The Marketing Book 5th Edition

Response

Measurement

Continuity

...Customers’responses are recorded

...and the

dataused to

inform actions...

...Designed to start and prolong

customer relationships

What are direct marketing and interactive marketing? 577

required is a history of the customer’s transac-
tions. Often this will be summarized, showing
us little more than the value of each transaction,
the product or the merchandise category and
when it occurred.
Without this minimum amount of informa-
tion, we cannot practise efficient direct market-
ing because:

Direct marketing is the process in which...

individual customers’ responses and transac-

tions are recorded... and the data used to

inform the targeting, execution and control of

actions... that are designed to start, develop

and prolong profitable customer relationships.

Figure 22.3 makes the point graphically.
The components of response, measure-
ment and continuity are common to all good
direct marketing activity:

 Response. A response is needed to acquire a
customer and to begin compiling data relating
to that customer. It is very unusual to hear of
a direct marketing initiative that does not have
response as a key stage in the communication
programme.

 Measurement. This has always been central to

direct marketing. Before cheap computing

power became available, it was already possible

to record and measure the immediate results

of marketing expenditures. Reply coupons and

telephone numbers included codes to identify

the source of responses. Cost per response

(CPR) and cost per sale (CPS) were and still

are useful measures. Now measurement is

extended to individual customers’ activity.

Because each customer is identified, their

buying behaviour can be tracked over time.

This enables the eventual return on marketing

investments to be measured and forecasting to

be improved.

 Continuity. This is the aim of every competent

direct marketer who seeks to maximize the

gearing on the customer acquisition investment

by doing more business with the customer for

a longer period.

The customer marketing database

An electronic library is needed to receive fresh

data, keep them and make them accessible to

maintain the continuous learning loop that

characterizes direct marketing.

This is the customer marketing database

system (Figure 22.4). It brings together informa-

tion from a variety of sources and links the

information to customers.

The database enables marketing costs to be

reduced. This is achieved through using infor-

mation derived from:

 the cost, number and value of new customers

obtained by source;

 the results of contacts with established

customers.

For example, it may cost twice as much to
acquire customers from advertising in The
Economistas in The Times. But the database may
reveal that Economistreaders buy more and stay
longer, making them more profitable.
More business per customer is achieved
through using customer purchase histories,
Figure 22.3 The process of direct marketing leading to: