In 2012, Jason Handman tried to make a point about customer segmentation by telling a story about his aunt. She was a nurse and she worked for a medical insurance company in the late 1960’s. Her job was to send out letters to her patients, telling them who to contact with claims about hospital stays and doctors’ bills.
This was way before online platforms like La Piazza existed and long before the internet on which such platforms operated existed too. It was a very direct marketing form back then, one he says worked really well to reach targeted customers. The only problem was that by 2012 it was not working at all. The letters were sent for many years, but it did not work with patients that had changed addresses. And in 2013 they actually canceled the practice of sending direct marketing letters altogether.
Today, Handman’s nephew works for one of the largest direct marketing companies in the country. He tells a story about another person who works in direct marketing who tells him that not only do direct marketers lose most of the time to other forms of marketing, but if they do win, it is not usually with the consumer who is the most profitable.
The Direct Marketing Phenomenon Today
We live in an age where companies from any sector of the economy can spend enormous sums of money trying to be found, purchased, and sold. For the most part, consumers don’t understand why they have to do any of these things to earn money. In 2012, 67% of consumers said they did not like direct marketing, with only 32% saying they liked it. That’s a serious problem when direct marketing is not working.
Will Direct Marketing Work in the Future?
If you take a look at advertising spending by country, it’s easy to see why it doesn’t work today. For instance, the U.S. is spending far more advertising dollars than anyone else to get attention. It works because advertising is relatively cheap and companies from all industries can spend the money to compete. Finding something like a pair of Simply Whispers titanium earrings is as easy as a search engine query, which will lead you to the best deals, ideally from the original supplier. The entire rest of the world spends very little to reach their consumers and therefore doesn’t win much of the time.
Direct marketing is actually still quite effective in a nation where we spend all this money on advertising. You can click here for tools and services to follow-up on your leads in a professional manner. But it does not work so well in the rest of the world, where spending money on advertising is still seen as important and there is a lot more competition. So if direct marketing does work in the future, it will be far from everywhere. Most of the places where it has worked so well in the past are already facing massive competition and the winners will get kicked out of the direct marketing game by more competitive companies.
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