Not because direct marketing strategists do not understand the concept. But rather many marketing newcomers are not going through the learning discipline they need to see the big picture.

Indeed, a little knowledge about what direct marketing does in the wide world of marketing is a dangerous thing.

In a recent article from direct marketing leader Stan Rapp, he brings forward his case as astutely as ever with this statement.

At a time of great change, we reach for new words to describe what is happening, even though they later may prove meaningless. Marketers are no exception. While absorbing the shock wave of exponential connections to consumers (and consumers to one another), they have rushed to embrace digital marketing as the wave of the future. It's a combination of words – “digital” and “marketing” — that makes little sense. “Marketing” is about the efficient and effective movement of goods and services from producer to end user. “Digital” describes a powerful new communication technology. The marketing of the future is much more than a form of technology.

Mr Rapp thinks as I do that direct marketing envelopes all media including broadcast, print, direct mail, freestanding inserts, the online medium, email and cell phone marketing. All one-to-one selling defines the strategic playing field for experienced direct marketers.

Within direct marketing, there exists specialists such as direct response television, online, direct mail, CRM, database, catalogs and alternate media. But the experienced direct marketers knows how to use multiple media, or one medium alone, to maximize ROI.

Why do direct marketers keep harping on a purer definition of direct marketing?

The reason is quite simple. Clients who have a myopic view of what we do will not understand the depth of our potential contribution.

A good example is what happened to MDs. They had to fight -- and our continuing to do so -- to differentiate themselves from Optometrists, chiropractors, podiatrists and PAs. An MD has far more training and greater depth of knowledge of how to diagnose, treat disease and perform surgery.

There is a place for all of these practitioners. But an Optometrist is not the same as an Ophthalmologist. It is important for the patient to recognize the difference.

What say you?

Here are some examples of the types of information you have available from these sites.

- Email facts and trends by specific industries

- Cell phone use and topics related to integrated media

- Demographics of Internet users

- The percentage of Internet users who do a given activity on a "typical day"

- Percentage of customers that come from online searches

- A chart showing home broadband adoption since 2000

- Percentage of searchers who use Google, Yahoo or some other search engine

- Streaming video usage and applications over time

- Historical perspectives on the growth of social media over the last five years

- Percentage of web users who never go past the first page of a given website found by a search engine

This list is not exhaustive, but it should represent a reference list for most of you.

www.marketingsherpa.com

www.pewinternet.com

www.eMarketer.com

www.searchenginewatch.com

www.internetretailer.com

www.Mashable.com

www.B2bdaily.com

www.Hubspot.com

If you use other sites, then please share it in your comments. I would like to strengthen this list beyond the above list for all readers of this blog and my clients.

The Customer's value = the CPC (Cost Per Customer)

An insurance agent asked this question several weeks ago and I thought you might benefit from my response.

This is what he asked.

I’m looking for some quick feedback on how you are calculating Cost Per Lead or Cost Per Prospect, or any other lead generation measures you use, to see how you are modeling the cost side.  Are you using:

A. Only direct lead-gen associated costs

B. Direct lead-gen associated costs + a burdened rate on the marketing side

C. Total marketing budget

The response below.

Hi John,

This may not handle your entire question, but any CPI (Cost Per Inquiry or CPL for Cost Per Lead) must first begin with an allowable CPS (Cost Per Sale).

The basic question you and the CFO must agree to is how much the average sale is worth to you and how much the company is willing to pay for a new contract or sale.

Ask this question: "Dear CFO. If I had 1000 new contracts I could sale to you, how much would you be willing to buy them for? Give me a good price. Because the more you can afford to pay for them, the greater number of contracts I will be able to sell to you beyond this initial 1000."

The ultimate number you need is exclusive of overhead, proposals, bad debt, commissions etc. So you need to take the CFOs answer and calculate your available budget for promotion only. That's the number marketers are looking for and is commonly referred to as the CPS.

Remember that paying commissions without the support of lead generation and advertising is the coward's way out for many companies.

What I mean by that is that many insurance companies let the distributors or straight commission sales people take all of the marketing risk and pay the agent after the sale is made. With lead generation, the company must now learn how to invest in the marketing piece by spending money before making the sale.

Some companies never manage to get beyond straight commission and end up with lower profits. They also abdicate their futures to sales people or distributors and loose control of their destiny.

Frankly, any company worth its salt should know what their allowable Cost Per Customer (CPC) is. That's an even more important number to agree upon than the CPS because the each customer represents the potential for multiple contracts or sales. But sadly, that is rarely the case. That's why marketing gets cut when times are rough. Company leaders sometimes do not see the marketing budget as a critical, long term investment.

The key to all of this is that you are quantifying success BEFORE you embark on any new business venture.

Now to the CPL. The CPL relies upon the allowable CPS and the projected conversion rate. For example, if you have an allowable CPS of $100 and your projected conversion rate is 10%, then your allowable CPL is $10 per lead. And so the formula goes. The trick is the balance the lead quality with the conversion rate.

If you get better quality leads that you can convert at 50%, then your allowable CPL increases to $50 per lead. But beware. It is possible to over qualify your leads by reducing your overall sales volume to come in below plan.

You would use a different allowable CPL for ALL media including the online, direct mail, Direct Response TV, outbound telemarketing and so forth. Why? Because the conversion rates vary dramatically from one medium to the next. The constant is the CPS and the CPC.

Bear in mind that you may not be able to convert a large number of your leads on the first pass. So plan repeat contact to maximize your conversion rate over a 12 month period (or longer/shorter depending upon the sales cycle for your product). You have paid $10 or more for each lead, so you need to get back your investment with a longer term contact strategy.

In BtoB, I have seen allowable CPL's of $1,500 or more. So instituting an effective CRM software program with ongoing training in its use will make a big difference in your program's success over the long term.

When you think about it, marketers should start all new business opportunities with this type of financial pro forma.

Once you know the CPL, CPS and or the CPC, then you can develop your marketing budget BEFORE even considering your offers or media strategy. If you need 5000 new contracts over the next 12 months, then your marketing budget should be 5000 X $100 CPS or $500,000. 

Hope this helps you.

If there is one sales issue that stumps most individuals responsible for new business, it is the Prospect with a poorly defined problem and no budgetprospect who presents an ill defined problem and has little or no budget. But how does the salesperson expose the lack of budget before expending the energy and expense of preparing a complex proposal?

In a recent newsletter issue published by raintoday.com, contributing editor Jill Konrath wrote an interesting article entitled The One Question that Can Kill Any Sales Conversation that addresses this very point.

She relates a story of a salesperson who piqued her interest to the point that she agreed to proceed with the project only to have the salesperson kill the sale with the budget question.

 '...I also need to get my blog social-media friendly. I don't have anyone working on that right now. It's a small project, but a necessary one. Interested?

Of course, she was. She asked, 'What's your budget for this?'

That's exactly what traditional sales training tells you to ask. To find out if you're dealing with a qualified buyer, you're supposed make sure they have money in their budget for your service.

It was the wrong question to ask!

Why is qualifying the prospect for budget so important?

As with any resource, sales people have limited time and money to do their jobs. And one way to guarantee missed sales goals is to waste those limited resources on unqualified prospects who have neither the money nor the authority to sign off on the proposed project.

The prospect, on the other hand, has no idea what the solution costs and wants to know this to see if is is even feasible.

For most high level sales executives, prospect budgets must be determined before preparing a proposal that takes many hours and often significant expense to prepare.

In many cases, the available budget -- or at least a gross range budget range -- will make the problem unsolvable based on the sales person's experience. Why waste the prospect's time or the salesperson's time when no sale is possible?

The client wants the specifications for the solution to his broad (and usually poorly defined) problem without investing in the skills and time to prepare it. And the service provider needs confirmation of the prospect's ability and willingness to pay before investing in the development of the proposal.

As a consultant, I have no problem discussing HOW I would approach the project and allocate time/costs for each step. But I cannot lay out the specifications for solving the problem without charging for my time.

To a greater or lesser degree, some companies will let you know what it costs to solve a well defined problem. But if the prospect has an itch with no idea how to solve it, then he must pay for help in defining both the problem and again for developing potential solutions. Implementation costs are then possible once the specifications are developed.

So the question remains. How can the prospect and the service provider come to terms on this issue? How can sales people qualify the prospect without spending too much time educating them when they will never buy?

More to the point, do you agree with Jill Konrath's article when she says the budget question before the solution is presented kills the sale?

In one of DMNews' best issues published June 7, 2010, the "Gloves Off" section includes interesting comments on this very point in a contender battle between two marketers entitled "Is the Term 'Direct Marketing' antiquated?"

Jen Mundah, VP of resourcing and creative services for Carlson Marketing with 13 years of direct and interactive services says "yes."

"Historically, the terms 'direct marketing' and 'direct mail' have been interchangeable, both meaning a method of communicating directly with consumers through acquired lists... Direct mail still plays a role in the mix... while marketing directly to consumers is at the highest level ever... 'direct marketing' hasn't benefited.

 Ms Mundah prefers the expression "direct strategy."

 Gene Silverman, VP of Marketing Services and Account Management for Hawthorne Direct with over 20 years of DM experience takes the opposite position. 

"... the term 'direct marketing' still sits well with me... some direct agencies adopt 'smoke screen' terminology such as 'brand response,' 'direct to consumer' or 'b-to-c' marketing... In fact, direct marketing has never been more au courant, useful and powerful."

 His position in the article is that direct marketing uses media in all of it's forms including TV, online, mobile, outdoor -- and yes, even print and direct mail.

Further in the same publication, Carol Krol, the Editor-in-Chief proposes that traditional lead generation methods continue to dominate profitable lead generation and customer upsell.

Who has this right? Have we strayed so far from the direct marketing strategy into media tactics that we no longer understand what the direct marketing strategy does? 

You may recall that Rogers and Peppers reinvented the term "direct marketing" (and most other terms associated with it) by calling the strategy "One-To-One" marketing.

So what do you think we should call this combination of science and art to persuade individuals to buy our products? Is the term "direct marketing" dead?

Technicians do not necessarily make great strategists

The first thing any programmer on the team should want to know is, "What are we trying to accomplish?" But annoyingly, after the marketers attempt to communicate marketing strategy to programmers for several hours, the conversation ends with that dreaded statement from the programmers.

"What do you want us to do?"

Turning several colors of red from frustration, our response to them would usually go something like this.

"As marketers, our primary role is to come up with what we are trying to achieve with the database. So we think you should answer your own question by figuring out what programming you need to do to solve the problem we just laid out."

Part of the challenge in this ongoing discussion is that it is difficult to find technicians who know how to create tactics that fulfill broad based strategies. 

The problem today, of course, has raised it's ugly head again with web technicians who know the technology but have little understanding of marketing strategy.

Here is an example of a marketing analyst translating the data to actionable marketing information.

Several times a year, I recommend that my clients become better informed about their customers to help them keep the profitable ones and attract more of the same. I typically work closely with customer modeling analysts at strong operations like Merkle, Experian, Epsilon (who now owns the Abacus database), Equifax and so on. 

In every case, these analysts send back a model or customer profile report with 80 to 120 pages of numbers without developing an executive summary or key findings summary.

It is certain that balancing the many dependents that impact response often makes developing summaries and and interpreting them a challenge. From the analyst’s perspective, the computer applies their sophisticated algorithms as needed to make record selection for customer or prospect segmentation. 

But marketers need a firm handle on what their best and worst customers look like when developing new product ideas or breakthrough creative work. A solid understanding of the demographics, lifestyles, likes and dislikes of his customers makes the marketer a far more effective planner and implementer.

So one of my significant consulting roles today involves interpreting the findings so marketers can apply them to their daily tasks. 

It is rare to find analysts who are also adept at communications and interpreting the data for high level marketers. 

Here's an example of an internet technician trying to communicate.

Let's face it. Most Internet experts came from the tech world. So it is not unusual to find a disconnect between Internet experts and marketers who thrive on working with many channels.

Just as the programmers of old, these new web tech experts have a hard time differentiating between tactics and strategies.

They do many things well. But what they do might not fit the marketing strategy. They know their craft, but not necessarily the longer term customer building strategies.

They also suffer from poor communication skills.

Here's a lift of an article entitled Optimization Overdose by Paul Knegten. He starts out his article with this statement in bold type.

"Demand side platforms (DSPs) are a giant leap forward for Adkind." In the body of the article he writes. "1. Make sure your DSP and dynamic ad provider are talking to one another (programmatically). Essentially, the DSP has to pass audience information through, and the dynamic provider has to pass which creative execution it will show. Ask a lot of questions to make sure this is being done."

What!?!>?#@#

This is an overdose all right. An overdose of gobbledegook that does not communicate benefits or a clear strategic focus.

These types of articles permeate the Internet and trade publications with little to offer in the way of meaningful information. It's not that these people don't have skills or that they are dolts. They just don't know how to communicate.

Nor does their emphasis on the bits and bytes naturally provide them with the tools to understand marketing strategy.

Conclusion

May astute company managers somehow weed out the tacticians from the marketing strategists.

But I'm not holding my breath.

Many managers today came from the school of tactical thinking and poor communication skills. Heck, they might even come from web design or database programming.

In the so called "good old days", the big communication challenge for direct marketers was to translate marketing objectives to database mainframe programmering. Today, the challenge extends to the new internet technicians.