First floor marketing

Ravi Shankar
National Business Head, Stakeholder Management - NFO India

With cost of communication and marketing being so high nowadays, it is wise to get your prospective customer in your sight before shooting. Finding your prospective customer is more than half the battle won.
Direct marketing to prospects has paid dividends as it costs much lesser than addressing a large number of customers. Most organisations however, have resorted to mass mailing to a large database of prospects hoping that some of them would respond and then focusing on those to sell their product or service.
This has often proved to be expensive. The problem is in the databases used by organisations, which are procured from a variety of sources and used without filtering them. As a result of which mailing costs are huge. With mailing and courier costs and production costs skyrocketing, organisations end up wasting a lot of their valuable resources. They have also reconciled themselves with low level of responses and justify this as industry standard.
Which brings us to the matter of first locating the customer and then shooting our marketing package at him rather than carpet-bombing geographical areas where they are believed to exist. How does one fine-tune the focus on the prospects?
Organisations would be better off building customised databases from existing databases until they arrive at "hot prospect lists". This will not only help in increasing the "hit rate" but will help organisations make a more attractive delivery of their product/ service.
For example many organisations constantly target residents of posh colonies in metros assuming that high net worth individuals reside in such colonies. They do. But there is a small catch to this.
It has often been seen that in many of the posh localities in metros built several decades back, the owner generally resides on the ground floor and enjoys the use of the driveway and the front lawn and the kitchen garden. The landlord as he is referred to, will in many cases be, a retiree who built his house many years back when he settled in the city. Today he has rented out the "first-floor" to a company executive who pays a huge rent to live in a good locality. The landlord downstairs lives off the rent paid by his first-floor tenant.
In these cases the company executive living on the first floor has the higher propensity to spend on new durables, credit cards, investment instruments, holidays abroad, new cars etc. The retiree landlord is happy shoring up his bank account for some future medical expense and gifts for his children and grandchildren and investing in safety bonds.
Most companies using databases of residents in these posh localities send mailers to everyone who lives there. In effect many companies are sure to have 50 per cent wastage. While they might be looking for the "first-floor" executive they are sending mailers to retirees as well for the same product.
The profile and lifestyle of both types of residents are totally different. Why then are most companies wasting their resources?
This is just a case to make a point. There are several such examples of "how not to do" direct marketing!! It defeats the whole purpose. Some of the best global marketing organisations still go wrong on this front, ending up making the Postal department, courier companies and printers richer and still not reaching the prospect.
There's another example of an executive who uses a credit card from an MNC Bank for the past 5 years. He has received at least 40 mailers from the same bank imploring him to use their card. Apart from wasting their monies they have also indicated repeatedly to their customer that they do not know he exists!
Therefore cleaning up databases regularly, de-duplicating them and better still building on one's own hot prospect list from various databases would be the most prudent thing to do. Not only does it cut mailing costs - the money saved could be pumped into improving the delivery package. Instead of sending an impersonal mailer the monies saved could be used for a personal visit by a representative or sending something more attractive that induces him to open it and browse through it. Other wise mailers would still be one of the biggest contributors to the recycled paper industry!
Cigarette and liquor companies have used this method of building databases by the referral method effectively to reach out to hot prospects. This has helped them increase the impact of any direct marketing activity, as they are able to deliver a higher cost package that is more attractive to the prospect.
Custom built databases need constant updating and a dedicated team of people who sift through the data and weed out redundant prospects. This is the area that companies need to invest in. The impact and conversion rate is generally much higher in personalised marketing efforts and more innovative contacts. This can only be done when one focuses on almost every customer or every set of customers separately.
Prospecting is one activity, which most companies still invest in, in their quest for sales numbers. The area that is still largely ignored in their marketing efforts is the existing customer. Very few companies keep in touch with their current customer base. Either because they just don't care or have forgotten to maintain a database of their customers. It beats all logic but that is why the gentleman already having a credit card still receives mailers from the same bank for the same product!
Much of this problem can only be solved with quality manpower working on the database. Data entry operators or standard software cannot change this situation. People with good knowledge of geography, demographics and psychographics of the market need to be browsing through prospect lists to take a call on each of them to improve the success rate.
There's a huge opportunity for direct marketing organisations to generate and sell
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