You might think that direct marketing is fairly straightforward.
You just design a marketing piece and blast it out to a contact database, right?
That's a fine approach for amateurs but the pros have taken it to a level of sophistication that would surprise most mere mortals.
Using sophisticated contact optimization algorithms, high-volume direct marketers feed their customer, geographic, product and predictive data into advanced mathematical models. These models evaluate the financial impact of all of the possible permutations, literally millions of them in some cases, for contacting prospects across channels and product offers over time. The outputs from this complex analysis define who should receive what direct marketing contacts when.
The primary objective of contact optimization is to maximize revenues and profitability from direct marketing (or whatever optimize whatever metrics are most important to the marketer – for many, it's not just about revenue and profits). This involves determining the best messages for each individual customer. The approach takes into account a wide variety of business rules and direct marketing best practices. It also recognizes that the more direct marketing messages a contact receives, the less likely that they are to respond.
The outputs from this exercise are impressive, almost magic-like. For example, contact optimization software might determine that a customer with Profile X will respond best if presented with Message A, Message B and Message C in that sequence, whereas a customer with Profile Y will respond best if presented with a different sequence: Message C, Message B, then Message A. Applying this simple discovery to a very large direct marketing dataset can result in tens of millions of additional dollars in revenues for catalogers or credit card companies who are sending out millions of pieces of direct mail.
The leading software company in this space is a firm called Alterian, which has what is arguably the most advanced direct marketing contact optimization software. Peak behind the curtain of the largest direct marketing companies in the country and you'll find most are tapping into the power of Alterian's enterprise marketing software solutions.
If you run direct marketing for a large company, it's imperative that you invest in contact optimization software. If you don't, you'll wake up one morning realizing that your competitors have used contact optimization to dramatically outperform you and steal your market share.
Even smaller firms, companies that may not be able to afford to invest in sophisticated contact optimization software, can benefit from the concept of contact optimization.
The basic idea is to never treat your direct marketing database as one mass of contacts. You need to switch from a product-centric direct marketing approach to a customer-centric direct marketing approach. Take a systematic approach to direct marketing campaigns with an eye to refining your techniques to maximize the results – move away from mass blasting and you'll be amazed at how your results improve.