13 Reasons People Will Open Your Direct Mail

by Jessica Tsai

DMA07: At the Direct Marketing Association's annual conference, the secrets to reaching consumers in the real world.

CHICAGO -- No matter how quickly technology is pushing us toward a digital world, marketers continue to actively rely on direct mail. In fact, advertising spend on direct mail is second only to the money spent on television, according to a presentation by Robert Coen of Insider's Report here this week at DMA07, the Direct Marketing Association's annual conference. Customers, too, continue to enjoy receiving mail, according to experts at the conference. One of those experts, Nancy Harhut, managing director of relationship marketing at Hill, Holiday, a Boston-based communications agency, shared with attendees 13 tips for improving your direct mail campaign.

Studies of human psychology have uncovered various ways people act in automatic ways, Harhut told the audience. For instance, she said, if faced with an entryway on the left and right side, most people have a tendency to go right. Similarly, people have learned how to automatically recognize and respond to what they think is junk mail. Therefore by leveraging the reflexive impulses of human behavior, marketers can optimize their direct mail campaigns.

Here are Harhut's 13 tips about those reflexive impulses, how they can affect campaigns, and what you can do about them:

1. People respect authority: Make your mailings look professional, serious, and official -- whether through key phrases such as "important information enclosed," delivery by respected carriers like Western Union or FedEx, or even the use of high-quality envelopes.

2. People respect authority figures: Unsure of what to do, people tend to trust those who seem to know. Have quotes from famous figures endorsing your product, or simply have a famous client's name on the outside of the envelope -- both result in increased response rates.

3. People are naturally curious: Present your campaign in a unique way and customers will be attracted by its original presentation -- and, thus, interested in what's within.

4. People make very deliberate assumptions: The people that Harhut calls "gatekeepers" are those who filter each mailing before it reaches the intended recipient. They, like most people, can immediately recognize what seems to be junk mail. Marketers have to get past that barrier to entry by appearing important and relevant.
  • Make the mailing personalized.
  • If the mailing is a fulfillment request, be sure to note that clearly on the envelope.
  • Have an official-sounding sender or title, such as "Doctor John Smith," or even "From the
  • Office of the Director of Marketing."
5. People are inclined to touch things.

6. People are drawn to attractive keywords: The most enticing word to consumers is "free." Other words that make consumers feel like they're being introduced to something new include "introducing," "announcing," "finally," "now," etc.

7. When people say "no," it can really mean "tell me more": People often reject an offer because it doesn't solve their problems, but if after they say "no" you come back with a different approach, they may become interested.

8. People respond to compliance triggers: People have been trained to view certain things as signifying an automatic "yes," Harhut says. Coupons are often understood to provide savings whether or not the amount saved is specified. People like to understand why they are being asked to do something, but they don't always bother to listen to what comes after the word "because." Studies have shown that by simply hearing "because" after a request is often enough to stimulate a "yes," she says.

9. People are most interested in themselves: Present your campaign in terms of how the customer will benefit, not in terms of how you are helping them:

  • Tell them how to succeed.
  • Present them with an offer.
  • Flatter them.
  • Deliver good news.
  • Make them feel superior.
  • Tell them something that seems as if it were exclusively meant for them.

10. People make decisions based on both rational and emotional reasons: Appeal to the emotional and they may justify it with the rationality of your offer. They are also more likely to respond when trying to avoid pain, and the nuance is critical; as an example, "Are you losing customers?" is more effective than "Are you getting enough customers?"

11. People feel obligated: Give people a complimentary gift along with the message and many will feel obliged to give something in return.

12. People want what they can't have: People are often charged into action when they think something is "for a limited-time only," "expires soon," or is for just "the first 1,000 customers." In fact, when a limit is imposed on an offer, customers who were already inclined to buy are often compelled to buy more.

13. People do what people who are like them do: People are more likely to think they're missing out than revel in the fact that they are the maverick. Along with a campaign, present an extensive list of customers who have aligned with your company. Regardless of whether those clients are influential individually, the sheer volume can be enough to be convincing.

Honda chooses services model for database

by Ben Woodhead

HONDA Australia's motorcycle and outboard motor business will introduce its first fully fledged customer relationship management system under a contract with Salesforce.com.

The hosted system will replace Honda Australia Motorcycles and Power Equipment's existing Lotus Notes customer database and will be integrated with other technology such as its voice over internet protocol phone system.

The unit's IT manager, Craig Bassett, said the $350 million a year concern would install Salesforce for 40 users in December and eventually increase the number using the platform to 50.

"The major reason for looking at Salesforce was to be able to understand our customers better," Mr Bassett said.

"We had disparate, decentralised databases of customer information all over the company and Salesforce is an opportunity to centralise that.

"We'll be better able to serve our customers and market to them. There's no point trying to market an off-road mini-bike to a 60-year-old.

"We want to understand what a customer may be interested in depending on age, where they live, what their interests are, and we haven't be able to do that."

Mr Bassett said the unit looked at a number of customer relationship management alternatives over the past two years and it had not started out with a clear preference for either a hosted or on-premises system.

However, he said, many big-name vendors quickly priced themselves out of the equation and that a hosted system offered the best value for money.

"When we did a matrix of the costs involved in in-house versus outsourced system, Salesforce came out on top," he said.

"Not in all areas, but in most."

The unit awarded Salesforce. com the contract in July and has been working through requirements testing and proofs of concept for the past two months ahead of the December production rollout.

Integrator Sqware Peg is handling installation of the system.

''Everything Will Be Digital,'' Says Microsoft CEO

by Jessica Tsai

The Association of National Advertisers' "Masters of Marketing" Conference reveals insights about how to handle the industry's future: brand focus and maverick creativity will light the way.

PHOENIX -- The overall theme of this year's Association of National Advertisers (ANA) conference, bringing together 1,200 marketers and advertisers, centered on transformation. In the Web 2.0 era, technological advancements have forced the role of the marketer to change -- fast. One presenter after another regaled the audience with examples of how, with each new development, consumers have been ready for the next innovation and what they've come to expect from marketing -- and marketers.

In the conference's first session, Microsoft Chief Executive Officer Steve Ballmer envisioned a future in which, while watching the PGA championship game, he could communicate to his colleague, Microsoft founder Bill Gates simply by saying to the TV, "Hey, Bill, did you see that shot?" Voice recognition technology would pick that message up, GPS would locate Gates, and the Internet telephony wired into the system would connect a call and convey Ballmer's message. Bill would then respond, "Yeah, and did you notice it was a Nike ball?" Gates's reponse would trigger an interactive shopping interface to pop up on both their screens, allowing either of them, in real time, to purchase a set of similar golf balls through the TV.

Soon, according to Ballmer, "everything will be digital," and, in that world, there is no limit to innovation. Technology will provide boundless possibilities and the only thing marketers need to focus on is human talent. Customer insight will be bursting at the seams -- and the more marketers understand about manipulating that information, the more targeted, relevant, and effective their messages will be.

When technology becomes ubiquitous, the differentiator will be creativity. According to many of the ANA presenters, a strong, innovative, and creative strategy is, and will be, key to the future of brand success. Therefore, companies have to move past the handicap of being "overanalytical," said Bob Lachky, senior vice president of Anheuser-Busch, the St. Louis-based maker of Budweiser and other beers. "At some point you just have to go, 'Make room for creativity.... Nurture your mavericks.' "

And yet, amid all the changes in delivery media, companies must stay true to their brand, Lachky says. Focus on the meaning of the brand everyday, he told the audience, because if companies can't grasp that core message, marketers certainly can't expect consumers to. "Create your own characters," he added, and don't lose sight of them. For example, when you employ a celebrity to deliver your message, that star "must be subservient to your brand," he said.

Even for corporations with a strong identity, such as McDonald's, it is essential never to forget the premise of the brand. McDonald's has been experiencing a revival of late, with healthier food choices and increased focus on nutritional content, according to Mary Dillon, the company's chief marketing officer. The Oak Brook, Ill.-based fast-food chain currently serves an estimated 52 million customers daily worldwide and recently announced that it expects to surpass analyst predictions for third-quarter earnings (to be released on October 19), according to USAToday.com. But the company has suffered its share of bad times. "We took our eyes off the fries, so to speak," Dillon said, adding that the company had failed to execute on the basics, such as customer service, that were essential to the McDonald's brand.

Companies that have stayed true to their brand include Milwaukee-based motorcycle retailer Harley-Davidson, said Chuck Brymer, chief executive officer of DDB, a New York City-based advertising agency. The Harley-Davidson brand embodies the concept of personal freedom -- and by staying true to that central concept, the company has developed a following that "lives and breathes Harley," Brymer told the ANA audience.


Ten strategic technologies to watch in 2008

By Linda Tucci

Protecting the environment has become part of IT's job. Managing your organisation's metadata should be high on the IT agenda. But the Web -- and the new computing models it's spawned -- looms large on Gartner's list of 10 strategic technologies for 2008.

Strategic technologies, as defined by Gartner, are technologies that could disrupt IT or business in the next 18 to 36 months. They may require a large dollar investment and could cripple your organisation if adopted too late. In other words, these technologies carry a high potential to shake up your job, big time. Here's what should be on your radar now, with comments from Gartner analyst Carl Claunch:

Green IT. Here to stay. Regulations are multiplying and could constrain plans to build new data centres. Learn about potential compliance regulations and form an alternate strategy for adding data centres. Don't get on the wrong side of the boss, shareholders or marketing.

Many companies, from Dell to Sole Technology, a small maker of skateboard footwear, are touting Green IT as a component of the company mission. Make no mistake, the software that schedules which applications should run where will and must factor in server energy efficiency. In the meantime: "When you are at a peak period and using everything, you have no choice. During the times when you are not totally maxed out, turn off the ones that are the worst energy hogs," Claunch said.

Unified communications. Twenty percent of companies that used to rely on private branch exchange (PBX) have migrated to IP telephony. But the times, they are a'changin'.

More than 80% of companies are doing trials of IP telephony. In three years, a majority of companies will be using it, Gartner predicts. And no wonder, when even things like video security cameras have become digital, Claunch said. This is the first major change in voice communications since the digital PBX and cellular phone changes in the 1970s and 1980s.

Business process modelling. The imperative for 2008 for this perennial list maker is to bring enterprise architects, senior developers, process architects and process analysts together to jointly define top-level process services. The modelling goal is faster and highly flexible processes. Think Legos. If the business decides it wants to change how it charges for products for two months, IT should be able to get into the process, change it and change it back when required, Claunch said.

Metadata management. A jargon-rich discipline (or lack of discipline, unfortunately) that nonetheless is a critical technology going forward. "If your aim is to have the ability to re-hook the IT systems to rapidly support any change your business might make, then you're talking about connections you don't know in advance," Claunch said. You need clean and consistent data to do that. "Metadata management is part of the magic sauce to that."

Virtualisation 2.0. "This is a change in people's recognition of the scope of what virtualisation can do," Claunch said. Virtualisation is not just about shedding servers -- disaster recovery is a good example. Suddenly, putting in 10 backup machines for 10 production machines is a crude and expensive strategy.

Also just emerging, courtesy of virtualisation: A new distribution model for applications. "Instead of selling and shipping just the application to you, the software supplier might send you a virtual machine file that has everything, the OS and the application, pre-integrated," Claunch said. So less work for you, and the vendor doesn't have to test all the combinations. Cautions? Licensing issues have to be sorted out before pre-integrated applications become widespread. And you'll have to run herd on vendors to make sure patches are updated.

Mashup and composite applications. Web mashups will be the dominant model (80%) for creating composite enterprise applications by 2010. Why? They allow you to rapidly tailor the functionality you want in one place, without having to re-create the original, Claunch said.

Mashups will replace internal portals for employees, who now have to flip between applications to get what they need. Businesses will use mashups to talk to customers about their orders. "You get the tracking information from FedEx, the map from Google, stick in on the same page with your data and now what the customer sees is a picture of a little plane with her order," Claunch said. And the licensing issues here? "Once you make a service that is available and open and doesn't require registration, I think it will be difficult to talk about terms and conditions that are hidden in a contract five screens down."

Web platform and Web-oriented architecture (WOA). Forget the acronym, Claunch said. The idea is this: Software as a Service (SaaS) is forcing companies to evaluate where service-based delivery will add value from 2008 to 2010. Meanwhile, emerging Web platforms are offering service-based access to infrastructure, information, applications and business processes through Web-based "cloud computing" environments. Now is the time to look beyond SaaS and examine how Web platforms will change their business in three to five years.

Computing fabric. Five years ago, you bought a server. Inside there was one motherboard with a particular number of processors, some amount of memory and I/O connections. You got the mix the vendor built. You needed tons of memory and not much processor? Too bad. Blade servers helped. The next step in this progression, Gartner says, treats memory, processors and I/O cards as components in a pool, combining and recombining them into particular arrangements to suits the owner's needs. "You use the fabric to hook them anyway you want," Claunch said. "That's really a revolution."

For example, a large server can be created by combining 32 processors and a number of memory modules from the pool, operating together over the fabric to appear to an operating system as a single fixed server. The enabling technology is the switch that got fast enough to make it feasible. "It's things like InfiniBand" that make it possible, Claunch said.

Real World Web. The Real World Web delivers augmented reality as opposed to virtual reality, in real time, not before or after the fact. It gives tripping a whole new meaning. So, the GPS navigation unit, for example, gives real-time directions that react to events and movements. Now is the time to look for how to cash in on augmenting the world at the right time, place or situation.

Social software. The Web version of mob mentality, the collective conscious, "the wisdom of crowds" -- whatever you want to call it -- is coming to a workplace near you. Web 2.0 products such as wikis, RSS feeds and tagging will be used to communicate and foster collaboration in your company. Expect a shakeout as vendors big, small and just-born strive to deliver robust Web 2.0 offerings to business.


CRM's Future Will Look Nothing Like Its Past

At the Gartner CRM Summit, a distinguished industry analyst outlines (yet again) how companies have learned about -- but continue to struggle with -- the requirements of CRM.

by Colin Beasty

HOLLYWOOD, FLA. -- The CRM marketplace continues to benefit from a stronger economy and renewed attention to driving profitability -- and now, more than ever, chief executive officers are taking note, according to a leading industry analyst. As part of Gartner's annual CRM Summit here yesterday, that was the crux of the message from Scott Nelson, a vice president and distinguished analyst at the firm.

Citing recent Gartner research, Nelson said during his keynote presentation, "Why the Future of CRM Will Look Very Different from the Past," that 72 percent of CEOs stated that building better relationships with customers was the best way to increase revenue. "CRM is the result of the environment a company is operating in," he told the audience. "And thanks to the lessons learned from the past, most businesses' CRM practices are better because of it."

According to Nelson, whose speech had the familiar bent of past Summits, most businesses today have learned to focus their CRM initiatives in order to:
  • increase revenue;
  • cut costs;
  • drive brand awareness; and
  • improve customer loyalty.

Most businesses have learned--but not all, apparently. "I remember one financial services company that had spent close to $1 billion on their CRM project over the course of nearly a decade," Nelson said. "And they still hadn't determined which of these four areas they wanted to address first and foremost." (The arena most companies focus their CRM projects on, Nelson said, is in improving customer loyalty.)

Even as companies gain a better understanding of CRM and expand their expertise, many still have long way to go with their CRM initiatives, Nelson said. Some are still plagued by the problems that have bedeviled the market for years -- including an overabundance of options. "The [vendor] market is still a highly fragmented one," Nelson said, "and organizations are still struggling with many of the strategies and concepts."

But any company still disillusioned by failed CRM efforts had better get past them, Nelson said. Customers are driving the need for improved CRM strategies because the bar has been raised, thanks largely to well-known, innovative CRM practices. Nelson cited Amazon.com as an example: Consumers value its customization capabilities and now expect that level of personalization with other vendors they deal with. "Our customers use Amazon.com and compare us," Nelson said. "They know someone else can do it, so why can't we?"

However, as many who have tried CRM and failed realize, there are some caveats. "Many businesses are still product-driven organizations, and are struggling with making the transition to becoming a customer-driven organization. You can't just automate the front office without thinking about how it may bog down the back office," Nelson warned. If too much information comes in from different segments throughout an organization, he added, "you can bring the back office to a grinding halt."

To help organizations avoid this and other pitfalls, Nelson offered four principles for a successful customer-centric strategy:

  • Extend the breadth and depth of relationships.
  • Reduce delivery channel costs.
  • Reinforce the brand.
  • Focus on customer value and satisfaction.

Nelson also reiterated Gartner's half-decade-old "Eight Building Blocks of Customer Centricity," each of which, he said, is essential for organizations to have:

  • Customer Vision
  • Customer-Centric Strategies
  • Valued Customer Experience
  • Organizational Collaboration (among staff, partners, and suppliers)
  • Managing Customer Lifecycle Processes
  • Collecting and Distributing the Right Customer Information
  • Technology
  • Defining Internal and External Metrics for Success and Failure

The adoption of these eight building blocks helps determine where a company sits in the CRM maturity model, of which Nelson said there are five stages. The first stage of what Gartner calls its "Customer-Centric Generational Framework" includes companies that have no vision or customer-centric strategies, don't know the customer experience, collect only basic and fragmented information, and have very fragmented technology with weak functionality. These Stage One companies also are hindered by departmental silos and have little to no organizational collaboration or processes.

Most companies, according to Nelson, are right where they were a year ago -- and two years ago: between Stage Two and Stage Three. Companies mired there have initial productivity and visibility into their customer bases; isolated customer-centric strategies initiated from the bottom up; and minimal progress on developing customer-experience strategies. Also, these midlevel firms are noticing the first signs of organizational collaboration, starting to optimize processes for efficiency, launching team-based (and, unfortunately, fragmented) customer-information campaigns, and implementing technology (albeit with limited functionality).

The fifth and most advanced stage in Gartner's guide to customer centricity includes companies that have the following:

  • a value network enabled;
  • a value-based collaboration strategy for mutual benefit;
  • an understanding of a wider scope of the customer experience;
  • shared customer centricity with goal alignment;
  • end-to-end process optimization;
  • shared information and insight beyond the company; and
  • strong technology functionality implemented beyond the company to partners.

To reach that upper echelon of Gartner's customer-centric framework, Nelson told the crowd, it's critical that companies understand the most important aspect of CRM success: "It's about defining the business processes and strategies," he said. "Companies still struggle with their CRM initiatives because they struggle to identify and automate the customer processes, or [they] automate broken ones."

And, in the end, companies also need to understand technology's a proper place in the big picture, Nelson said. "You can do CRM without technology; you just need technology to scale it."