Traditional DM Slowly Closes the Gap

Nearly every summer, I have the honor (and the very great pleasure) of spending a few days with a small, very elite group of some of the top direct marketers in the country; the old school, envelopes, inserts, labels-and-stickers kind. All are clients of the legendary Jim Perdiew, a DM consultant with a waiting list for wannabe clients. As one member of the group whispered to me the other day, “I’ve never gone through a tougher interview in my life than the one when I was trying to get Jim to take me on as a client.”

Jim’s been getting his clients together for an annual retreat for a few years now. He invited me for the first time in 2003. My job was to wake the group up to the possibilities of e-mail, something virtually none of these 45-odd marketers at some of the country’s major marketing firms, insurers, financial institutions, and database companies were doing back then.

They didn’t particularly want to, either. Back then, e-mail was firmly outside their comfort zone. The fact I returned a year later to nail home pointers about spam didn’t spark much bandwagon enthusiasm, either. Yet this really smart group of marketers warmly welcomed me into a coterie Jim likes to call his Bohemian Club. Still, there was a lingering feeling of being That Internet Chick.

I missed the gathering last summer (blame ClickZ’s baby boomlet), so I really looked forward to seeing my DM friends again this week. And what a difference two years has made. Virtually everyone in the group is now pretty deeply involved in e-mail marketing. I spent the three days in Seattle marveling at their very different approaches to the medium, and the very different levels of sophistication between these traditional marketers and the all-online, all-the-time world so many of us (myself included) have come to inhabit.

Oh, and please let me be the first to admit that while I’ve got years of marketing experience under my belt (traditional and interactive), I’ve never walked so much as a block in a traditional DMer’s shoes. So I learn a lot from them, too.

A real schism occurs for these traditional DMers between online and snail mail. “When direct mail pieces don’t contain a URL, customers complain,” was a broadly affirmed fact. Still, Jim strongly advises retailer clients against using anything in a physical mail piece to drive recipients to “the competitive Web world.”

Online, he argues, competitors can charge less, sell tax free, or promise speedier delivery. “You don’t want to get involved in a war even if you know you’re going to win because there will be casualties. You don’t want to encourage your customers to go online because there will be casualties,” Jim warned.

“As soon as we deviate off [traditional direct marketing], we lose sales,” he said. “Nobody I’m aware of has adapted to that diminution of sales.”

To back this up, case studies in which e-mail was pitted against snail-mail were shared. In virtually every case of head-to-head, same offer competitions, e-mail was the hands-down loser in terms of response, often by as much as 65 percent. “You can’t beat even a bad snail-mail with an e-mail,” warned Jim.

I’ve got no quibble with the response rate issue, stunning as it is. Nevertheless, I’d still like to see a ROI analysis of two campaigns. I’m not saying e-mail would win, but am willing to bet the margin would be a lot smaller.

I heard some pretty radical stories about list management. Vinesse.com, an online wine retailer, worried about what the company calls “passive unsubscribes,” a term they used to refer to the 17 percent of their list who haven’t opened or responded to an e-mail in six months. All those names were unceremoniously slashed from the list. Boom! Orders and revenue shot up. In retrospect, the company says they’d now first send a warning or “confirm your interest” message before simply dumping the data — just what I was about to suggest.

While the group’s more than gotten its feet wet in e-mail, there’s a very low level of knowledge of or integration with other online marketing channels and tools. Transactional e-mails are very much favored over landing pages, but none of the people I spoke with were aware of click-to-call or similar enabling technologies. The group discussed segmenting messages to reach different online audiences, but awareness of behavioral targeting is all but nonexistent. There was a lot of talk about persuasion, but again, low awareness of creating personas, a tactic just as adaptable to offline as on-.

Yet just talk to this group on the consumer level. It’s all Web, all the time. When George Silverman, speaking on WOM, asked the audience to recommend favorite products and services, the dot-coms started to fly. After a while, George was obliged to ask if they could recommend anything offline. This year, I was far from the only person in the room hunched over a laptop or BlackBerry during sessions. If these DMers have been slow to make real inroads into interactive, as consumers they’re all over the Web.

What’s interesting is to what extent online is segregated from the broader marketing process. Only three or four of the 45 or so DMers say they’ve conducted usability studies in the past year. With one exception, none have ever used the Web to listen to chatter about their company or brand, nor searched for their company or brand names. Most have Web sites, yet nearly all are unfamiliar with even the basics of SEO.

“We decided not to optimize our site for search,” the owner of one newly-launched online business told me. He wasn’t kidding. I looked; the site doesn’t even have meta tags. Instead, he’s going the e-mail and banner ad route. While the clickthrough rate is an astonishingly good 3.5 percent, conversions hover just a hairsbreadth above zero. Sure, there are huge landing page issues. But no search visibility means the consumer must convert the first time she clicks. There’s virtually no way she’ll ever find her way back to the site.

It’s always dangerous when marketing disciplines are siloed. I applaud this group for getting into e-mail up to their elbows after so much resistance just a few short years ago. Still, I wished I could give them a crash course in other aspect of online marketing: viral, RSS, SEO, SEM, landing pages, optimization. But you know what? We online marketers could learn a few lessons from old school DMers, too.