DM Comment

But just because CRM is suffering growing pains, it would be naive to assume that everything in the DM garden is rosy.

The arguments for DM are convincing in theory, but in reality many practitioners are disappointed. And not just for those making their first tentative steps into the arena, either. Large organisations are also discovering that direct marketing is not the universal panacea that they hoped it would be.

There are many reasons for this discontent and they vary by industry and nature of business. I won\'t pretend to be able to identify all of them, but I can offer a few observations that may help match our expectations of direct marketing to reality.

As usual, many of the problems are of the industry\'s own making. In some cases, expectations haven\'t been properly managed and the benefits have been over-sold. The key attributes of measurability and accountability are a good example of this. Especially now, as shareholders and senior executives demand ever-increasing accountability from all aspects of their marketing activity.

Too often, accountability is interpreted solely as return on investment (ROI), cost per customer or your choice from a range of key performance indicators. Often, these are viewed purely on a short-term campaign-by-campaign basis, which results in an overly cautious, numbers-orientated approach and gives rise to an aversion to risk and testing.

This already unpromising situation can be worsened by the failure to manage expectations. There are still some DM advocates who continue to propagate the idea that success is all down to some \'black art\' and that response rates and success can be plucked out of the air without thorough preparation and insight. The truth is that effective direct marketing remains a mix of the creative art, science and a liberal investment of time.

And investment is the right word. DM rarely yields great dividends in the short term because this is the period during which strategies are tested and knowledge is gathered, developing the platform for new campaigns and future growth.

Yes, we can make good assumptions based on previous experience, knowledge of the marketplace, observing competitors and running research groups. But they remain assumptions or best guesses and are often the reasons behind crushed expectations and an attitude that views direct marketing as a short-term tactical tool. The reality is that there is no substitute for a comprehensive testing programme to identify what works as well as what doesn\'t.

It\'s a truism to say that the worst outcome of a direct marketing campaign is that \'it failed to deliver the results, but you don\'t know why\'. In fact, it\'s equally true if the campaign works - but you still don\'t know why.

Without knowing why it worked the first time, you can\'t hope to repeat it. Conversely, understanding why a campaign has failed allows you to ensure that those factors aren\'t repeated in the future. Successful direct marketing is as much about eliminating wastage as it is about exploiting success. Above all, its great benefit is that it allows you to build ever more detailed knowledge of your marketplace.

However, the perennial challenges remain. We want successful campaigns and we want them now. But how do you measure success? Well it\'s not just the numbers. They\'re important, but they\'re only one aspect of the evaluation process. And as your tax inspector will tell you, there\'s more to a spreadsheet than the bottom line.

So rather than pure ROI myopia, campaign analysis must place more emphasis on \'soft\' measurements that can be added to the ever expanding and increasingly valuable knowledge base. Like stock market investors, Direct Marketers need to learn to think long-term. The most successful direct marketing businesses like Dell, Tesco and Capital One understand this and that\'s why they consistently demonstrate improving growth.

Planning and managing expectations aren\'t the only factors. DM is a technical discipline and one that\'s constantly developing and changing. It is vital that client and agency marketers invest time and money in training - at all levels. Most junior and middle level marketing managers work to short-term objectives - they\'re not encouraged to lift their heads and look at the bigger picture. Perhaps, given their average job tenure, that\'s no surprise, but it contributes to a culture of short-term thinking and risk aversion.

So if this strikes a chord in people in CRM right now, don\'t worry - we\'ve been there!