Marketing Communications

426 CHAPTER 13 DIRECT MARKETING

As the roots of direct marketing lie in the mail order industry, many authors argue that the

real strength of direct marketing, as illustrated by mail order success stories, still relates to

what is called ‘transactional direct marketing’ or selling. The database compiled by companies

allows them to segment their target groups by needs and values and to maximise the prob-

ability of response. It also allows marketers to develop profiles of the most profitable customers,

and hence target new prospects more efficiently. This efficiency at transaction marketing is

what has driven marketing’s growth, and many marketers leave direct marketing at that

‘direct sales level’.^12

New financial services organisations and brands such as the European online bank Egg

(www.egg.co.uk) have been developed to function as direct sales businesses. Egg initially

started in the UK in 1998 and grew into the world’s largest pure online bank. Egg offers a

range of direct banking services including credit cards (bought by Barclays Bank in 2011),

savings, loans and mortgages. It also provides its customers with top-of-the-range online

banking facilities. Its products and services are specifically tailored to fit the direct marketing

medium, and they are simplified so that customers require less advice as part of the decision-

making process. This considerably improves response and conversion rates through building

consumer confidence. On the other hand, the new brand had to be independent and there-

fore could not leverage the heritage or awareness of its parent company. It had to build its own

customer base and generate awareness and trust on its own terms.^13 Egg won several awards

with its ‘What’s in it for me?’ campaign.^14

Sales or distribution support

Direct marketing can also be used to support the activities of the sales team, dealers or retailers.

Although the actual selling is done by intermediaries, direct marketing tries to prepare,

stimulate and facilitate sales. It can also be used to follow up sales. Direct marketing is also

often used to support personal sales. Sales visits are rather expensive, but a high frequency of

contacts has to be maintained or even increased because of the highly competitive market

environment. In this case direct marketing has a funnel function (see Figure 13.1). Reducing

a high number of potentials to a limited number of qualified prospects (to be visited by the

sales representative) is the main objective. Direct marketing will take over some of the sales

team’s tasks to reduce costs.^15

Figure 13.1 Direct marketing as a sales supporting tool

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