DM Spending Continues to Trend Upward

We recently came across survey results conducted by Tivoli Partners* looking at the trends associated with Direct Marketing. As companies continue to push their marketing partners to more quantifiable results and ROI, direct initiatives continue to play a critical role in their communication vehicles.

A national survey among direct marketing professionals to identify key industry trends recently found that 69% of the respondents indicated that direct marketing spending has increased since 2004. They collected responses online from a statistically valid sample of 130 participants, mostly in the financial, retail, and services industries. Respondents’ company size ranged from 11 to 5,000+ employees. 55% spend $1 million or less on direct marketing each year, and 29% spend $5 million +.

" The bottom line is, we
all want the same thing."

The findings indicate that reasons for the upward trend included clients’ need for more accountable communications, and the ability to reach customers and prospects in more targeted fashions, including direct mail, e-mail, telemarketing, and other one-to-one communications methods. Advanced technology and enhanced data-mining techniques have brought even more science to the art of direct marketing.

Begin a dialogue with your target to gain a better understanding of their needs and how better to tailor your message and offers to them. When given a laundry list, respondents gave high marks to reminder mailings (83% used these somewhat/very successfully) and newsletters (65% used these somewhat/very successfully).

And, finally, it’s interesting to note that direct marketers identify lifetime customers as their most valuable (38%), yet do not allocate customer retention a bigger slice of the budget pie.

While communications budgets should reflect that there are different jobs to be accomplished and prioritize accordingly, the bottom line is we all want the same thing – to sell more product, gain market share and loyalty, leading to more sales and up-sell opportunities.

Key findings:

1. Direct marketing budgets have increased. 69%of respondents indicated an increase in spending when asked whether their total direct marketing budget had increased, decreased, or stayed the same during the past two years. 16% indicated their budgets had stayed the same.

2. Acquisition and retention are just about equally important. 52% of respondents use direct marketing for customer acquisition, while 47% use it for customer retention.

3. Spending for customer retention lags. More than one-third (39%) spend 25% or less on customer retention, while those who commit more than 75% of their budgets comprised less than 12%.

4. Reminder mailings and newsletters are preferred tactics. When given a laundry list including points-based frequent buyer programs and membership clubs, respondents gave the highest marks (83%) to reminder mailings and newsletters (65%).

5. There’s no substitute for great customer service. 79% feel that they are somewhat/very successful
in delivering exemplary customer service, while 8% indicated they are not even trying.

6. Marketers are quick to react if something’s not working. 68% agreed with the statement, “We quickly shift dollars during a campaign if we think it’s not working.” The remaining respondents wait until the end of
the campaign to evaluate results.

7. Telemarketing users have increased their spending. 42% of respondents do not use telemarketing at all; but of the 58% that do, 43% have increased their spending in the past two years.

8. Direct mail delivers. More than half (54%) have increased their use of direct mail in the past two years — indicating that predictions that the Internet would replace print have not come to fruition.

9. e-Mail rules. 72% have increased their use of e-mail marketing during the past two years. And 63% of those marketers using online banners or sponsorships have increased their spending.

10. Cross-selling is king. When we asked respondents to rate certain topics of interest from customer retention to innovative tactics, 52% indicated that they were very interested in techniques to deepen their relationship with current customers.

11. Lifetime value ranks highest. When asked to identify their most valuable customers, 38% chose lifetime value above all other indicators.

The bottom line is, we all want the same thing.

Chris Georgieff, Account Director
Cheil Communications Irvine


*Tivoli Partners commissioned Interactive Marketing and Research of North Carolina to conduct this survey of select subscribers to direct marketing publications. Tivoli Partners is a Charlotte, NC based agency specializing in direct response marketing.