Direct marketing is a sometimes controversial sales method through which advertisers approach potential customers directly with products or services. The most common forms of direct marketing are telephone sales, solicited or unsolicited emails, and mailed catalogs, leaflets, brochures and coupons. In most cases, the goal is to inform customers of products or services that they may need without waiting for customers to initiate contact. Particularly online, the practice has received a lot of criticism when it comes to personal privacy and data tracking. The practice is nevertheless very successful, however, which motivates many marketers to continue despite the possible risks and downsides.
Importance of Databasing and Profiling
In order to be successful in direct marketing, companies usually have to compile large databases of personal information about potential customers and clients. These databases are often sold to or shared with other marketing conglomerates. Most databases are computerized, which makes them very easy to update as consumer information changes. Things like purchase history, address, and average income can all help shape a marketer’s profile of a potential customer.
How Information Is Collected
Different companies have different ways of getting information about customers, but the process is often easier than it seems. Magazine subscriber lists, association membership rosters, and professional conference attendance directories are often publicly available. This data can give marketers a baseline sense of what certain people’s interests are. School registration information, geographic information like ZIP or postal code, and rough annual income is often also available from tax records. Over the Internet, marketers can sometimes collect data based on webpages viewed or purchases made.
A More Personalized Way to Reach Customers
For many companies and service providers, particularly those that are small or very nuanced, traditional forms of advertising — radio, newspapers, television, and the like — may not be the best use of promotional budgets. For example, a company that sells a men’s hair loss prevention product would have to find a radio station whose format appealed to older male listeners who might be experiencing this problem. There would be no guarantee that this group would be listening to that particular station at the exact time the company's ads were broadcast.
Direct marketing, by contrast, would allow the company to pre-select customers who meet the right demographics. These people could be targeted with specialized mailings or phone solicitations. In this way, the company could spend the same amount of money on advertising but reach a higher percentage of potential purchasers.
Customer Overload and Other Downsides
Many people are unaware of how the personal information they include on an order form or survey may be used for targeted advertising later, which can open the direct marketing industry up to criticism — people usually want full disclosures of how their information can or will be used before providing it. One prevailing philosophy in direct mailing circles is the idea that if a customer orders one item — swimsuit from a clothing catalog, for example — he or she might naturally be interested in related items like swimming pool supplies or exercise equipment as well. This could lead to direct marketing overload as potential customers become overwhelmed with catalogs, unsolicited emails and unwanted phone calls.
There is also the concern that personal information collected by legitimate direct marketing agencies could be purchased by unscrupulous companies for the express purpose of fraud. A marketer who knows a lot about a potential customer may try to use that information for crimes like identity theft of bank fraud.
Privacy Concerns Online
Some of the harshest criticism of direct customer marketing involves the online space. People who engage in online shopping or even just casual web browsing do not usually like the idea that their movements are being tracked by companies hoping to sell them specific goods or services. Many privacy experts and advocacy groups have tried to lobby for rules against aggressive online tracking in order to preserve personal privacy.
Industry Regulation
Many direct marketing companies belong to self-policing associations which actively discourage fraudulent or invasive use of their databases. Legitimate direct marketing firms also typically offer methods through which individuals can “opt out” of advertising lists by request. In the United States, the national “do not call list” is one example of successful industry regulation. That list, which is maintained by the Federal Trade Commission, allows individuals to permanently opt out of targeted phone solicitations.
In most countries, customers also have the right to unsubscribe to unsolicited catalogs and to block bulk emails from their in-boxes. A number of anti-spam and anti-tracking initiatives are also prevalent online. Customers cannot usually completely prevent targeted marketing, but they can often do a lot to help keep the information stored on them in check.
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