Published June 12-16, 2021
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Direct Marketing
Let’s start with some history of brand-consumer communications. For a long time, this was done via mass advertising – TV, radio, print. As more niche media platforms were launched, it became possible to segment audiences. Then came direct marketing – individuals could be identified by their addresses and mailers sent to them. Starting in the mid-1990s, the Internet brought in very targeted advertising – and also pricing based not on size of audience, but on performance (clicks, form fills, transactions).
Let’s dig deeper into direct marketing, before we get to the world of email marketing.
From Wikipedia: “Direct marketing is a form of communicating an offer, where organisations communicate directly to a pre-selected customer and supply a method for a direct response. Among practitioners, it is also known as direct response marketing. By contrast, advertising is of a mass-message nature. Response channels include 800-numbers, reply cards, reply forms to be sent in an envelope, websites and email addresses… Direct marketing is attractive to many marketers because its results, positive or otherwise, can be measured directly. For example, if a marketer sends out 1,000 solicitations by mail and 100 respond to the promotion, the marketer can say with confidence that the campaign led directly to a 10% conversion. This metric is known as the ‘response rate’, and it is one of many clearly quantifiable success metrics employed by direct marketers. In contrast, general advertising uses indirect measurements, such as awareness or engagement, since there is no direct response from a consumer. Measurement of results is a fundamental element in successful direct marketing.”
From Cyberclick: “An essential aspect of direct marketing is that the consumer response is measurable: for example, if you offer a discount for an online store, you should include some kind of cookie or pixel to let you know if the user has used of the code… The most powerful and innovative direct marketing strategies want to elicit a reaction in the target audience using content delivered directly to the consumer, both physically and through the email marketing. A very striking graphic design, a surprising product, or a video that touches the heartstrings of the listener, can elicit a direct response from the consumer.”
From CFI: “The term “direct marketing” was first popularised by an American man named Lester Wunderman. In 1967, he identified trends in marketing and defined it using the term “direct marketing.” Thus, Wunderman is considered to be the father of contemporary direct marketing. Coincidentally, he was also responsible for the creation of the toll-free 1-800 number, an invention that is still widely in use today.”
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Lester Wunderman
I first heard about Lester Wunderman from Ajay Row in our MartechBrain conversation. Ajay strongly recommended reading Lester Wunderman’s book “Being Direct”. Wunderman writes: “This is a book about direct marketing, about how to advertise profitably in a postindustrial, information-based society. It is a book about how manufacturers and consumers may engage in an interactive dialogue affecting the behavior of both. It is also a book about the changing paradigm of brands — which used to represent a cluster of product values but now increasingly identify clusters of consumers’ individual needs. I have written this book in the form of an autobiography to show, step by step, how I learned to make advertising pay. It is based not on theoretical hypotheses or secondhand case histories but on the recorded results of the many billions of dollars’ worth of advertising I helped create and whose results I was able to measure. I will describe the rules as I learned them and show how I discovered them — the facts, the hunches, the breakthroughs, and the frustrations — the experiences I used to create the campaigns that succeeded and others that failed.”
Wunderman lists 19 principles of direct marketing in the book:
- Direct Marketing Is a Strategy, Not a Tactic
- The Consumer, Not the Product, Must Be the Hero
- Communicate with Each Customer as an Audience of One
- Answer the Question “Why Should I?”
- Advertising Must Change Behavior, Not Just Attitudes
- The Next Step: Profitable Advertising
- Build the “Brand Experience”
- Create Relationships
- Know and Invest in Each Customer’s Lifetime Value
- “Suspects” Are Not Prospects
- Media Is a Contact Strategy
- Be Accessible to Your Customers
- Encourage Interactive Dialogues
- Learn the Missing “When?”
- Create an Advertising Curriculum That Teaches as it Sells
- Acquire Customers with the Intention to Loyalize Them
- Loyalty Is A Continuity Program
- Your Share of Loyal Customers, Not Your Share of the Market Creates Profits
- You Are What You Know
A few interesting points from Lester Wunderman in a 2008 interview to Clickz:
Media has returned us to personal engagement. This is a good thing. But this is also where I worry. I don’t want to make friends with people who want to sell me something. The supermarket got it right. They proved that you don’t have to be a friend; they only had to provide products at fair prices. That changed the retailing world. I remember going shopping with my mother [as a child], and we went to shops where they knew our names. The butcher knew what she was accustomed to buying. Data is returning us to that kind of relevance. It’s creating warmth that has not existed in advertising when we were starting out.
… We never had a click before. We did have other relationship vehicles (coupons), but we never had this situation where both parties are aware that something further is going to happen. The consumer clicks because she wants to know more. The marketer is aware of the click and wants to do more for the consumer. We never had that signal that could be the beginning of satisfaction for both parties. It has to be dealt with carefully. Corporations have got to set up departments that are sensitive to potential danger that the click can create.
… The difference between a consumer and a customer is what makes success and failure. A consumer might become a customer. A customer is someone who is using a product. If you have a customer, you have to nurture that relationship. You have to make sure the customer continues to buy your product. I think there are going to be tricks and promotions within advertising and marketing. These will cement those relationships.
Ray Shulz wrote about Wunderman in an obituary in January 2019: “[W]hile it is hardly premature when a man of 98 dies, it has to fill email marketers and everyone in this business with sadness and a certain awe. Not that Lester ever focused on email marketing in particular, but everything he did before it paved the way for it.”
Email marketing has become one of the key pillars of direct marketing, and that’s what we turn to next.
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Email Marketing and the Inbox
The digital revolution sparked by the Internet needed a unique identifier for every individual. That was the email address. Cookies and device identifiers on mobiles were also additional mechanisms to identify people, but they still afforded some anonymity to the consumer. An email address was precise because it delivered communication directly to the inbox. And thus rose to prominence the field of email marketing. Brafton offers a nice history of email marketing. (Email marketing (along with SMS) has also been Netcore’s primary business for the past 14+ years.)
Writes Neil Patel: “People are inundated with interruptions, pitches, and advertisements everywhere they look. Though you might think your email is special. But to the reader, your email is one in a million — and not in a good way. This is why it’s important to remember where you are and use good manners. Getting into someone’s inbox is like being invited to their home for dinner.”
There are 3 inboxes which are central to our digital lives – SMS, email (mostly Gmail), WhatsApp. These ‘messaging apps’ are the way we communicate – 1:1 and in groups. These inboxes are also the endpoints for brand communications – from OTPs to receipts, from the ‘what’s new’ to offers. Each inbox has its own unique characteristics and thus serves a special purpose.
The email inbox has multiple advantages over the others. SMS is largely limited to text and 160 characters (even though RCS promises to enable rich media in the inbox). WhatsApp, owned by Facebook, has many restrictions on who can send and what can be sent. Both are also expensive. In India, SMS costs 13 paise and WhatsApp costs 30 paise. In comparison, emails cost 1-3 paise and can have text, images, audio and even video as content.
The popularity of email as a communication channel has also led to a rise in spam – hindering the effectiveness of marketing communications. Gmail’s folders and sorting algorithms are not the lasting solution. I believe the time has come for a dedicated inbox for brand communications.
I had written previously about an idea I called the microbox, “a custom inbox for viewing and engaging with microns. Brands should be able to directly publish to this micronbox – as long as they have permission to do so. Customers can get a significantly upgraded viewing experience than the conventional email inbox with its linear list of incoming emails. The micronbox has the potential to transform brand-customer engagement the way WhatsApp upgraded person-to-person mobile communications from the SMS inbox.”
So: can we create a micron-only inbox for brand communications? How will this two-sided platform work – why will brands send messages to yet another inbox and why will we as consumers further divide our attention with a new inbox?
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Micronbox
One way to build the future is to imagine it and then take the steps to make it happen. Let’s do the same with the micron-verse. Let’s look ahead a few years and see how brand-customer engagement has changed.
Each of us has a micronbox. It is built on email so it doesn’t necessarily need a new app or identity. This new inbox collates all the microns from our Gmail inbox and organises them better. No microns from a brand which we have not subscribed to make it through. Only a single email from a brand is present – older, unread mails get layered together into that single email. Thus, the micronbox only has as many emails as brands we subscribe to. Microns that we read are automatically deleted unless we choose to save them for future reference. (To elaborate: automatic deletion and especially only those emails getting saved which come from a conscious choice gives us and the brand added information – that people really care about this particular content; this is something that a simple open rate vs ignored will not capture.)
Microns are interactive. So, instead of just a static one-way communication, microns become dynamic and engaging. One can buy a book right from the micron itself, expand a new story to read more, provide feedback or answer questions – right from the inbox, without having to click through to the website. (The magic which makes this possible with emails is AMP.)
An element of gamification makes it fun. Customers/subscribers earn points for opening and engaging with microns. The more the continuing engagement, the better the rewards. (This is similar to what credit card companies offer – the more you spend, the more you earn. Basically, loyalty and discipline is being rewarded.) They also earn points by sharing information about themselves with brands so the communication they get is more personalised creating a mutual win-win. They can control what personal info they share with different brands. All this helps in increasing the signal-to-noise ratio in the inbox.
The micronbox is clutter-free. Instead of a ‘delete’ mindset when dealing with emails, there is a ‘delight’ feeling as we scan it. Brands have become friends whose messages are never ignored, read promptly and always acted on. Brands provide us useful info which make daily life better. They offer us what we need rather than what they want. They learn from our actions to make the relationship better daily with every interaction.
(Aside: This is the key and the core of a successful brand-customer relationship. The essence of a market economy – where businesses grow only by successfully meeting their customers’ need – at the lowest cost possible (else their competitors win). So if business in this sense is about meeting needs, a reinforcement of trust starts to happen between business and customer through microns – businesses promise to meet customers’ need and customers in turn provide the needed information/preferences.)
What has made the micronbox such a widespread global success is the fact that it is built on the email transport layer. Email is an open standard and allows anyone to publish via SMTP. We have control on the inbox and can use different email clients built using the IMAP protocol. This openness of standards continued with the micronbox – with one addition. The right to publish by a brand had to be matched with a subscription from the customer – only then is the communication channel established. The control is always with the subscriber who can decide to terminate the relationship at any point.
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Bringing to Life
So, how can the micronbox be brought to life? There have been just a handful of inboxes in our life in the past 25 years – Hotmail, Gmail, SMS, WhatsApp, Facebook Messenger. What will it take to make a new inbox become part of our daily routine? Many things have to fall in place to make it happen.
First, microns have to become popular. Microns are a new format using email as a transport mechanism. For microns to succeed, both brands and consumers need to adopt microns. For consumers, the attraction is that these are short messages and have something of value rather than just standard promotional content. If a loyalty program can become embedded in microns, that will offer an additional incentive for consumers to prioritise opening microns. For brands, the higher open rates of microns will create a good reason to switch from pure promotional emails. If microns can consistently demonstrate 50% open rates, brands will find microns an attractive proposition.
Second, the popularity of microns will actually lead to an increase of email communications – which will drive the need for a dedicated inbox for microns. This is where the micronbox comes in. Initially, it can just aggregate the microns that are delivered to our primary inbox. Over time, the micronbox email address can itself become the identity for subscribing to marketing mails from brands. The attraction of the micronbox will be that it will be spam-free. By controlling the visual display and timeline of emails from the IMAP server, the micronbox can create a much more compelling content consumption experience.
Third, the use of email as a transport layer is what can drive adoption. There is no need for consumers to download yet another app. Each of the 4 billion mobile phones in the world already has an email client! All that needs to be done is that it needs to be configured to read from a different email server. (A dedicated app for the micronbox can be built just like the Gmail app, but that doesn’t have to be a priority.)
Finally, the micronbox’s interactive capabilities will convert the email inbox into a conversational interface. While WhatsApp and SMS have this today, the challenge is that the brand channels are mixed up with the personal communications channels. The customer mindset in WhatsApp is to communicate with friends and family, not with brands. Brands are important enough that they deserve a dedicated inbox – brands now have the requisite data to do 1:1 engagement with each of us. AI-powered chatbots can power infinite such parallel brand conversations with customers.
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The micron-verse with the micronbox at its core offers a better world for brand-consumer communications. Many things have to go right to make this new future a reality. I am reminded of a GE campaign from the late 1980s that I used to see a lot on TV during my stay in the US – “We bring good things to life.” Microns are a good thing we should all work together to bring to life.