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In business-to-business marketing, the integrated direct marketing model is a gold mine for the marketing group that wants to build sustainable relationships with the right customers. The economics of the IDM model come from two primary facts:
1. Marketers have come to realize that they cannot afford to invest in all customers and prospects equally. In fact, acquisition efforts should be segregated out from cultivation and retention efforts. IDM allows us to do that.
2. More expensive contact types, such as face-to-face or special events, can be leveraged with tremendous effectiveness by lower contact types, such as the Internet, E-mail, print, mail, and phone
Here’s what the integrated direct marketing process can do for you:
1. Reduce the expense to revenue ratio by at least 15%
2. Increase the number and frequency of value-based contacts to the right prospect or customer
3. Increase the perceived service level at the point of contact
4. Increase product penetration
5. Increase customer loyalty
Additionally, in support of particular product lines, IDM ensures:
1. Faster Introduction
2. Higher amplitude
3. Segmented and sustained market position
(Tracy, please photocopy the graph from AgriPassport volume 2, edition 1).
Quoting Bob Stone, long the venerable guru of American direct marketing, a definition of direct marketing must include three phrases: “interactive system,” “using one or more contact media,” and as must all direct marketing “effect a measurable response or transaction.”
IDM is not direct mail; it is not telemarketing; it is not transaction focused. The integrated direct marketing model is data-based and loyalty focused. IDM is highly targeted marketing that uses an integrated, organized, planned system of contacts by which we make offers to individuals using a variety of media. This system of building sustainable loyalty with our customers and prospects creates an on-going civil dialogue. It is accomplished by integrating communication across all contact media - print, the Internet, E-mail, mail, phone, field events and face-to-face visits from the field force. It’s defining characteristic is the delivery of relevant value. The value is defined for us by our customers and prospects. It provides for the delivery of relevant value-based information at the right time, in the desired delivery system, to the right individual that ensures interdependent relationships built over time.
The IDM model makes use of the marketing database as the repository of corporate memory, storing the results of all interactions with customers and prospects.
(Tracy: Insert the “nuclear reactor” model).
In addition to simple facts such as demographics and product usage, today’s sophisticated marketers are building database systems that capture the complexity of buyers’ needs and purchasing behavior along with relevant complaint and/or satisfaction issues. The information then is available for product design groups, marketing, sales, research and other corporate functions. The database becomes the springboard for the organization’s need to be responsive, flexible, and dedicated to learning. Through the technology of our database, we are able to store response data by individual contact within an account. Moreover, we are able to measure our effectiveness relative to cost and to results. The measurability tracks profits, investments, expenses, account penetration (or, “share of wallet”), problems, issues, complaints and satisfaction.
IDM is a systematic method of getting close to our customers. Using this tool we can integrate our channel contacts and media efforts through a common database which is focused on our target universe. Through testing we can validate results and expand our program and processes with great certainty.
The marketing database is mind of the IDM organization. It is serviced by a proactive outbound call center (or telemarketing unit) which becomes both a listening post to customers and the dealer channel as well as a way to leverage the field organization in building relationships and selling products. In the IDM model the marketing database is shared with the field organization, tour channel partners, and all internal departments.
The essence of a successful IDM process is to capture, centrally, information about our customers and prospects at all points of contact. The key to success then is how well the marketer can segment within a given target audience. It is critical in the B2B arena to segment on similar sets of unfulfilled needs and purchasing behavior. This allows us to understand our customers’ need and how they buy and then to market our products and services to these identified niches.
Once the segments have been identified (keeping in mind that the entire target universe may emerge as one large segment), the next step to take is to grade accounts within segments to ensure that the investment made is the least amount of money to strengthen the relationship with the particular account.
The grading model looks like this:
(Tracy, insert account contact matrix template from AP 2.1)
Grading is the economic modeling of the IDM efforts based upon an investment decision which takes into accounts the historical (actual)revenue and potential revenue from a particular segment of accounts. In other words, grading serves the marketer as an economic and analytical tool which requires that we invest in the major segments we have created proportional to their economic history and potential.
Integrated direct marketing works both as a stealth defensive weapon, as well as a highly leverageable marketing tool. The competitive advantage it affords the skilled executioner is proprietary and affords increasing , not decreasing, economic returns. The fundamental concepts we use in loyalty-focused IDM include:
1. Market to individuals … not to corporations
2. Address the unique set of needs of that buyer group (or application)
3. Individuals are clustered (i.e., segmented) around common sets of needs which define a market niche
4. All contacts with an individual, whether a customer or a prospect, must be of value as defined by them
5. The technology we use is transparent
6. Planning is critical
7. Testing is mandatory
8. Integration is the process used to ensure that the higher cost contacts are leveraged
9. Properly executed IDM is a continuous improvement process that profitably drives business strategy
10. The investment made is proportional to the level of commitment to us
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