Consumer direct mail gets twice the response of business mail. Why?
Karen Fletcher writes
Long before Heinz introduced customer magazines, or Sainsbury’s launched
a loyalty card, business-to-business marketers were using direct
marketing to reach existing and potential customers.
Direct mail was and still is a large part of most business-to-business
marketing and these campaigns were usually thought of as far more
effective than anything the FMCG companies could come up with.
But figures released in October this year from the Direct Mail
Information Service, which supplies figures on use of direct mail for
the Royal Mail, show that this could be a misconception.
According to DMIS, response to consumer direct mail campaigns is
outstripping response to business campaigns. Research based on over 1300
direct mail campaigns shows that average response to a consumer mailshot
is 8% - twice that of the average response to a business mailer. Why
should this happen?
Wanda Goldwag, director of sales and relationship management at Air
Miles, argues that increased use of direct mail for business campaigns
has not been matched by better skills in the area. ‘There has been a
real surge in business-to-business direct marketing. There are more
people using this medium; fewer people using the trade press and other
media. A large number of people have moved into direct marketing,
following the fashion without having the expertise on board,’ she says.
Goldwag believes consumer marketers have an advantage over their
business-to-business counterparts. ‘Volume of direct mail is increasing
in consumer marketing. It is usually through an agency, so there are
planning directors. Most of the volume increase in business-to-business
is coming from smaller companies which have less access to that kind of
help,’ she adds.
However, Richard Bush, managing director of Dowell Bush Direct, feels
that poor quality lists and information are to blame for low business
mailing response rates. ‘The most important difference between consumer
mailing and business-to-business direct mail is the availability or lack
of quality, relevant, and up-to-date lists. I know of one or two
specialist business lists that are good quality, but these list owners
concentrate on specialist market places.
‘There are some excellent consumer list providers but very few good
business-to-business list providers,’ he adds.
Bush stresses the need for business marketers to build their own
database of customers. This is borne out by the two examples of work
(see boxes) which have been nominated for Royal Mail/DMA Awards: both
campaigns relied on in-house databases for targeting.
‘It is worth investing in an in-house database. Business marketers know
they have access to quality data. It is quite a heavy investment but it
has a significant effect on response rates,’ says Bush.
One problem faced by business marketers is that unlike those who build
lists of consumer names, they are much less likely to have the option of
renting out their databases to recoup the investment made. The areas
that business marketers target are highly specialised, and often create
much smaller lists than consumer markets.
Gary Selby, managing director of TDS Inform, specialists in business
information, agrees that low response rates in business mailings are the
result of poor data. ‘The quality of business data has been suspect.
There are limitations on the selectability at a company level, and a
lack of detailed knowledge of the person within an organisation who
should be targeted,’ he says.
Tony Lamb, managing director of Conduit Business Information, also
believes that poor business data is to blame for low response rates.
‘Data decay rates are different in the consumer market to the business
market. Not only do people change jobs, but companies move more often
than consumers move their own property.’
But Selby adds that the problem goes deeper than simply accessing the
information. ‘A typical problem has been the lack of selections
available across the information. If you have limited selections
available, you have limited degrees to which you can target the data.’
In an attempt to overcome these problems TDS Inform has developed its
Acumen system. Selby explains: ‘Acumen was developed to try to apply the
logic geodemographic targeting as used in consumer direct marketing to
business direct mail. Acumen combines data such as where the target
business is, with size and type of business to try to build a profile of
what makes a suitable buying business.’
TDS has also built up a telephone-based system of checking and updating
its business lists on a virtually continuous basis to ensure accuracy of
Selby feels that business-to-business marketers are sometimes to blame
for poor targeting because of their attitude to business data. ‘Too
often people are renting business data on a one-off basis. As soon as
people take data on that basis it reduces the effectiveness of the
projects they can run: they can’t segment the data, they can’t do repeat
mailings,’ he says.
It may be that measuring the effectiveness of a business-to-business
mailing based on response rates encourages short-term tactical attitudes
to direct mail - the same attitudes which have created the problem of
poor quality data. Tony Lamb thinks business-to-business mailings should
be judged by return on investment (ROI).
‘If you look at selling into the fleet car market and compare it with
selling cars to consumers using direct mail, you may get lower response
rates to a mailing which goes to fleet buyers, but you are going to be
selling cars worth tens or thousands of pounds more.’
While the quality of creative work in business-to-business mailings is
rising above the traditional letter and brochure mailshot, targeting has
not kept pace. Though business marketers are spending more time and
money on creativity, it might be better if they took a long-term view
and invested in better data, rather than see the investment go straight
into the bin.
Karen Fletcher is deputy editor of Marketing
Microsoft hits the target
This campaign, shortlisted for three Royal Mail/DMA Awards, targeted
companies with roughly 100 to 200 computers - small businesses by the
usual standards of Microsoft. Evans Hunt Scott creative director, Ken
Muir, says: ‘We were not really aiming at IT directors in huge
companies, but at people in smaller operations who are close enough to
the ground to see it happen.’
Muir says that getting targeting right is the hardest part of this type
of campaign: ‘Traditionally, direct marketing has a fight to talk to the
right people and the best campaigns have got the targeting part sussed.
It is so important, and even with the best software company in the world
we still haven’t got it 100% right.
‘Having said that, it is an ongoing process and we have built up a
profile of our potential customers.’
Muir believes that business-to-business mailings can have the advantage
over consumer mailings when it comes to creativity: ‘In business-to
business you are mailing a much smaller quantity so you can be more
creative with things that might require hand insertions for example.’
He adds: ‘Microsoft demands that we are innovative. It recognises that
its customers are people. The real success of the campaign was raising
awareness in the business PC market, which is very busy.’
Muir points out that a company director is also a consumer. Business-to
business mailings should recognise this. ‘People react well to work
which recognises that they are more than a name and a job title.
Something that recognises that they have to consider their career within
a company works well,’ he says.
40 Degree turns up the heat
This campaign, nominated for a DMA/Royal Mail Direct Marketing Award in
the direct mail low volume business category, aimed to encourage
marketers in the fashion industry to take a stand at the Emap
Explosive is a small agency set up six months ago by partners Paddy
Barnes and Anthony Wallis. Both worked in marketing for a fashion group
and so had a unique insight into the target market for the 40 Degree
Barnes acknowledges that a business-to-business mailshot has to stand
out from the rest of a pile on someone’s desk. ‘Our success with this
campaign was due to the fact that we were developing something for which
we were once the target market. We received hundreds of letters for
various events which got no further than the bin. So we had to surprise
people and make them take notice,’ he says.
The 40 Degree campaign had several stages, which went out to about 500
named individuals, including: a spoof washing powder sample followed by
a 40 Degree miniature vodka bottle, and a bowl of mints - designed to be
used on the recipients’ exhibition stands.
The creative work is very vivid and uses metallic packaging as well as
bright colours - not a typical business-to-business mailing. But Barnes
feels this is a great strength: ‘There is no difference between the
creativity required for consumer mailings and those for business to
business. I think it is exactly the same.
‘Where companies go wrong is to treat business people differently from
consumers. They do have different priorities, but in terms of creativity
it shouldn’t be different. We made this look like a consumer campaign
which helps stimulate the response.’
The targeting for this campaign was helped by Emap’s own business-to
business database which consists of circulation lists for its fashion
trade magazines, such as Draper’s Record.