The Direct Approach: Going beyond ROI

With customers being offered more ways to access information about brands, the time has now come for direct marketing to step up its game.

We are an industry obsessed with ROI, a term that originated in accountancy but one we have now made our own. A blunt instrument we wield to show a campaign has worked. Not for us the brand-building nonsense of our advertising cousins; we can show sales. And as "crunch" turns into "downturn" and then "recession", this short-termism will become evermore prevalent.

Whatever happened to conversations about building the customer life time value? Whatever happened to shareholder value? Perhaps we have become an extension of the client's sales department and forgotten we are in the communications business.

Let's be clear: measurability and accountability are paramount. But surely they should be the starting point?

We now live in a brave new world of instant communication, with access to unparalleled levels of information and a multi-networked society. We have moved from the days of consumer power being limited to Which? magazine and BBC Watchdog. Now we have the instant power of the blog, Trip Advisor, Top Table, Amazon reviews, eBay ratings, search engines, Google and more. With access to such feedback, who will consumers trust more: the marketing and brand messages, or the easy-to-find user experience?

Now should be the time that we become as obsessed with the 99 per cent who don't respond to our communications, as we are with the 1 per cent who do.

As an industry, we have poured hours and money into driving higher short-term response. Better targeting, segmentation models, propensity models, churn prediction models and one-to-one targeting are all admirable and, no doubt, scientific stuff. But what have they led to? Acceptable campaign ROI, for sure; maintenance of response rates, no doubt. But has it delivered true consumer engagement? What of our recommendation rates, advocacy levels, product reviews and brand saliency measures? We should be as obsessed with these as we are with response rates.

Advertising has educated clients to accept that their campaigns take time to build, that it takes a certain level of frequency or exposure before a consumer can recall the communication. We, on the other hand, have educated clients that we are one-hit heroes, delivering our campaign objectives with a single strike. This will come back to haunt us now that consumers have so many more access points to a brand than our single communication.

The Royal Mail has undertaken a number of studies into the medium. It has looked to understand the ritual of receiving, opening and reading mail, and even analysed in which rooms in the house post is read, stored or binned. Mail that needs actioning ends up in the kitchen, with more engaging items ending up in areas of relaxation like the lounge. A lot of mail not only lingers for a while, adorning fridges and notice boards, but is also passed on to friends and family. Despite our careful targeting, not all is opened by the recipient, with 8 per cent of men claiming their partners open their mail. Somehow, they also managed to ascertain that people who don't throw away direct mail spend up to four minutes and 32 seconds reading it (compared with less than four minutes reading a utility bill), and 20 per cent retain it for review or action at a later date.

We have also discovered similar effects with e-mail. In a surprising result, we found that response, purchase and click-through can take up to 90 days.

All this means that we do have a much greater opportunity to drive consumer engagement than we talk about or previously understood. Royal Mail proved this in further studies with Dunnhumby and a number of FMCG brands. They found that while, in the short term, a campaign could deliver an ROI of more than 30 per cent, this increased to more than 70 per cent over the long term.

How should we be delivering this engagement? Obviously, we should consider how we distribute the message and how often. But the point is that we should consider the initial point of response of the campaign as the starting point.

The bigger task is how to measure how well we are engaging the non- responders and what we need to do to convert them. Direct communications need to take account of a longer-term strategy in which different direct channels converge to build a broader conversation beyond the 1 per cent. Ideally, we would begin to be able to gauge who needs what level of communication to convert, as well as who are more likely to become advocates and so are also worth investing in.

Fuelling advocacy is becoming a channel in itself - word of mouth or C2C (consumer to consumer). Target the right product at well-connected, socially gregarious people and these same people will do the rest. This is something we have trialled for clients and have seen recommended sales anywhere from eight to 30 times, dependent on product. Which, of course, then fuels its own further advocacy. Perhaps this is the true measure of engagement. But what value did we attribute to the first sale made to the advocate - that of the additional 30 sales or just that single one?

This isn't just about acquisition. Working across a broad variety of service industries, we have seen our role develop to manage customer journeys. We help to deliver real moments of brand truth right from the post sale, through ongoing customer management and development and on to retention and loyalty.

In this way, a customer-centric, highly personalised CRM strategy could become the core brand thought, leading to increased advocacy.

We understand customers better, through data interrogation and insight, and have access to the right channels to deliver the necessary engaging communications.

The true measure for the direct marketing industry should, therefore, not be just about short-term campaign ROI. We owe it to our clients to think bigger and be more responsible. We owe it to them to champion long-term customer value.

- Gavin Wheeler is the managing director of WDMP.