Direct marketing and relationships

VIEWPOINTDirect marketing and relationshipsAn opinion pieceSally Harridge-MarchOxford Brookes University,Oxford,UKAbstractPurpose –The purpose of this paper is to discuss the complementary effect of relationship marketing and direct marketing and outline the foundations of direct marketing that can be enhanced by relationship marketing principles.Design/methodology/approach –This is a personal viewpoint based on many years of working in,teaching and research of direct and relationship marketing.Findings –The paper finds that both disciplines of direct marketing and relationship marketing have something of value to the other.The combination of the two strategies can only be of value and benefit to both customers and organisations.Originality/value –The value of this paper is that it outlines the symbiotic strength of direct marketing and relationship marketing that allows contemporary marketers to utilise the best of both disciplines to establish and maintain strong relationships with their customersKeywords Direct marketing,Relationship marketingPaper type Viewpoint IntroductionDirect marketing has matured into an increasingly exact and complex science requiring knowledgeable and experienced practitioners.More and more marketers are convinced that they need to develop closer relationships with their customers in order to achieve behavioural loyalty.This paper explores the complementary effect of relationship marketing with direct marketing and draws attention to the foundations of direct marketing that can be enhanced by relationship marketing principles.Relationship marketingRelationship marketing is a term introduced by Berry (1983)that puts forward that marketers should move away from transactional marketing and build longer term relationships with their customers,focusing on building trust between buyer and seller so that loyalty develops.As a concept,there is little that can be faulted;after all,isn’t that what all businesses want,loyal customers with whom they want a long relationship?The idea of relationship marketing was developed by Gronroos (1994)whose opinion was that relationship marketing was all about identifying,establishing,maintaining,enhancing and,occasionally,terminating relationships with customers.The objective of such relationships,he suggested,is to give mutual benefit through the exchange and fulfilment of promises as well as communication.He went on to say that relationship marketing is the result of applying a set of processes involving interaction,communication,dialogue and value (Gronroos,2000).Over the last 20years,The current issue and full text archive of this journal is available at/1750-5933.htmDMIJ2,4192Direct Marketing:An International Journal Vol.2No.4,2008pp.192-198q Emerald Group Publishing Limited 1750-5933DOI 10.1108/17505930810931008relationship marketing has been espoused by many in the services and industrial arenas,where it is,perhaps,easier to developer longer term relationships.The acquisition,retention and nurturing of customer relationships is fundamental to an organisation engaging in relationship marketing.Nurturing the customer is a step along the path to invoking loyalty on the part of the customer.Loyalty is one of the objectives of relationship marketing because a loyal customer may be of strategic advantage to an organisation.Direct marketingDirect marketing has a much longer history,originating from organisations selling their products directly using a catalogue and mail-order.Much of the attraction of buying this way came from the credit facilities that such companies offered as well as the convenience of shopping from home and receiving one’s purchases through the mail.From these rather humble beginnings,direct marketing has metamorphosed into a complex science that involves collecting data on customers,storing transactional and behavioural information in a database,analysing the performance of various tactics and manipulating data to maximise the return on investment.Direct marketing and relationshipsJust because an organisation wants a relationship with a customer,it does not necessarily mean that the customer wants a relationship with the organisation. Marketers have to work hard at getting and keeping customers and working towards getting their loyalty.Direct marketing may be part of the strategy for doing this.Direct marketing has often been seen as a tool which enhances relationship building because it enables organisations to“get a response”from those targeted,thus establishing an exchange of views if not a full blown communication exchange.When customers do respond to an offer,their personal data can be collected.When this information is combined with that of other customers and is subsequently analysed,it can yield important knowledge that aids customer segmentation and targeting.. Profiles can be developed of“good”customers,so that organisations can replicate the success that they have had with one group of customers in another group.Direct marketing,like relationship marketing,involves both acquiring new customers and keeping those already gained.It has been claimed that organisations should have both acquisition and retention strategies in order to maintain the customer tterly,some organisations have upgraded their databases to include customer relationship management(CRM)programmes that enable them to combine data from different sources to reduce duplication and have a more holistic view of the customer from different perspectives.For example,a bank customer may provide data from account transactions,enquiries about different products,online banking information, payments or transfers between accounts and visits to branches.LoyaltyLoyalty includes both attitudinal and behavioural dimensions(East et al.,2000).The loyalty ladder(Christopher et al.,1991)helps marketers categorise their customers according to their level of behavioural loyalty.These customers represent a more attractive proposition to the marketer than the one-off transaction customer.The model of the ladder hasfive rungs;suspect,prospect,customer,client and advocate.The Direct marketing and relationships193concept of “supporter”was added to the ladder by McDonald and Christopher (2003).The higher the up the ladder the customer moves,the higher the level of loyalty they demonstrate.However,in transactional markets,for example consumer goods,it has been more difficult for marketers to develop relationship building strategies.O’Malley and Tynan (2000)report that marketers in such sectors almost ignored relationship marketinguntil the advent of database technologies which enabled direct marketing activities,customer relationship management and relationship marketing to take place.As a result,the term relationship marketing is often used as a catch-all phrase to describe direct marketing or database marketing (Tapp,2005).Online relationshipsIn the online environment,Davis et al.(1999)proposed the idea that retailers apply a trust building approach to consumer marketing relationships.Thus,relationships in the virtual world are moderated by the participants’ability to trust in each other.Thus relationship exchanges are now occurring in multiple dimensions (Cannon and Perrault,1999)and customers can utilise many channels through which they can communicate with organisations and through which organisations can direct messages and encourage responses.It is easy to see why some organisations might believe that because communication is made so easy with the advent of sophisticated technology,they do not have to think strategically about using direct marketing to kindle long-term relationships.However,writers such as Godin (1999)remind us that having a customer’s permission to contact them means that messages are likely to be better received.This is because customers not only expect to hear from the organisation to whom they have given communication permission,but also because they expect that the message will be both important and relevant to them.Because the message is relevant,expected and has value for the recipient,a positive response is more likely and a relationship can be started or enhanced.If an organisation that has received communication permission from a customer but continues to send them irrelevant messages,then the organisations runs the risk of alienating customers.In exchange for offering personal data and preferences,customers have the right to expect that messages will be relevant.If messages are not relevant and meaningful to individual customers,organisations run the risk of alienating the very people with whom they wished to develop a relationship.The basics of direct marketingNow it is even more important now to remember the basics of direct marketing when attempting to develop a relationship with a customer because of the alternative channels they can use.Customers expect the organisation to know about them,regardless of the channel they choose to access the organisation.The basics of direct marketing,long espoused by practitioners and theorists alike,are:.the development of a database;.personalisation;.strategic customer relationships;and.measurement of results.DMIJ 2,4194The databaseDirect marketing requires that the marketer collects relevant information.The information which an organisation stores about a customer should befit for the purpose intended.In other words,data should be up to date and error free.Getting the single customer view(SCV)from the numerous touch-points to which a customer has access is not simple(Lawson,2008)However,it is important because it does not inspire confidence in a customer to receive duplicate messages from an organisation,whether by mail,e-mail,mobile or telemarketing.Messages sent to customers need to be personalised in terms of the way they like to be addressed and the method used to communicate.Customers then feel that they have control over the way in which marketing messages are received.As a result,direct marketing can be seen to be less of an intrusion.The database can be used to tailor relevant communications as well as provide information for future profiling.It is also important not to betray customer trust by allowing data to be used by others.It is essential that data is kept safe and that privacy is not abused.Without confidence in security,customers may limit their communication with the organisation.The risk of fraud orfinancial abuse may also restrict customers from using transactional technology(Tsiasmes and Siomkos,2003).For this reason,a relationship may not develop if offline channels are not available. PersonalisationDigital printing and online facilities allow marketers to personalise products,pricing and promotions to match their customer needs.It is no longer necessary to bombard prospects with hundreds of offers(although my letter box and e-mail inbox denies this!).If an organisation has any kind of relationship with a customer,even if it is only one transaction,they know much about that customer that allows the personalisation of future communications.Previous purchases can act as a platform for the offer of similar or related products.Sophisticated analysis can yield suggested purchases derived from the buying behaviour of similar customers,as Amazon’s systems allow.Working on the principle that loyal customers are less likely to be price sensitive Amazon experimented unsuccessfully with personalizing prices,where loyal customers were offered higher prices than new customers(Cox,2001).Some customers believe that such dynamic pricing is illegal or at least should not be allowed (Alreck and Settle,2007).It is possible to personalise a price from analysis of previous purchases.At the very least,some customers think that it is unfair to loyal customers and boycott organisations that attempt price personalisation.Strategic customer relationshipsMost organisations will need both to keep their existing customers and acquire new ones.Acquisition and retention strategies need to work together and concurrently to maximise share of customer wallet and prevent customer churn.Loyalty-schemes may help to get behavioural loyalty in the short term but do not necessarily achieve combined attitudinal and behavioural loyalty.Just because a customer is habitually loyal it does not mean that they will not transfer their custom to another provider if triggered to do so.For this reason,organisations need to discover who their most important customers are and how they are going to keep anisations also need to know how those customers were recruited in thefirst place,thus allowing the Direct marketing and relationships195opportunity for the marketer to replicate their success by using the same approach for acquiring similar customers (Sargeant,2001)Satisfying these customers may not be enough,there may be more that an organisation needs to do to prevent them from leaving,such as allocating a named contact person,offering privilege access,special events,etc.for such customers so that transferring their business to a competitor becomes an emotional wrench for them.Measuring responseContemporary customer relationship management software can help marketing organisations analyse their success with campaigns.What works for one customer may not work for another,so testing different prices,offers and messages becomes easier with sophisticated analysis capability.In addition,measuring the profitability of a customer over time can help with retention strategies and point to opportunities for cross selling and up-selling.Measuring response builds into what we know about the customer and,hence,future campaigns can utilise response information to help predict revenue and profit levels.Knowing what customers respond to can help with computing allowable spend when designing customer acquisition strategy.The budget allowed for retaining customers can also benefit from analysis of what has worked well before.Marketers need to think about the most effective methods for achieving what they are setting out to do.While sending out e-mails may be of low cost,they may not generate the best level of response from customers.Similarly,mail-shots may generate a varying level of response.In other words,an organisation needs to compare and contrast the results from different media and tools to help them predict future response rates and thence determine the most effective and efficient way to achieve their objectives.ConclusionsDirect marketing today necessitates entering into and maintaining a relationship with a customer.Indeed,research conducted by Gyro International (2008)found that 83per cent of marketing directors questioned agreed they would be concentrating on existing customers during the current difficult economic environment.Getting and keeping loyal customers is an essential part of an organisation continuing in business when threatened by recession and will continue to be important when the economy recovers.The literature on direct marketing and relationship marketing has continued to converge over the last few years.Now,they share a symbiotic strength that allows contemporary marketers to utilise the best of both disciplines to establish and maintain strong relationships with their customers.There are many media and tools available to the marketer and these should be chosen with care so that the best results can be achieved.Marketers should not forget the basics of direct marketing when instigating a relationship as customers are individual people or organisations with individual needs that need to be addressed.Contemporary customers may be technology savvy but that does not necessarily mean that they wish to use technology to communicate with organisations.They may not wish to have any communication at all yet still remain loyal.As marketers,we have toDMIJ 2,4196form our strategies based on customer needs and collecting information on what those needs are is fundamental to marketing success.If organisations are“up front”about why they collect data and be willing to share that with customers,then customers are more likely to impart personal data (D’Arcangelo,2008).Seeking a customer’s permission to contact may benefit some organisations,but such permission should not be abused by sending irrelevant or untimely anisations should remember that personalisation is fundamental to relationships and direct marketing.They should use the information they have about customers to enhance a relationship.Failure to do so has negative outcomes.First,a competitor could open communications and steal customers who feel neglected by lack of relevant communication.Alternatively,customers may be alienated by irrelevant,impersonal messages and choose to retract communication permission.It may be that customers are tempted to defect to competitors.But,rather than accepting this as inevitable,direct marketers who adopt a relationship management approach realise that their disloyalty indicates that there is something wrong with the organisation(Gee et al.,2008).Inviting customers to recount their dissatisfaction and invite them to talk about what is prompting their imminent departure can be built into interactive tools and direct marketing messages.Prompting discussion allows the direct marketer to investigate and improve the problem area by,perhaps reviewing customer service or developing preferential pricing for loyal customers.Both disciplines of direct marketing and relationship marketing have something of value to the other.The combination of the two strategies can only be of value and benefit to both customers and organisations.ReferencesAlreck,P.L.and Settle,R.B.(2007),“Consumer reactions to online behavioural tracking and targeting”,Database Marketing and Customer Strategy Management,Vol.15No.1, pp.11-23.Berry,L.L.(1983),“Relationship marketing”,in Berry,L.L.,Shostack,G.L.and Upah,G.D.(Eds), Emerging Perspectives on Services Marketing,American Marketing Association,Chicago, IL,pp.25-8.Cannon,J.P.and Perrault,W.D.(1999),“Buyer-seller relationships in business markets”,Journal of Marketing Research,Vol.36,November,pp.439-60.Christopher,M.,Payne,A.and Ballantyne,D.(1991),Relationship Marketing,Butterworth Heinneman,Oxford.Cox,J.(2001),“Can differential prices be fair?”,Journal of Product and Brand Management, Vol.10No.5,pp.264-75.D’Arcangelo,G.(2008),“Give CRM Data back to the Customers?”,CRM2008Annual Buyers Guide,p.24.Davis,R.,Buchanan-Oliver,M.and Brodie,R.(1999),“Relationship Marketing in electronic commerce environments”,Journal of Information Technology,Vol.14,pp.319-31. 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