Real-World Customer acquisition practices for Multichannel Direct Marketer.

Internet marketing is hot and email marketing is on fire, but professionals who track new customer return on investment (ROI) still concentrate most on direct mail. These and other survey results are in the second edition of the Direct Marketing Association’s (DMA) newly released “Customer Prospecting and Retention Report.”

The DMA report builds on its 2005 predecessor by comparing and contrasting previous data with new results, while adding relevant information about how marketers are reaching, converting, and retaining customers in today’s multichannel marketing environment. For example, new in this edition, DMA broadened the study of database management, and especially customer marketing databases.

“Direct marketers cannot thrive without a thorough comprehension of how to best use all of their available resources — including financial, technical, and personnel — in their efforts to acquire new customers, convert them into repeat purchasers, and then retain them as loyal, lifetime customers,” said Anne B. Frankel, DMA senior research manager. “The aim of our ‘Customer Prospecting and Retention Report’ is to provide a body of knowledge of what techniques are now being used to further those all-important marketing goals.”

“Reaching, converting, and retaining customers is the lifeblood of any company,” said David Shepard, president of David Shepard Associates, who partnered with DMA on this report. “This study examines how client-based companies go about the business of budgeting, new customer acquisition, retention, loyalty, modeling, segmentation, testing, and database management. Plus, reflecting today’s multichannel climate, this second edition explores up-to-the-minute practices by segmenting survey respondents according to their use of the most advanced marketing tools, such as testing, predictive modeling, segmentation, and customer segment managers.”

The DMA study allows members of the direct marketing community to benchmark their performance with survey results that are broken down by type and size of firm. The results provide an up-to-date snapshot of how companies engaged in direct marketing are managing key tasks such as customer acquisition, promotion and retention, media channels and operations, and budgeting.

Most findings are analyzed by three categories: overall respondents, primary market, and revenue.

The report’s key findings include:

· 54 percent indicate that they consider lifetime value in their marketing decisions.

· Less than half (43 percent) of those surveyed have a loyalty/rewards program in place; of this group, 47 percent say that it is a very or somewhat important in keeping a customer.

· When asked about the importance of a variety of factors in contributing to their overall marketing success, 46 percent of direct marketing professionals rated testing and tracking results and performance as “very important” (with an overall mean rating of 4 on a scale of 1 to 5), closely followed by access to new prospect names (37 percent, with an overall mean rating of 3.8).

· About 35 percent of all those using direct mail track both response and value at the key code level. Another 31 percent track both response and value at the campaign level. The other direct mail users track just response (30 percent) either at a key code or campaign level.

· 56 percent of the respondents have developed proprietary prospecting databases, abandoning the old practice of renting names for one-time use and the usual (and repetitive) merge-purge routine.

· When asked how much testing they do by channel, respondents rated email, vertical lists, and compiled lists near a 3 (using a 1-to-5 scale, where “1” means no testing and “5” means extensive testing).

· Offer and creative continue to be the most tested new customer acquisition package elements. On the strategy side, only offer and creative scored above a 3 (on a 5-point scale), while frequency of contact scored a 2.7.

· About 43 percent of those surveyed test the old fashioned way — i.e., one variable at a time.

· About 52 percent of those who use household level models rated them as effective (a “4” or “5” on a 5-point scale).

· 38 percent of those using models scored ZIP Code models as being very or somewhat effective (a “4” or “5” on the scale where “1” is not effective and “5” is very effective).

· Among the companies that employ statistical models, 52 percent have an internal modeling staff.

DMA conducted the survey from April to July, recruiting 441 respondents via email and other online sources. Of that number, 253 direct marketers completed the entire questionnaire.

For more information at http://www.the-dma.org>