What to consider when evaluating direct marketing for your business
What should your business spend on direct marketing, what type of success rate can you expect and what tools should use, such as direct mail, telemarketing or online?
Over the last two to three years, the use of direct marketing has increased by almost 20%. Much of this growth in use has been driven by the increasingly important role of the internet in direct marketing.
Almost three quarters of larger UK companies use direct marketing as a marketing communication tool. These larger businesses also spend a higher proportion of their marketing budget on direct marketing than most small businesses.
Probably around two thirds of direct marketing takes place in the business to business, or b2b market and one third of direct marketing is aimed at consumers.
What budget should I allow for direct marketing?
Research by the direct marketing industry shows that smaller businesses usually spend 0.5-1% of their turnover on direct marketing. So, if you business turnover is £500,000, you would typically expect to allocate between £2500 and £5000 for direct marketing activities.
The other way to decide what budget you should allocate to direct marketing, is as a proportion of your overall marketing spend. Most smaller businesses spend up to about 25% of their marketing budget on direct marketing, and larger businesses often spend a far higher proportion – up to half of their budget.
What direct marketing tools should I use?
The most common direct marketing tool is direct mail: sending promotional mailings to named individuals in the postal system. Direct mail accounts for about a quarter of the total amount UK businesses spend on direct marketing.
The next most popular direct marketing tool is online internet advertising primarily through the use of pay per click advertising and banner adverts. Other direct marketing tools which are used on a fairly frequent basis are magazine display adverts designed to generate a direct response, door drops to consumers’ homes, loose inserts in magazines and newspapers, and field marketing.
Telemarketing has decreased in popularity due to the increasing number of registrations with the Telephone Preference Service and Corporate Telephone Preference Service.
Newer emerging direct marketing methods include email marketing, which is overcoming initial concerns about the legality of its use by launching newer sources of double opt in email marketing lists. Also growing as a niche tool is mobile marketing, using SMS messaging to interact with consumers on their mobile phones.
Which direct marketing tools are the most effective?
Recent surveys of the sales generated by direct marketing show that nearly half of sales are generated by online sales from websites on the internet, and around 10% sales are generated by mail order and home shopping type direct marketing activities. The remainder of sales are generated by other direct marketing tools such as telemarketing and field marketing.
What direct marketing response rates can I expect?
Direct mail is by far the most popular direct marketing tool, accounting for around a quarter of all DM activity. Looking at the response rates from direct mail campaigns, it is generally accepted that you can expect typical response rates of 1-5% from your mailing.
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