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Build your business through direct marketing print Print

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Direct marketing offers you the potential to gain further sales from existing customers or clients, and new sales from new customers. This guide offers you an overview of what’s involved and how direct marketing works.

What is direct marketing?

Direct marketing basically involves building a direct, close relationship with your customers. In practice it means marketing your product or service to the people that are most likely to buy off you. One of the easiest ways of doing this is to build a list of all your customers (and potential customers) and then use this list to contact them. The related ANZ Biz Hub article Why databases are a valuable asset explains how to collect the details of customers.

Direct marketing can be one of the most cost-effective ways of expanding your sales. It helps you to strengthen your relationship with existing customers and find new customers. It also has the great advantage of being relatively easy to monitor. This means (unlike some other forms of advertising) you can measure the results and work out how effective a campaign has been.

 

Will Direct Marketing (DM) suit your business?

Almost every business can use direct marketing. For instance:

  • Do you sell to a select or easily identifiable group? For example, to people from only one geographical area, or to retailers, young people, soccer players, plumbers, builders, car owners, etc. If you can place your customers in specific categories such as occupation, age, income, lifestyle, housing, attitudes, location, etc., then direct marketing will be particularly useful to you.
  • Do you have a group of customers that is reasonably loyal? You can use direct marketing to keep these customers loyal and away from the competition.
  • Could you sell more to your existing customers? Do you have products or services that you could sell, which your customers are presently unaware of?
  • Do you want to spend less on conventional advertising (that often does not work or is very difficult to measure) and adopt a more cost-effective marketing approach?
  • Do you sell high-cost items that require a lot of information before the customer is likely to purchase?

If any of these apply to your business, direct marketing will be valuable to you.

 

Types of direct marketing

Direct mail

Conventional direct mail involves you sending a package to an existing or potential customer that would typically include a personalised letter plus a brochure or flyer.


Email marketing

The tactic can significantly cut postage costs and works well with a website, enabling you to market your goods or services to the world.


Telemarketing

This tactic can be very effective for goods and services over a certain value.


Leaflet or flyer drops

Also a form of direct marketing, this involves distributing flyers or brochures to post boxes or homes throughout a particular region or to a sample area. However, this approach is far less targeted than the personalised letter and the response rate is much lower.

 

Targeting your direct marketing

The people most likely to buy off you are:

  • your existing customers
  • people who are similar to your existing customers.

Because you're not using the 'shotgun' approach of ordinary advertising, the far more focused tactic of direct marketing generally means you get much better value for your dollar. The more accurately you can profile your 'average' customer, the better your chances of success in finding more like them. Are they of a similar age, do they live in a definable area, have similar jobs, hobbies, etc. Are they married or single? Answering these questions is called 'segmenting the market' (splitting the total market into small segments). The importance of this exercise is obvious: it allows you to focus maximum effort on the right people.

 

How to get started

Direct marketing is built around quality databases. In all cases involving lists, however, remember that you must respect the provisions of the Privacy Act.


Existing customers

Your most cost-effective option is to keep on building your database of customers. It is always easier and cheaper to sell more to existing customers than to find new ones. Aim to capture all the details you need, including names and addresses from enquiries coming into your business. Consult the article Why databases are a valuable asset for more help. New customers

Once you've defined your typical customer profiles based on your existing customers, you can set about finding out where there are more people like them. Some sources include:

  • A joint venture with another business, whereby they send an offer of your products or services to their customer database, and you do the same for them.
  • The Yellow Pages is a valuable resource if you're selling to businesses. Choose the categories most likely to buy off you (for example, all the plumbers in New Zealand). For more information visit www.yellowpages.co.nz or phone 0800 803 803.
  • New Zealand Post offers a direct marketing service. Contact them on 0800 804 307 or visit www.nzpost.co.nz for more details.
  • List brokers rent lists (find them in the Yellow Pages). Note that some lists are better than others, so check with previous list renters to make sure the lists are up to date - no point in paying for non-existent names and addresses.
  • Other sources of prospects include business directories, voting rolls and local council lists. Don't neglect newspapers (for example, if you sell wedding albums the engagement notices in the newspapers would be a good source of prospects).
  • Statistics New Zealand is a good source of demographic information (but not actual names) that will help you target your campaign more sharply. For example, some areas or suburbs may be far more suitable as targets for a campaign than others. Visit www.stats.govt.nz or phone your nearest branch of Statistics New Zealand for more details.

 

Tips for using direct marketing

Current customers

Because existing customers are the lifeblood of your business, it's vital that you keep hold of them. You know how difficult it is to lure a loyal customer away from a competitor - the same should apply to you and your customers. Your first efforts in direct marketing should therefore be directed at keeping your regular customers happy. For example:

  • Keep in touch at least once every 90 days. People like to feel special and individual. Show them that you know who they are.
  • Keep them informed about what is happening in your business. Offer them a special preview of your new product lines or sales.
  • Send customers updates of new products or services, details of discount offers only for regular customers, reminders that their next appointment is due, or a list of your products when you know they will be buying. For example, a florist might send a product list before Mother's Day or Valentine's Day.
  • Think up fresh marketing ideas that no one else uses. For instance, send your good customers birthday cards with a $10 spending voucher enclosed for your business.


New customers

  • Send new customers a follow-up letter or card thanking them for their first purchase, then ring them for further business.
  • Offer them products or services that complement what they have just bought.

For more ideas, see our article 10 ways to delight and retain your customers.

 

Do your homework first!

As with any marketing exercise, you need to do your homework first. Set a budget for your direct marketing campaign and work through the following questions:

  • Is direct marketing the right tactic?
  • Have I identified my target market, and what am I going to offer them?
  • Do I have the stock/capacity on hand to meet possible demand and fulfill orders efficiently?
  • Do I have a Code of Practice in place to comply with direct marketing regulations?

You should also complete a break-even analysis to work out what increase in sales is needed to recover the cost of your direct marketing campaign.   

Summary

  • Every business, large or small, can use direct marketing.
  • Quality databases are the key to effective direct marketing.
  • It is cheaper and more efficient to collect names yourself, but you can also rent lists or work in alliance with other businesses that have good databases, provided you respect the provisions of the Privacy Act.
  • Do your homework first in the form of a budget and break-even analysis.

Resources

For more details on putting together an effective direct mail package, read the related ANZ Biz Hub article Why databases are a valuable asset.

Consult the Direct Marketing Services category in the Yellow Pages for companies offering lists and other DM services.

Useful websites

In all your direct marketing ensure you comply with the Privacy Act and the Unsolicited Electronic Messages Act (anti-spam legislation).

The New Zealand Marketing Association provides information, tools and resources for Direct Marketing. You can also download the Code of Practice for direct marketers. See www.marketing.org.nz for more information.

The New Zealand Post website has a range of information and resources on direct marketing. Visit www.nzpost.co.nz/Cultures/en-NZ/Business/DirectMarketing/

For information on demographics and population trends visit the Statistics New Zealand website www.stats.govt.nz

 

Further information:

To talk to an ANZ Business Specialist:
Call 0800 269 249
Visit anz.co.nz/business
Visit your nearest ANZ branch

              

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