What are direct marketing and interactive marketing? 569
Direct marketing: a new definition
For a more recent definition than Stan Rapp’s,
we turn to my book Direct and Database Market-
ing(1997):
Direct marketing is the process in which individ-
ual customers’ responses and transactions 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.This definition is at once broader and narrower
than that of Stan Rapp. It is broader in the sense
that it applies to any kind of business capable of
recognizing individual transactions with its
customers. It is narrower to the extent that it is
confined to a specific business process.
Could this more recent definition also be
applied to e-commerce? Let’s take it apart to
see.
Direct marketing is the process in which individ-
ual customers’ responses and transactions are
recorded.As with Rapp’s definition, mine does not specify
the media through which customers’ responses
and transactions are invited or received. In fact,
a customer might spot a bargain on a website,
make further enquiries by telephone and com-
plete the transaction at a dealership. If the item
purchased were a second-hand car, such a
scenario would be very likely.
In the definition, customers’ responses are
recorded. If the car dealership did not bother to
do this, then the process would not qualify as
direct marketing. On the other hand, the form of
response is not specified – for example, the data
could include clickstream data as readily as
phone calls or posted coupons.
... and the data used to inform the targeting,
execution and control of actions...
Note that the definition does not specify any
interval between recording the data and using
them. It may often apply to data stored on a
customer database and used months later (as in
the Tesco Clubcard example), but it can equally
apply to data used in real time during a
telephone call or website visit.
In fact, the use of profile, preference and
purchase data in real time was pioneered in call
centre software before the WorldWide Web was
used for marketing. An early example was (and
still is) car insurance quotations. The quote
given to the caller is driven by the answers to
scripted questions. A later example is add-on
offers triggered by home shopping orders (e.g.
matching accessories). In this case, no questions
are asked to prompt the offer – it is driven by the
content of the customer’s order.
Again, the nature of the actions is not
specified – they could include: restricting a mailed invitation to the best
customers;
targeting new customers who match the profile
of the best-established customers; or
personalizing a website to make relevant offers
to previous visitors.The purpose of the actions is clearly specified:... that are designed to start, develop and
prolong profitable customer relationships.
This part of the definition excludes no business
with expectations of success. However, the idea
that customer data collection and analysis are
the key to success was peculiar to direct
marketing – although management consultan-
cies and customer relationship management
(CRM) software vendors now also claim owner-
ship of it.Direct marketing and Pareto’s principle
If Thomas Jefferson (... all men are created equal)
was the hero of mass marketing, Vilfredo Pareto
is the hero of direct marketing. Pareto’s principle
(of the distribution of incomes) was that 80 per