A pyramid scheme is a fraudulent investing plan that has unfortunately cost many people worldwide their hard-earned savings. The concept behind the pyramid scheme is simple and should be easy to identify; however, it is often presented to potential investors in a disguised or slightly altered form. For this reason, it is important to not only understand how pyramid schemes work, but also to be familiar with the many different shapes and sizes they can take.
The Scheme
As its name indicates, the pyramid scheme is structured like a pyramid. It starts with one person - the initial recruiter - who is on top, at the apex of the pyramid. This person recruits a second person, who is required to "invest" $100 which is paid to the initial recruiter. In order to make his or her money back, the new recruit must recruit more people under him or her, each of whom will also have to invest $100. If the recruit gets 10 more people to invest, this person will make $900 with just a $100 investment.
The 10 new people become recruiters and each one is in turn required to enlist an additional 10 people, resulting in a total of 100 more people. Each of those 100 new recruits is also obligated to pay $100 to the person who recruited him or her; recruiters get a profit of all of the money received minus the initial $100 paid to the person who recruited them. The process continues until the base of the pyramid is no longer strong enough to support the upper structure (meaning there are no more recruits).
A product-based pyramid scheme is the same concept disguised as a legitimate direct sales opportunity. Here's how it works:
•A distributor recruits 10 salespeople who each pay $500 for a starter kit of products to sell.
•The distributor gets 10 percent of each starter kit that's sold.
•The distributor also gets 10 percent of each product that any of his recruits sells, including more starter kits.
•The recruits are told that the fastest way to make money isn't by selling products, but by recruiting more people to buy starter kits.
•The people at the top of the pyramid get commissions from everyone in their downline, the many levels of recruits below them on the pyramid.
The problem with most product-based pyramid schemes is that the products themselves don't sell very well, or have very slim profit margins. So the only way to make money is to find more recruits. Eventually (and surprisingly quickly), the market becomes saturated. There are too many people trying to sell the same unattractive product and there's no one left to be recruited.
It's mathematically impossible for everyone to make money in a pyramid scheme. For example, if each recruit needs to find 10 more people to recoup the cost of his or her initial investment, the eighth level of the pyramid would have to recruit a billion people to make back their money. And the next level would need 10 billion, nearly twice the population of the Earth.
In fact, pyramid schemes don't work unless somebody loses. Those at the bottom of the pyramid are essentially defrauded by those on top. It's a mathematical fact that no matter how many people join a pyramid scheme, 88 percent of the members will be on the bottom level and will lose their money
Pyramid schemes are illegal because people don't lose their money due to normal market forces, but because the system requires them to lose so that a few at the top will win.
Studies show that in a naked pyramid scheme, 90.4 percent of people lose their money, while in product-based pyramid schemes, that number jumps to a shocking 99.88 percent
Multi-Level Marketing and Pyramid Schemes
On the surface, it's hard to tell the difference between a legitimate MLM and a pyramid scheme. That's because they're both built on the business model of "multiple levels" of distributors and recruits. Some critics of MLMs claim that all of them, even the supposedly "legitimate" ones, are pyramid schemes in disguise.
In a landmark 1979 ruling, the Federal Trade Commission found that Amway was not a pyramid scheme. That ruling has paved the way for hundreds of MLMs to follow Amway's business model. The Amway Web site highlights the differences between its unique "business opportunity" and a pyramid scheme:
•Amway doesn't pay distributors for simply recruiting new salespeople.
•The only way to make money through Amway is either by selling products directly to consumers or by managing a team of salespeople. Managers get a percentage of each of their recruits' sales.
•Amway doesn't require its salespeople to buy starter kits or impose a minimum monthly order value to stay a member.
Amway stresses that the main difference between a legitimate MLM business model and a pyramid scheme is that a legitimate MLM is focused on selling products, not recruiting more salespeople. In a legitimate MLM, it should be possible to make money by simply selling products directly to customers. With that main criterion in mind, here are some other ways to identify product-based pyramid schemes:
•Pyramid schemes offer money for simply recruiting people. This money can come as a commission from the sale of a starter kit or as a recruiting "bonus."
•Avoid any MLM that puts much more emphasis on recruiting salespeople than selling the actual product.
•Pyramid schemes charge steep startup costs for joining, including mandatory training, a starter kit and a non-refundable membership fee.
•Beware of any MLM that allows five or more levels of distributors to collect commissions on a single sale.
•Make sure that the products being sold have real value and a competitive price. Are they reputable brands? Have the manufacturers been involved in recent lawsuits?
•Avoid MLMs that only sell lists of sales leads to other MLM salespeople. This is most likely outdated information that has made the MLM rounds several times before.
•Avoid signing up for an MLM as part of a high-pressure motivational event. Consider the information carefully and take it home to think about it.
•Be wary of anyone who tries to sell you on an MLM by flaunting their personal wealth. Realize that many of the people who claim to have made millions through MLM have actually made their money selling books and videos on how to make millions through MLMs.
•Bottom line: If it sounds too good to be true, then it probably is.
Notable Recent Cases
Internet
In 2003, the United States Federal Trade Commission (FTC) disclosed what it called an internet-based "pyramid scam". Their complaint states that customers would pay a registration fee to join a program and purchase a package of goods and services such as internet mail, and that the company offered "significant commissions" to consumers who purchased and resold the package. The FTC alleged that the company's program was instead a pyramid scheme that did not disclose that most consumers' money would be kept, and that it gave affiliates material that allowed them to scam others
Pyramid schemes may use email to persuade others that they are multi-level marketing (MLM) business plans. MLM plans—such as Amway, ACN, Mary Kay, Tupperware, and Avon Products—are sometimes criticized, but remain legal by offering genuine products; pyramid schemes do not.
Others
In early 2006 Ireland was hit by a wave of schemes with major activity in Cork and Galway. Participants were asked to contribute €20,000 each to a "Liberty" scheme which followed the classic 8-ball model. Payments were made in Munich, Germany to skirt Irish tax laws concerning gifts. Spin-off schemes called "Speedball" and "People in Profit" prompted a number of violent incidents and calls were made by politicians to tighten existing legislation. Ireland has launched a website to better educate consumers to pyramid schemes and other scams.
On November 12, 2008 riots broke out in the municipalities of Pasto, Tumaco, Popayan and Santander de Quilichao, Colombia after the collapse of several pyramid schemes. Thousands of victims had invested their money in pyramids that promised them extraordinary interest rates. The lack of regulation laws allowed those pyramids to grow excessively during several years. Finally, after the riots the Colombian government was forced to declare the country in economical emergency in order to seize and stop those schemes. Several of the pyramid's managers were arrested and are being prosecuted for the crime of "illegal massive money reception".
November 2008: The Kyiv Post reported on November 26 2008 that American citizen Robert Fletcher (Robert T. Fletcher III; aka "Rob") was arrested by the SBU (Ukraine State Police) after being accused by Ukrainian investors of running a Ponzi scheme and associated pyramid scam netting $20 Million USD (Kiev Post also reports that some estimates are as high as $150M USD).
The Federal Trade Commission has opened an investigation to Shop to Earn Shop to Earth.
Specialty Catalogs
Specialty catalogs are a promotion and distribution technique commonly employed by direct marketers. They describe, graphically and verbally, a limited range of products. Specialty catalogs are a good promotion/distribution choice for new products. They are also most effective when using a niche strategy. There are several reasons for this:
•It is less risky than a mass distribution strategy. If it is not successful, it can be altered with only moderate expense.
•It is a stealthy way of testing market acceptance of the product. It doesn't alert the competition, or at least the competition will not perceive it as a threat.
•Specialty distribution is better able to obtain high margins than mass distribution. This will allow a price skimming strategy, where it is possible to capture the consumer surplus over time.
•Specialty catalogs allow the marketer to better target prime segments, like the early adopters and innovators that will be prepared to try a new product.
•Catalog response is immediate. Product problems will become evident before too many products are shipped.
•Catalogs are less expensive than sales forces. The average cost per sale is lower than most forms of advertising where low volumes are involved.
•The printed medium is suitable for new products or any other situation where detailed information needs to be communicated.
Showing posts with label Direct Marketing. Show all posts
Showing posts with label Direct Marketing. Show all posts
Sunday, October 11, 2009
Multi-Level Marketing
Multi-Level Marketing (MLM) or Network Marketing
What is Multi-Level Marketing (MLM)?
Multilevel marketing (MLM) plans are a way of selling goods or services through distributors. These plans promise that if you sign up as a distributor, you will receive commissions — for both your sales of the plan’s goods or services and those of other people you recruit to join.
Multi-level marketing (MLM) is a term that describes a marketing structure used by some companies as part of their overall marketing strategy.
The structure is designed to create a marketing and sales force by compensating promoters of company products not only for sales they personally generate, but also for the sales of other promoters they introduced to the company, creating a down line of distributors and a hierarchy of multiple levels of compensation.
The products and company are usually marketed directly to consumers and potential business partners by means of relationship referrals and word of mouth marketing
Criticism of Multi- Level Marketing (MLM)
The FTC issued a decision, Case. Amway Corp. in 1979, which indicated that multi-level marketing was not in itself illegal. However, Amway was found guilty of price fixing (by requiring “independent” distributors to sell at low prices) and making exaggerated claims income.
The Federal Trade Commission believes that multi-level marketing organizations with greater incentives for recruitment as sales of products must be treated with scepticism. In April 2006, she proposed a business opportunity for the rule requires that all sellers of business opportunities, including MLMs to provide sufficient information to enable buyers to make an informed decision about their probability of earning money. FTC regulation of trade rules generally 1-1/2 to 3 years before a final settlement is established.
The criticisms were raised against MLM programs to be cult-like in nature. Many programs feature intense MLM programs motivation, which may be difficult to distinguish from the cult propaganda. Criticism of Amway as a cult have been widely seen as unfounded, although some of the “bodies of Independent Business” within Amway have
been accused of operating as cults.
Another criticism is that MLM programs are in place to thwart most distributors, as there is a continued incentive to continue to recruit distributors even though the products have reached market saturation, which has caused the average earnings per distributor continue to decline.
How does a Multi Level Marketing works?
Multilevel marketing plans, also known as "network" or "matrix" marketing, are a way of selling goods or services through distributors. These plans typically promise that if you sign up as a distributor, you will receive commissions -- for both your sales of the plan's goods or services and those of other people you recruit to join the distributors. Multilevel marketing plans usually promise to pay commissions through two or more levels of recruits, known as the distributor's "downline."
In a typical multi-level marketing or network marketing arrangement, individuals associate with a parent company as an independent contractor or franchisee and are compensated based on their sales of products or service, as well as the sales achieved by those they bring into the business. This is like many franchise companies where royalties are paid from the sales of individual franchise operations to the franchisor as well as to an area or region manager.
In a legitimate MLM company, commissions are earned only on sales of the company's products or services. No money may be earned from recruiting alone ("sign-up fees"). One must analyze the compensation plan to determine whether participants are paid from actual sales to customers and not from money received from new recruits. If participants are paid primarily from money received from new recruits, then the company is an illegal pyramid or Ponzi scheme.
Some less legitimate companies produce revenues primarily by attracting new participants with the hope of reward and selling them products or services of dubious value at inflated prices, as opposed to selling products or services consumers would purchase at the given price without regard to the opportunity attached. One must evaluate the products or services and determine if a significant percentage of consumers would continue to purchase them if the participants do not make money from the underlying opportunity. If the products or services have dubious value or if the participants must purchase excessive quantities without reasonable intent to use or resell said items, then the company is likely a thinly veiled illegal pyramid scheme.
Multi-level marketing has a recognized image problem due to the fact that it is often difficult to distinguish legitimate MLMs from illegal scams. MLM businesses operate legitimately in the United States in all 50 states and in more than 100 other countries, and new businesses may use terms like "affiliate marketing" or "home-based business franchising". However, many pyramid schemes try to present themselves as legitimate MLM businesses.
Compensation Plans in MLM
Companies have devised various MLM compensation plans over the decades.
•Unilevel or Stairstep Breakaway plans are the oldest and most popular. They feature two types of distributors -- managers and non-managers -- and three types of pay:
1.Baseshop overrides are overrides of managers from their subordinate non-managers, collectively called a baseshop. This is the same as any other sales organisation.
2.Generational overrides are overrides of managers from the baseshop of managers who were previously their subordinate. Most plans compensate at least three generations of such managers.
3.Executive bonuses are commissions for managers who exceed a sales quota. For example, 2% of the total company sales revenue may go to a bonus pool that is shared monthly pro rata to managers who exceed $10,000 in that month.
•Matrix Plans limit the width of each level in a distributor's group, forcing strong distributors to pile ("spillover") their recruits over people who did not sponsor them.
•Binary plans limit the width of each level to two legs. Commissions are based on "cycles," where a distributor is paid a fixed amount whenever both legs achieve a certain number of sales units each. Commissions are paid incrementally when the sales volume in each leg matches.
•Elevator or Matrix schemes feature a game board or a list on which each distributor pays in one or more product units to participate. When a certain number of units have been paid in, the structure splits and the earlier participant receives consideration.
Ways to Avoid Being Sucked in by a Multi Level Marketing
•Never agree to go to an interview without getting a company name. Once you have the company name, you should research it on the internet. If you can’t find them, or anything about them, or if they require that you purchase costly inventory, then that raises some red flags. Check with your local Better Business Bureau and state Attorney General about any business that seems fishy.
•Who pays your salary? If it is straight commissions then be suspicious. Is the company putting their money where their mouth is? Check that there really is a product, that it is a reasonable price, and that it is something which would be possible to find a market for. If the commissions are mainly for recruiting others to do the same thing as you or for selling to others within the network, that is a pretty sure sign of a pyramid scheme.
•Do they claim to have some secret plan/connection/relationship/method which you are unable to verify? Pyramid schemes are illegal, but they aren’t the only type of business that is illegal. Make sure that you understand how a business works and how it makes money for the various people involved. This is just one step in making sure its legit.
•Business is not a matter of “faith”. Many pyramid schemes continually ask their members to “keep the faith.” They are continuously “pre-launch”, yet they never actually launch. If their best argument is that you should have faith, then don’t stick around, you can go to church instead.
•“Earn your bread by the sweat of your brow.” It might not sound as alluring as promises of making thousands of dollars with little or no work, but you’ll find that “real” business opportunities actually require you to work. In return they offer you some sort of reasonable compensation. If there is an exaggerated compensation advertised, or if it “only takes an hour a day” then it is highly unlikely that this is a legitimate business.
What is Multi-Level Marketing (MLM)?
Multilevel marketing (MLM) plans are a way of selling goods or services through distributors. These plans promise that if you sign up as a distributor, you will receive commissions — for both your sales of the plan’s goods or services and those of other people you recruit to join.
Multi-level marketing (MLM) is a term that describes a marketing structure used by some companies as part of their overall marketing strategy.
The structure is designed to create a marketing and sales force by compensating promoters of company products not only for sales they personally generate, but also for the sales of other promoters they introduced to the company, creating a down line of distributors and a hierarchy of multiple levels of compensation.
The products and company are usually marketed directly to consumers and potential business partners by means of relationship referrals and word of mouth marketing
Criticism of Multi- Level Marketing (MLM)
The FTC issued a decision, Case. Amway Corp. in 1979, which indicated that multi-level marketing was not in itself illegal. However, Amway was found guilty of price fixing (by requiring “independent” distributors to sell at low prices) and making exaggerated claims income.
The Federal Trade Commission believes that multi-level marketing organizations with greater incentives for recruitment as sales of products must be treated with scepticism. In April 2006, she proposed a business opportunity for the rule requires that all sellers of business opportunities, including MLMs to provide sufficient information to enable buyers to make an informed decision about their probability of earning money. FTC regulation of trade rules generally 1-1/2 to 3 years before a final settlement is established.
The criticisms were raised against MLM programs to be cult-like in nature. Many programs feature intense MLM programs motivation, which may be difficult to distinguish from the cult propaganda. Criticism of Amway as a cult have been widely seen as unfounded, although some of the “bodies of Independent Business” within Amway have
been accused of operating as cults.
Another criticism is that MLM programs are in place to thwart most distributors, as there is a continued incentive to continue to recruit distributors even though the products have reached market saturation, which has caused the average earnings per distributor continue to decline.
How does a Multi Level Marketing works?
Multilevel marketing plans, also known as "network" or "matrix" marketing, are a way of selling goods or services through distributors. These plans typically promise that if you sign up as a distributor, you will receive commissions -- for both your sales of the plan's goods or services and those of other people you recruit to join the distributors. Multilevel marketing plans usually promise to pay commissions through two or more levels of recruits, known as the distributor's "downline."
In a typical multi-level marketing or network marketing arrangement, individuals associate with a parent company as an independent contractor or franchisee and are compensated based on their sales of products or service, as well as the sales achieved by those they bring into the business. This is like many franchise companies where royalties are paid from the sales of individual franchise operations to the franchisor as well as to an area or region manager.
In a legitimate MLM company, commissions are earned only on sales of the company's products or services. No money may be earned from recruiting alone ("sign-up fees"). One must analyze the compensation plan to determine whether participants are paid from actual sales to customers and not from money received from new recruits. If participants are paid primarily from money received from new recruits, then the company is an illegal pyramid or Ponzi scheme.
Some less legitimate companies produce revenues primarily by attracting new participants with the hope of reward and selling them products or services of dubious value at inflated prices, as opposed to selling products or services consumers would purchase at the given price without regard to the opportunity attached. One must evaluate the products or services and determine if a significant percentage of consumers would continue to purchase them if the participants do not make money from the underlying opportunity. If the products or services have dubious value or if the participants must purchase excessive quantities without reasonable intent to use or resell said items, then the company is likely a thinly veiled illegal pyramid scheme.
Multi-level marketing has a recognized image problem due to the fact that it is often difficult to distinguish legitimate MLMs from illegal scams. MLM businesses operate legitimately in the United States in all 50 states and in more than 100 other countries, and new businesses may use terms like "affiliate marketing" or "home-based business franchising". However, many pyramid schemes try to present themselves as legitimate MLM businesses.
Compensation Plans in MLM
Companies have devised various MLM compensation plans over the decades.
•Unilevel or Stairstep Breakaway plans are the oldest and most popular. They feature two types of distributors -- managers and non-managers -- and three types of pay:
1.Baseshop overrides are overrides of managers from their subordinate non-managers, collectively called a baseshop. This is the same as any other sales organisation.
2.Generational overrides are overrides of managers from the baseshop of managers who were previously their subordinate. Most plans compensate at least three generations of such managers.
3.Executive bonuses are commissions for managers who exceed a sales quota. For example, 2% of the total company sales revenue may go to a bonus pool that is shared monthly pro rata to managers who exceed $10,000 in that month.
•Matrix Plans limit the width of each level in a distributor's group, forcing strong distributors to pile ("spillover") their recruits over people who did not sponsor them.
•Binary plans limit the width of each level to two legs. Commissions are based on "cycles," where a distributor is paid a fixed amount whenever both legs achieve a certain number of sales units each. Commissions are paid incrementally when the sales volume in each leg matches.
•Elevator or Matrix schemes feature a game board or a list on which each distributor pays in one or more product units to participate. When a certain number of units have been paid in, the structure splits and the earlier participant receives consideration.
Ways to Avoid Being Sucked in by a Multi Level Marketing
•Never agree to go to an interview without getting a company name. Once you have the company name, you should research it on the internet. If you can’t find them, or anything about them, or if they require that you purchase costly inventory, then that raises some red flags. Check with your local Better Business Bureau and state Attorney General about any business that seems fishy.
•Who pays your salary? If it is straight commissions then be suspicious. Is the company putting their money where their mouth is? Check that there really is a product, that it is a reasonable price, and that it is something which would be possible to find a market for. If the commissions are mainly for recruiting others to do the same thing as you or for selling to others within the network, that is a pretty sure sign of a pyramid scheme.
•Do they claim to have some secret plan/connection/relationship/method which you are unable to verify? Pyramid schemes are illegal, but they aren’t the only type of business that is illegal. Make sure that you understand how a business works and how it makes money for the various people involved. This is just one step in making sure its legit.
•Business is not a matter of “faith”. Many pyramid schemes continually ask their members to “keep the faith.” They are continuously “pre-launch”, yet they never actually launch. If their best argument is that you should have faith, then don’t stick around, you can go to church instead.
•“Earn your bread by the sweat of your brow.” It might not sound as alluring as promises of making thousands of dollars with little or no work, but you’ll find that “real” business opportunities actually require you to work. In return they offer you some sort of reasonable compensation. If there is an exaggerated compensation advertised, or if it “only takes an hour a day” then it is highly unlikely that this is a legitimate business.
Saturday, October 10, 2009
Telemarketing
What is Telemarketing?
•Telemarketing is marketing conducted over the telephone. Most telemarketing calls are "cold calls," meaning the recipient of the call has not requested that the telemarketer contact them. Telemarketing is one of the most controversial types of marketing.
•Telemarketing is a method of direct marketing; where a salesperson uses the telephone to satisfy prospective customers and persuade them to buy a products or services
Categories of Telemarketing
The two major categories of telemarketing are:
•Business-to-business (B2B)
•Business-to-consumer.(B2C)
The following are the sub categories of telemarketing
1. Lead Generation – Involves gathering of information about the prospective customers.
2. Sales – Persuade others to buy a product or service
3. Outbound - This is a proactive marketing in which prospective and preexisting customers are contacted directly.
4. Inbound –This is a reactive reception of incoming orders and requests for information.
Telemarketing may be done from a company office or from call center or even from home. It can be done either manually or automatically. In manual method, the salesperson makes use of information like phone numbers of prospective customers, and persuades them to buy by highlighting the features of the product.
The other method is use of pre recorded sales pitches which are programmed to be played over Telephone. This is known as automated telemarketing. Robot calling is a form of voice broadcasting which is used for political or social awareness programs.
Mostly telemarketing involves two basic operations, determining the needs of the customer and second is persuading them to buy the product if they are interested in such services or products. The prospective customers are identified by past purchase record, request for a service or information, credit limit, and various forms (application or survey). Names may also purchased from other partner companies (e.g., a computer seller may lend his customer details to warranty service providers) or by referring telephone directory or public list and the list is analyzed.
Advantages of Telemarketing
It has effects at a large scale. You have all available information from a customer in one click, which reduces the sales cost greatly. You no longer need to send your staff on visits. It is also easier for sales representatives to inform the customers of new products and services.
It is collaborative. The seller establishes conversations with the customers rather than just looking at number or profiles.
It is flexible. Different from other media in Direct Marketing, a Telemarketing campaign can has the potential to modify the communication on the basis of the answer we receive. Additionally, you can constantly update your client data base, in short time and without having to leave your office. It is a way to be always in contact with your customer
It is measurable. At each step of the Telemarketing campaign, the results can be compared with the ones previously established, and a company is able to develop, analyze the benefits, point out the mistakes and take corrective actions to modify planning for the next steps.
It is fast moving. Phone calls are short, actions are implemented promptly, the responses of the customer also come rapidly, moreover the sales and its results are in real time.
Disadvantages aspects of Telemarketing
1.One of them is the lack of visual contact; therefore you cannot use the gestures or facial expressions. Some customers can feel uncomfortable when products are pushed to them over the phone
2.A telephone conversation can be easily forgotten once you have hung up the handset. It is therefore necessary to confirm in writing, even through a simple letter, phone conversation
3.In order to obtain the desired results, a company needs to position the product in the market prior to the Telemarketing campaign. Otherwise, the customer will not know the product or service.
Key Concepts & Steps in Telemarketing Campaigns
Before You Begin
If you can immediately gain new prospects and customers, don’t hesitate to launch a telemarketing campaign right now. You may also decide to pursue telemarketing after developing your annual marketing plan.
Set your goals
You can use telemarketing in many ways; brainstorm the campaigns that will work best for your company. For example, you may need to generate leads for your sales team or use telemarketing to support other marketing campaigns.
Forecast and budget; Determine whether to Build in-house or Outsource
•Estimate your call volume, then think about hours of operation, fluctuations in call volume, and the skill set you’ll need in your reps.
•Your call volume also drives your headcount, software, phone system and the office space you’ll need.
•These requirements will help you decide whether to use a vendor or hire and manage a team in-house. If you look at vendors, the requirements will make your discussions easier and faster.
•Budget for everything including headcount, software licenses, bonuses and management.
Develop Good Scripts
Reps will need to capture attention, build value, and close; a good script will help them do it consistently.
•Make your scripts conversational, simple, and focused on the end goal.
•It helps to make and listen to calls as you’re developing and refining your script. What looks good on paper may not work on the phone.
•Get feedback from your team as well.
Train and Coach your Team
Regular coaching and quality assurance is crucial.
•Engage your reps, role-play and guide them through calls.
•Listen to calls regularly, evaluate your reps and coach them to improve their performance.
Make It Fun!
Telemarketing is a tough job and turnover is a big issue.
•Make things fun with contests, events, and other incentives.
•Make their space comfortable and interesting – tiny cubes, old chairs and windowless rooms don’t put a smile in anyone’s voice.
Report Your Results
•Define the reports you’ll need — your system may not be able to provide all of the data, but you can probably find an alternate solution.
•Use reports to consistently evaluate progress and improve your campaigns.
Telemarketing Fraud
What is Telemarketing fraud?
Telemarketing fraud is fraud perpetrated over the telephone by a person who is trying to trick a victim for financial gain. While many legitimate companies do conduct business by telemarketing programs, there are others out there who exploit the anonymity that telephones offer and seek to cheat people out of money. This can be done by outright theft or by identity theft.
There are many telemarketing fraud schemes that are perpetrated on a daily basis, with the end result being the same. The person committing the telemarketing fraud promises a product or service offered at a deal thought too good to be true, in return for a secured form of payment. In some cases, this will be a guaranteed cashier's check, money order or even cash. In other cases, it may be a check or credit card.
•Telemarketing is marketing conducted over the telephone. Most telemarketing calls are "cold calls," meaning the recipient of the call has not requested that the telemarketer contact them. Telemarketing is one of the most controversial types of marketing.
•Telemarketing is a method of direct marketing; where a salesperson uses the telephone to satisfy prospective customers and persuade them to buy a products or services
Categories of Telemarketing
The two major categories of telemarketing are:
•Business-to-business (B2B)
•Business-to-consumer.(B2C)
The following are the sub categories of telemarketing
1. Lead Generation – Involves gathering of information about the prospective customers.
2. Sales – Persuade others to buy a product or service
3. Outbound - This is a proactive marketing in which prospective and preexisting customers are contacted directly.
4. Inbound –This is a reactive reception of incoming orders and requests for information.
Telemarketing may be done from a company office or from call center or even from home. It can be done either manually or automatically. In manual method, the salesperson makes use of information like phone numbers of prospective customers, and persuades them to buy by highlighting the features of the product.
The other method is use of pre recorded sales pitches which are programmed to be played over Telephone. This is known as automated telemarketing. Robot calling is a form of voice broadcasting which is used for political or social awareness programs.
Mostly telemarketing involves two basic operations, determining the needs of the customer and second is persuading them to buy the product if they are interested in such services or products. The prospective customers are identified by past purchase record, request for a service or information, credit limit, and various forms (application or survey). Names may also purchased from other partner companies (e.g., a computer seller may lend his customer details to warranty service providers) or by referring telephone directory or public list and the list is analyzed.
Advantages of Telemarketing
It has effects at a large scale. You have all available information from a customer in one click, which reduces the sales cost greatly. You no longer need to send your staff on visits. It is also easier for sales representatives to inform the customers of new products and services.
It is collaborative. The seller establishes conversations with the customers rather than just looking at number or profiles.
It is flexible. Different from other media in Direct Marketing, a Telemarketing campaign can has the potential to modify the communication on the basis of the answer we receive. Additionally, you can constantly update your client data base, in short time and without having to leave your office. It is a way to be always in contact with your customer
It is measurable. At each step of the Telemarketing campaign, the results can be compared with the ones previously established, and a company is able to develop, analyze the benefits, point out the mistakes and take corrective actions to modify planning for the next steps.
It is fast moving. Phone calls are short, actions are implemented promptly, the responses of the customer also come rapidly, moreover the sales and its results are in real time.
Disadvantages aspects of Telemarketing
1.One of them is the lack of visual contact; therefore you cannot use the gestures or facial expressions. Some customers can feel uncomfortable when products are pushed to them over the phone
2.A telephone conversation can be easily forgotten once you have hung up the handset. It is therefore necessary to confirm in writing, even through a simple letter, phone conversation
3.In order to obtain the desired results, a company needs to position the product in the market prior to the Telemarketing campaign. Otherwise, the customer will not know the product or service.
Key Concepts & Steps in Telemarketing Campaigns
Before You Begin
If you can immediately gain new prospects and customers, don’t hesitate to launch a telemarketing campaign right now. You may also decide to pursue telemarketing after developing your annual marketing plan.
Set your goals
You can use telemarketing in many ways; brainstorm the campaigns that will work best for your company. For example, you may need to generate leads for your sales team or use telemarketing to support other marketing campaigns.
Forecast and budget; Determine whether to Build in-house or Outsource
•Estimate your call volume, then think about hours of operation, fluctuations in call volume, and the skill set you’ll need in your reps.
•Your call volume also drives your headcount, software, phone system and the office space you’ll need.
•These requirements will help you decide whether to use a vendor or hire and manage a team in-house. If you look at vendors, the requirements will make your discussions easier and faster.
•Budget for everything including headcount, software licenses, bonuses and management.
Develop Good Scripts
Reps will need to capture attention, build value, and close; a good script will help them do it consistently.
•Make your scripts conversational, simple, and focused on the end goal.
•It helps to make and listen to calls as you’re developing and refining your script. What looks good on paper may not work on the phone.
•Get feedback from your team as well.
Train and Coach your Team
Regular coaching and quality assurance is crucial.
•Engage your reps, role-play and guide them through calls.
•Listen to calls regularly, evaluate your reps and coach them to improve their performance.
Make It Fun!
Telemarketing is a tough job and turnover is a big issue.
•Make things fun with contests, events, and other incentives.
•Make their space comfortable and interesting – tiny cubes, old chairs and windowless rooms don’t put a smile in anyone’s voice.
Report Your Results
•Define the reports you’ll need — your system may not be able to provide all of the data, but you can probably find an alternate solution.
•Use reports to consistently evaluate progress and improve your campaigns.
Telemarketing Fraud
What is Telemarketing fraud?
Telemarketing fraud is fraud perpetrated over the telephone by a person who is trying to trick a victim for financial gain. While many legitimate companies do conduct business by telemarketing programs, there are others out there who exploit the anonymity that telephones offer and seek to cheat people out of money. This can be done by outright theft or by identity theft.
There are many telemarketing fraud schemes that are perpetrated on a daily basis, with the end result being the same. The person committing the telemarketing fraud promises a product or service offered at a deal thought too good to be true, in return for a secured form of payment. In some cases, this will be a guaranteed cashier's check, money order or even cash. In other cases, it may be a check or credit card.
Database Marketing
What is Database Marketing?
•Database marketing is a systematic approach to the gathering, consolidation, and processing of consumer data (both for customers and potential customers) that is maintained in a company's databases.
•Database marketing is the analysis and use of customer databases to aid in the direct marketing of products.
The distinction between direct and database marketing stems primarily from the attention paid to the analysis of data. Database marketing emphasizes the use of statistical techniques to develop models of customer behavior, which are then used to select customers for communications. As a consequence, database marketers also tend to be heavy users of data warehouses, because having a greater amount of data about customers increases the likelihood that a more accurate model can be built.
The "database" is usually name, address, and transaction history details from internal sales or delivery systems, or a bought-in compiled "list" from another organization, which has captured that information from its customers. Typical sources of compiled lists are charity donation forms, application forms for any free product or contest, product warranty cards, subscription forms, and credit application forms.
The communications generated by database marketing may be described as junk mail or spam, if it is unwanted by the addressee. Direct and database marketing organizations, on the other hand, argue that a targeted letter or e-mail to a customer, who wants to be contacted about offerings that may interest the customer, benefits both the customer and the marketer.
Applications of Database Marketing
In an effort to more effectively target potential customers, many enterprises use database marketing to build models of their target demographic group, track down these groups and focus their advertising budgets on them in the hope that it will result in an improved return on investment (ROI) from their advertising spend.
Sources of Data
At its most basic level, database marketing is the analysis of databases holding information about previous or potential customers. These databases usually consist of basic personal details of customers along with details of their past transactions. The information is either gathered from internal sales data or bought in from other organisations.
Business to Consumer (B2C)
Consumer information is gathered by enterprises in a number of ways, many of which consumers remain oblivious to. These methods can range from requesting that the consumer fill in and return a warranty card to running promotional contests and sweepstakes.
Ideally, enterprises prefer to gather as much information as possible about potential customers, so they will employ any available methods to milk consumers for personal data. The more information contained within a database, the more accurate the results of its analysis.
Business to Business (B2B)
B2B data is usually much more limited than consumer information, but it can also be easier to procure. Enterprises hoping to target businesses can simply get in touch personally or gather publicly available information about them. However, since B2B databases will usually only contain a few hundred or thousand pieces of information at most (compared to potentially millions of pieces in a consumer database) it is more difficult to build a targeted marketing plan.
Data Analysis
Once a consumer or business database has been compiled it can then be broken down and analysed to produce valuable marketing information. If the database is extremely limited this analysis can be performed manually, but most consumer databases will contain so much data that specialised software tools are necessary to generate useful results.
Predictive analytics software allows data analysers to construct high quality predictive models of customer behaviour. By studying the past purchases of consumers it can be possible to predict broad trends in their purchasing habits, resulting in a somewhat accurate prediction of their future purchasing (though, of course, it is impossible to make 100% accurate predictions in this area).
Using these trends it is possible to further refine the information by grouping individuals according to any other personal data held on file about them (such as income, age, gender, etc.). This grouping results in a targeted mailing list of potential customers, each of whom share a set of desired characteristics.
Marketing
Once the raw data has been analysed and a mailing list produced there is simply the matter of contacting the potential customers with targeted advertising.
Traditionally, database marketing results in the mailing of advertisements (what many people would call ‘junk mail’). The development of technology, however, has enabled enterprises to contact potential customers much more quickly than through the mail.
While a great many enterprises still use the postal service to generate leads, modern marketing methods also involve the use of e-mail and SMS messages to potential customers. As well as being less expensive than traditional mail shots, electronic messages come with the additional benefit that recipients can respond instantly, either by following a link in an email or opting-in through an SMS or asking for a callback.
Future of Database Marketing
The development of the Internet has offered enterprises a highly effective way to gather customer information. Internet users are now perfectly comfortable with completing electronic forms for everything from online purchasing to setting up e-mail accounts, so the amount of consumer information available has increased greatly.
At present, we are seeing the development of a new form of database advertising. Online advertisers now use surfing habits as a method of directing advertising towards Internet users. Search engines such as Google serve ads according to users' keyword searches, while vendors such as Amazon use details of previous transactions to build a list of user-targeted recommendations. We can expect this trend to continue until all online activities are tracked for marketing purposes.
•Database marketing is a systematic approach to the gathering, consolidation, and processing of consumer data (both for customers and potential customers) that is maintained in a company's databases.
•Database marketing is the analysis and use of customer databases to aid in the direct marketing of products.
The distinction between direct and database marketing stems primarily from the attention paid to the analysis of data. Database marketing emphasizes the use of statistical techniques to develop models of customer behavior, which are then used to select customers for communications. As a consequence, database marketers also tend to be heavy users of data warehouses, because having a greater amount of data about customers increases the likelihood that a more accurate model can be built.
The "database" is usually name, address, and transaction history details from internal sales or delivery systems, or a bought-in compiled "list" from another organization, which has captured that information from its customers. Typical sources of compiled lists are charity donation forms, application forms for any free product or contest, product warranty cards, subscription forms, and credit application forms.
The communications generated by database marketing may be described as junk mail or spam, if it is unwanted by the addressee. Direct and database marketing organizations, on the other hand, argue that a targeted letter or e-mail to a customer, who wants to be contacted about offerings that may interest the customer, benefits both the customer and the marketer.
Applications of Database Marketing
In an effort to more effectively target potential customers, many enterprises use database marketing to build models of their target demographic group, track down these groups and focus their advertising budgets on them in the hope that it will result in an improved return on investment (ROI) from their advertising spend.
Sources of Data
At its most basic level, database marketing is the analysis of databases holding information about previous or potential customers. These databases usually consist of basic personal details of customers along with details of their past transactions. The information is either gathered from internal sales data or bought in from other organisations.
Business to Consumer (B2C)
Consumer information is gathered by enterprises in a number of ways, many of which consumers remain oblivious to. These methods can range from requesting that the consumer fill in and return a warranty card to running promotional contests and sweepstakes.
Ideally, enterprises prefer to gather as much information as possible about potential customers, so they will employ any available methods to milk consumers for personal data. The more information contained within a database, the more accurate the results of its analysis.
Business to Business (B2B)
B2B data is usually much more limited than consumer information, but it can also be easier to procure. Enterprises hoping to target businesses can simply get in touch personally or gather publicly available information about them. However, since B2B databases will usually only contain a few hundred or thousand pieces of information at most (compared to potentially millions of pieces in a consumer database) it is more difficult to build a targeted marketing plan.
Data Analysis
Once a consumer or business database has been compiled it can then be broken down and analysed to produce valuable marketing information. If the database is extremely limited this analysis can be performed manually, but most consumer databases will contain so much data that specialised software tools are necessary to generate useful results.
Predictive analytics software allows data analysers to construct high quality predictive models of customer behaviour. By studying the past purchases of consumers it can be possible to predict broad trends in their purchasing habits, resulting in a somewhat accurate prediction of their future purchasing (though, of course, it is impossible to make 100% accurate predictions in this area).
Using these trends it is possible to further refine the information by grouping individuals according to any other personal data held on file about them (such as income, age, gender, etc.). This grouping results in a targeted mailing list of potential customers, each of whom share a set of desired characteristics.
Marketing
Once the raw data has been analysed and a mailing list produced there is simply the matter of contacting the potential customers with targeted advertising.
Traditionally, database marketing results in the mailing of advertisements (what many people would call ‘junk mail’). The development of technology, however, has enabled enterprises to contact potential customers much more quickly than through the mail.
While a great many enterprises still use the postal service to generate leads, modern marketing methods also involve the use of e-mail and SMS messages to potential customers. As well as being less expensive than traditional mail shots, electronic messages come with the additional benefit that recipients can respond instantly, either by following a link in an email or opting-in through an SMS or asking for a callback.
Future of Database Marketing
The development of the Internet has offered enterprises a highly effective way to gather customer information. Internet users are now perfectly comfortable with completing electronic forms for everything from online purchasing to setting up e-mail accounts, so the amount of consumer information available has increased greatly.
At present, we are seeing the development of a new form of database advertising. Online advertisers now use surfing habits as a method of directing advertising towards Internet users. Search engines such as Google serve ads according to users' keyword searches, while vendors such as Amazon use details of previous transactions to build a list of user-targeted recommendations. We can expect this trend to continue until all online activities are tracked for marketing purposes.
Friday, October 9, 2009
Channels of Direct Marketing
Direct Mail
The most common form of direct marketing is direct mail sometimes called junk mail, used by advertisers who send paper mail to all postal customers in an area or to all customers on a list.
Any low-budget medium that can be used to deliver a communication to a customer can be employed in direct marketing. Probably the most commonly used medium for direct marketing is mail, in which marketing communications are sent to customers using the postal service. The term direct mail is used in the direct marketing industry to refer to communication deliveries by the Post Office, which may also be referred to as "junk mail" or "admail" or "crap mail" and may involve bulk mail.
Junk mail includes advertising circulars, catalogs, free trial CDs, pre-approved credit card applications, and other unsolicited merchandising invitations delivered by mail or to homes and businesses, or delivered to consumers' mailboxes by delivery services other than the Post Office. Bulk mailings are a particularly popular method of promotion for businesses operating in the financial services, home computer, and travel and tourism industries.
In many developed countries, direct mail represents such a significant amount of the total volume of mail that special rate classes have been established. In the United States and United Kingdom, for example, there are bulk mail rates that enable marketers to send mail at rates that are substantially lower than regular first-class rates. In order to qualify for these rates, marketers must format and sort the mail in particular ways – which reduces the handling (and therefore costs) required by the postal service.
Advertisers often refine direct mail practices into targeted mailing, in which mail is sent out following database analysis to select recipients considered most likely to respond positively. For example a person who has demonstrated an interest in golf may receive direct mail for golf related products or perhaps for goods and services that are appropriate for golfers. This use of database analysis is a type of database marketing.
There are a number of direct marketing media other than direct mail. These include (and are by no means limited to):
Telemarketing
The second most common form of direct marketing is telemarketing, in which marketers contact consumers by phone. The unpopularity of cold call telemarketing (in which the consumer does not expect or invite the sales call) has led some US states and the US federal government to create "no-call lists" and legislation including heavy fines. This process may be outsourced to specialist call centre’s.
In the US, a national do-not-call list went into effect on October 1, 2003. Under the law, it is illegal for telemarketers to call anyone who has registered themselves on the list. After the list had operated for one year, over 62 million people had signed up. The telemarketing industry opposed the creation of the list, but most telemarketers have complied with the law and refrained from calling people who are on the list.
Canada has passed legislation to create a similar Do Not Call List. In other countries it is voluntary, such as the New Zealand Name Removal Service.
Email Marketing
Email Marketing may have passed telemarketing in frequency at this point, and is a third type of direct marketing. A major concern is spam, which actually predates legitimate email marketing. As a result of the proliferation of mass spamming, ISPs and email service providers have developed increasingly effective E-Mail Filtering programs. These filters can interfere with the delivery of email marketing campaigns, even if the person has subscribed to receive them, as legitimate email marketing can possess the same hallmarks as spam.
Door to Door Leaflet Marketing
Leaflet Distribution services are used extensively by the fast food industries, and many other business focussing on a local catchment Business to consumer business model, similar to direct mail marketing, this method is targeted purely by area, and costs a fraction of the amount of a mail shot due to not having to purchase stamps, envelopes or having to buy address lists and the names of home occupants.
Broadcast Faxing
A fourth type of direct marketing, broadcast faxing, is now less common than the other forms. This is partly due to laws in the United States and elsewhere which make it illegal.
Voicemail Marketing
A fifth type of direct marketing has emerged out of the market prevalence of personal voice mailboxes, and business voicemail systems. Due to the ubiquity of email marketing, and the expense of direct mail and telemarketing, voicemail marketing presented a cost effective means by which to reach people with the warmth of a human voice.
Abuse of consumer marketing applications of voicemail marketing resulted in an abundance of "voice-spam", and prompted many jurisdictions to pass laws regulating consumer voicemail marketing.
More recently, businesses have utilized guided voicemail (an application where pre-recorded voicemails are guided by live callers) to accomplish personalized business-to-business marketing formerly reserved for telemarketing. Because guided voicemail is used to contact only businesses, it is exempt from Do Not Call regulations in place for other forms of voicemail marketing.
Couponing
Couponing is used in print media to elicit a response from the reader. An example is a coupon which the reader cuts out and presents to a super-store check-out counter to avail of a discount. Coupons in newspapers and magazines cannot be considered direct marketing, since the marketer incurs the cost of supporting a third-party medium (the newspaper or magazine); direct marketing aims to circumvent that balance, paring the costs down to solely delivering their unsolicited sales message to the consumer, without supporting the newspaper that the consumer seeks and welcomes.
Direct Response Television Marketing
Direct marketing on TV (commonly referred to as DRTV) has two basic forms: long form (usually half-hour or hour-long segments that explain a product in detail and are commonly referred to as infomercials) and short form which refers to typical 0:30 second or 0:60 second commercials that ask viewers for an immediate response (typically to call a phone number on screen or go to a website).
TV-response marketing—i.e. infomercials—can be considered a form of direct marketing, since responses are in the form of calls to telephone numbers given on-air. This both allows marketers to reasonably conclude that the calls are due to a particular campaign, and allows the marketers to obtain customers' phone numbers as targets for telemarketing. Under the Federal Do-Not-Call List rules in the US, if the caller buys anything, the marketer would be exempt from Do-Not-Call List restrictions for a period of time due to having a prior business relationship with the caller. Major players are firms like QVC, Thane Direct, and Interwood Marketing Group then cross-sell, and up-sell to these respondents.
One of the most famous DRTV commercials was for Ginsu Knives by Ginsu Products, Inc. of RI. Several aspects of ad, such as it's use of adding items to the offer and the guarantee of satisfaction were much copied and came to be considered part of the formula for success with short form direct response TV ads (DRTV)
The most common form of direct marketing is direct mail sometimes called junk mail, used by advertisers who send paper mail to all postal customers in an area or to all customers on a list.
Any low-budget medium that can be used to deliver a communication to a customer can be employed in direct marketing. Probably the most commonly used medium for direct marketing is mail, in which marketing communications are sent to customers using the postal service. The term direct mail is used in the direct marketing industry to refer to communication deliveries by the Post Office, which may also be referred to as "junk mail" or "admail" or "crap mail" and may involve bulk mail.
Junk mail includes advertising circulars, catalogs, free trial CDs, pre-approved credit card applications, and other unsolicited merchandising invitations delivered by mail or to homes and businesses, or delivered to consumers' mailboxes by delivery services other than the Post Office. Bulk mailings are a particularly popular method of promotion for businesses operating in the financial services, home computer, and travel and tourism industries.
In many developed countries, direct mail represents such a significant amount of the total volume of mail that special rate classes have been established. In the United States and United Kingdom, for example, there are bulk mail rates that enable marketers to send mail at rates that are substantially lower than regular first-class rates. In order to qualify for these rates, marketers must format and sort the mail in particular ways – which reduces the handling (and therefore costs) required by the postal service.
Advertisers often refine direct mail practices into targeted mailing, in which mail is sent out following database analysis to select recipients considered most likely to respond positively. For example a person who has demonstrated an interest in golf may receive direct mail for golf related products or perhaps for goods and services that are appropriate for golfers. This use of database analysis is a type of database marketing.
There are a number of direct marketing media other than direct mail. These include (and are by no means limited to):
Telemarketing
The second most common form of direct marketing is telemarketing, in which marketers contact consumers by phone. The unpopularity of cold call telemarketing (in which the consumer does not expect or invite the sales call) has led some US states and the US federal government to create "no-call lists" and legislation including heavy fines. This process may be outsourced to specialist call centre’s.
In the US, a national do-not-call list went into effect on October 1, 2003. Under the law, it is illegal for telemarketers to call anyone who has registered themselves on the list. After the list had operated for one year, over 62 million people had signed up. The telemarketing industry opposed the creation of the list, but most telemarketers have complied with the law and refrained from calling people who are on the list.
Canada has passed legislation to create a similar Do Not Call List. In other countries it is voluntary, such as the New Zealand Name Removal Service.
Email Marketing
Email Marketing may have passed telemarketing in frequency at this point, and is a third type of direct marketing. A major concern is spam, which actually predates legitimate email marketing. As a result of the proliferation of mass spamming, ISPs and email service providers have developed increasingly effective E-Mail Filtering programs. These filters can interfere with the delivery of email marketing campaigns, even if the person has subscribed to receive them, as legitimate email marketing can possess the same hallmarks as spam.
Door to Door Leaflet Marketing
Leaflet Distribution services are used extensively by the fast food industries, and many other business focussing on a local catchment Business to consumer business model, similar to direct mail marketing, this method is targeted purely by area, and costs a fraction of the amount of a mail shot due to not having to purchase stamps, envelopes or having to buy address lists and the names of home occupants.
Broadcast Faxing
A fourth type of direct marketing, broadcast faxing, is now less common than the other forms. This is partly due to laws in the United States and elsewhere which make it illegal.
Voicemail Marketing
A fifth type of direct marketing has emerged out of the market prevalence of personal voice mailboxes, and business voicemail systems. Due to the ubiquity of email marketing, and the expense of direct mail and telemarketing, voicemail marketing presented a cost effective means by which to reach people with the warmth of a human voice.
Abuse of consumer marketing applications of voicemail marketing resulted in an abundance of "voice-spam", and prompted many jurisdictions to pass laws regulating consumer voicemail marketing.
More recently, businesses have utilized guided voicemail (an application where pre-recorded voicemails are guided by live callers) to accomplish personalized business-to-business marketing formerly reserved for telemarketing. Because guided voicemail is used to contact only businesses, it is exempt from Do Not Call regulations in place for other forms of voicemail marketing.
Couponing
Couponing is used in print media to elicit a response from the reader. An example is a coupon which the reader cuts out and presents to a super-store check-out counter to avail of a discount. Coupons in newspapers and magazines cannot be considered direct marketing, since the marketer incurs the cost of supporting a third-party medium (the newspaper or magazine); direct marketing aims to circumvent that balance, paring the costs down to solely delivering their unsolicited sales message to the consumer, without supporting the newspaper that the consumer seeks and welcomes.
Direct Response Television Marketing
Direct marketing on TV (commonly referred to as DRTV) has two basic forms: long form (usually half-hour or hour-long segments that explain a product in detail and are commonly referred to as infomercials) and short form which refers to typical 0:30 second or 0:60 second commercials that ask viewers for an immediate response (typically to call a phone number on screen or go to a website).
TV-response marketing—i.e. infomercials—can be considered a form of direct marketing, since responses are in the form of calls to telephone numbers given on-air. This both allows marketers to reasonably conclude that the calls are due to a particular campaign, and allows the marketers to obtain customers' phone numbers as targets for telemarketing. Under the Federal Do-Not-Call List rules in the US, if the caller buys anything, the marketer would be exempt from Do-Not-Call List restrictions for a period of time due to having a prior business relationship with the caller. Major players are firms like QVC, Thane Direct, and Interwood Marketing Group then cross-sell, and up-sell to these respondents.
One of the most famous DRTV commercials was for Ginsu Knives by Ginsu Products, Inc. of RI. Several aspects of ad, such as it's use of adding items to the offer and the guarantee of satisfaction were much copied and came to be considered part of the formula for success with short form direct response TV ads (DRTV)
Direct Marketing
What is Direct Marketing?
There are two main definitional characteristics which distinguish it from other types of marketing. The first is that it attempts to send its messages directly to consumers, without the use of intervening media. This involves commercial communication (direct mail, e-mail, and telemarketing) with consumers or businesses, usually unsolicited. The second characteristic is that it is focused on driving a specific "call-to-action." This aspect of direct marketing involves an emphasis on track able, measurable positive (but not negative) responses from consumers (known simply as "response" in the industry) regardless of medium.
Direct marketing addresses some of the biggest challenges in marketing a business - lead generation, converting those leads into high quality customers, and then systematically growing customer profitability. Marketing experts estimate that your prospects and customers are bombarded with more than 3000 marketing messages (direct mail, email marketing, radio/TV advertising, billboards) – every day. Direct marketing helps you get through the ‘marketing noise’, and delivers a high return on investment for your marketing spend.
With prospects being presented with so many choices, they seldom, if ever, buy at the first contact. In fact, it can take anything from 9 to 15 contacts before they have sufficient trust in you to finally buy your product.
Little wonder that so many entrepreneurs and sales people hate cold calling as the chances of early success are dismally low.
An alternative to the pain of cold calling is a consistent set of processes that attracts qualified leads to your business, and then keeps them ‘in the loop’ until they convert into customers.
Systematic Direct Marketing is that set of processes - a marketing strategy based on direct marketing methods which will deliver an immediate and sustainable sales improvement.
By improvements we mean:
•your lead generation costs will drop,
•converting leads into sales will not be due to profit-killing price discounts, and
•your quality clients will form enduring relationships - providing you with profitable repeat sales
The Highly Effective Cycle of Systematic Direct Marketing
In order to attract, retain and nurture a list of highly profitable customers, you need to craft your direct marketing strategy around a number of marketing activities that can start in a fairly simple way, but over time develop into a fairly sophisticated set of direct marketing processes.
If you cycle through the following direct marketing activities you will experience an unprecedented improvement in your business’s results:
Each direct marketing cycle will create a set of clients who can start providing you with referrals. These ‘lowest cost’ prospects will supplement the prospects that you attract through your normal ongoing lead generation techniques, yielding an ever-increasing prospect base for you to convert into customers.
Benefits and Pitfalls in Direct Marketing
Direct marketing is known for an effective marketing strategy for many reasons
1. Direct marketing is very effective if you want a way to connect and interact with your prospective clients during your sales and marketing cycle. It helps you establish a direct relationship with your target customers.
2. Direct marketing allows your postcard printing pieces, for example, to generate awareness of your business among your target clients.
3. Direct marketing allows you to build a qualified and potential database for your business.
4. It helps your business to encourage recognition and loyalty, as well as trust from your prospective customers because direct marketing allows you to develop an effective and responsive feedback system.
5. It also helps you gather concrete information that can provide you evidence of the effectiveness of your marketing medium, such as your postcard printing project.
6. And because you actually connect with your prospective clients promptly, your direct marketing campaign (e.g. postcard printing) generates excitement over your products and services. It encourages your potential clients to value your business in terms of providing solutions to their unique individual needs. And your marketing campaign doesn’t have to include discounts or price cuts; your direct marketing campaign helps your target readers to simply see the value of having your kind of business in their lives.
Most of all, your direct marketing campaign helps you generate leads and manage them as well. More than getting sales leads for your business, maintaining your current database also needs constant work and effort. An effective direct marketing starts with a stable database. You need a solid system to manage all your new leads, as well as your loyal ones
Direct marketing does have some negative aspects, however. Many people are unaware of how the personal information they include on an order form or survey may be used for targeted advertising later. One prevailing philosophy in direct mailing circles is the idea that if a customer orders a swimsuit from a clothing catalog, he or she might naturally be interested in swimming pool supplies or exercise equipment as well. This could lead to direct marketing overload, as potential customers and clients 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 or shady companies for the express purpose of fraud.
There are two main definitional characteristics which distinguish it from other types of marketing. The first is that it attempts to send its messages directly to consumers, without the use of intervening media. This involves commercial communication (direct mail, e-mail, and telemarketing) with consumers or businesses, usually unsolicited. The second characteristic is that it is focused on driving a specific "call-to-action." This aspect of direct marketing involves an emphasis on track able, measurable positive (but not negative) responses from consumers (known simply as "response" in the industry) regardless of medium.
Direct marketing addresses some of the biggest challenges in marketing a business - lead generation, converting those leads into high quality customers, and then systematically growing customer profitability. Marketing experts estimate that your prospects and customers are bombarded with more than 3000 marketing messages (direct mail, email marketing, radio/TV advertising, billboards) – every day. Direct marketing helps you get through the ‘marketing noise’, and delivers a high return on investment for your marketing spend.
With prospects being presented with so many choices, they seldom, if ever, buy at the first contact. In fact, it can take anything from 9 to 15 contacts before they have sufficient trust in you to finally buy your product.
Little wonder that so many entrepreneurs and sales people hate cold calling as the chances of early success are dismally low.
An alternative to the pain of cold calling is a consistent set of processes that attracts qualified leads to your business, and then keeps them ‘in the loop’ until they convert into customers.
Systematic Direct Marketing is that set of processes - a marketing strategy based on direct marketing methods which will deliver an immediate and sustainable sales improvement.
By improvements we mean:
•your lead generation costs will drop,
•converting leads into sales will not be due to profit-killing price discounts, and
•your quality clients will form enduring relationships - providing you with profitable repeat sales
The Highly Effective Cycle of Systematic Direct Marketing
In order to attract, retain and nurture a list of highly profitable customers, you need to craft your direct marketing strategy around a number of marketing activities that can start in a fairly simple way, but over time develop into a fairly sophisticated set of direct marketing processes.
If you cycle through the following direct marketing activities you will experience an unprecedented improvement in your business’s results:
Each direct marketing cycle will create a set of clients who can start providing you with referrals. These ‘lowest cost’ prospects will supplement the prospects that you attract through your normal ongoing lead generation techniques, yielding an ever-increasing prospect base for you to convert into customers.
Benefits and Pitfalls in Direct Marketing
Direct marketing is known for an effective marketing strategy for many reasons
1. Direct marketing is very effective if you want a way to connect and interact with your prospective clients during your sales and marketing cycle. It helps you establish a direct relationship with your target customers.
2. Direct marketing allows your postcard printing pieces, for example, to generate awareness of your business among your target clients.
3. Direct marketing allows you to build a qualified and potential database for your business.
4. It helps your business to encourage recognition and loyalty, as well as trust from your prospective customers because direct marketing allows you to develop an effective and responsive feedback system.
5. It also helps you gather concrete information that can provide you evidence of the effectiveness of your marketing medium, such as your postcard printing project.
6. And because you actually connect with your prospective clients promptly, your direct marketing campaign (e.g. postcard printing) generates excitement over your products and services. It encourages your potential clients to value your business in terms of providing solutions to their unique individual needs. And your marketing campaign doesn’t have to include discounts or price cuts; your direct marketing campaign helps your target readers to simply see the value of having your kind of business in their lives.
Most of all, your direct marketing campaign helps you generate leads and manage them as well. More than getting sales leads for your business, maintaining your current database also needs constant work and effort. An effective direct marketing starts with a stable database. You need a solid system to manage all your new leads, as well as your loyal ones
Direct marketing does have some negative aspects, however. Many people are unaware of how the personal information they include on an order form or survey may be used for targeted advertising later. One prevailing philosophy in direct mailing circles is the idea that if a customer orders a swimsuit from a clothing catalog, he or she might naturally be interested in swimming pool supplies or exercise equipment as well. This could lead to direct marketing overload, as potential customers and clients 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 or shady companies for the express purpose of fraud.
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