Forget the technology. The most valuable asset for an online venture is old-fashioned direct marketing horse sense.
That was the consensus of the panelists in a Town Hall meeting yesterday during MeritDirect’s first Business-to-Business Co-op conference in Stamford, CT, moderated by Regina Brady, vice president strategy & partnerships for FloNetwork Inc., Cos Cob, CT.
Take e-mail. As now used, it has many disadvantages compared with paper direct mail. One is the lack of merge/purge.
“Twelve to 18% of marketing costs are going in the tank,” said Geoff C. Walker, CEO of PetfoodDirect.com, Montomeryville, PA.
Walker estimated that a firm mailing 500,000 e-mail names a year would save almost $200,000 in that period with proper merge/purge. He should know–40% of his firm’s mail budget goes to e-mail.
Another disadvantage is the lack of 3602’s (postal verification forms). “They’re your audit trail,” Walker said.
One more drawback is the lack of good RFM information on the average e-mail list.
“With the lack of true RFM, mailers will look for high selectivity,” said Rob Sanchez, vice president-sales and new business development for MeritDirect. “Business-to-business lists do offer some selectivity–for example company size and industry–but there’s less on the consumer side.”
Doesn’t e-mail have any advantages? Sure. One is that “in three to five minutes, you get 100% delivery,” Walker said. “You can also customize.” And it is useful for both customer communications and prospecting.
But there are a few things to keep in mind. Walker argued that companies must regulate themselves. PetDirect.com works hard to make sure that its customers don’t get “five mailings in 24 hours,” he said.
“Do these people write to their vendor? No they write to me, or to Mother MAPS,” he said.
Neil Sexton, founder of Sexton Marketing, Trinidad, CO, said that he has tried several times unsuccessfully to get himself off Insight Marketing’s e-mail list.
Another tip: E-mail should be a part–not all–of your media plan.
“We’ve had some success doing direct mail with e-mail follow-up,” Walker said. Also, it pays to include you toll-free number in e-mail communications. Walker pointed out, “8% to 15% of our responses to e-mail come over the phone.”
One thing the panelists seemed to agree on is that online customers buy more frequently. That is certainly true for Queensboro Shirt Co., Wilmington, NC.
“The average customer value is the same after a couple of years, but purchasing frequency is greater with online customers,” said Steven S. Little, former president of the firm.
Walker reported that PetfoodDirect frequency is 20% for his firm’s online customers.
Panelists expressed alarm at the high rate of online shopping-cart abandonment. The answer?
“I’m a proponent of human beings as a killer app,” said Sexton. Firms should create inside call centers and staff them with people who can convert an online shopper into a buyer. That’s better than “blindly deploying e-mail.”
Banner advertising? Moderator Brady said that she saw 25% clickthrough rates when she was at CompuServe, but that now the industry rate seems to be “well under half of 1%.”
Amy Africa, president of Creative Results, Williston, VT, offered some controversial advice for negotiating banner placements. “Ask for a price of 10% of the rate card,” she said. “Top off at 20 to 30% of pricing.”
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