‘Old Wine In New Bottles – Tastes No Better – And Maybe Worse’ by Drayton Bird

Clayton Makepeace has released the latest issue of ‘Total Package’. The featured article by Drayton Bird is titled “A Heretical Thought: Old Wine In New Bottles – Tastes No Better – And Maybe Worse”. [‘Permission Marketing’ Article]

Clayton Makepeace has released the latest issue of ‘Total Package’.

The featured article:

A Heretical Thought: Old Wine In New Bottles – Tastes No Better – And Maybe Worse

by Drayton Bird

Dear Business-Builder,

Marketers just love initials – which is a shame. Take “CRM.” What does that mean to you?

Odds are you said “Customer Relationship Management,” or something close, like “Customer Relationship Marketing.” Or maybe you said “Cause-Related Marketing.” Or even “Credit Risk Management” if you work in finance.

Last year a U.K. report revealed that a significant percentage of marketers admit they use jargon they don ‘t understand in meetings. Why? To impress? As their entry ticket to an in-group? To conceal their ignorance? Maybe all three.

The certain result is confusion, though. I can easily visualise a meeting in which people spend their time exchanging initials, jargon – and misunderstandings – for hours on end without achieving anything.

Do you think all this is a trivial matter? I believe it costs marketers billions; and in this piece I shall examine why, with particular reference to CRM and e-commerce.

A friend to the idle

Every marketer knows consumers are lazy. Show people how they can do something – lose weight, learn a language – with less effort, and you have a winning proposition.

You must wrap it up in new packaging, though – preferably something that sounds impressive. It’s not memorising and repeating words and phrases; it’s “programmed learning.” That makes you feel you’re doing something important, doesn’t it?

Marketers are just as lazy as customers – hardly surprising when you think about it, since they are customers in their real lives. Most (as I have learned from asking them to define it in many countries) are too damned idle to even learn what the word marketing means – let alone what “direct marketing” means.

Anyhow, that word “direct” … doesn’t it sound distressingly close to direct mail? And we all know what that means, don’t we? Junk. Ugh. That certainly doesn’t sound very reputable, does it? But as we shall see, even the newest marketers are busy churning it out – in new media.

Smart new ways to describe the same old thing
The man who coined the phrase “Direct Marketing” was, I believe, Lester Wunderman. A brilliant salesman (David Ogilvy told me he was the best he ever met) he soon started casting around for new, more appealing packaging.

I can’t recall the exact order they came in, but we had Dialogue Marketing, which proved very popular, especially in Germany – a bit of a surprise, as it is based on the idea that the customer can talk back.

Then there was Curriculum Marketing – because you are taking prospects through a sequence leading to a sale. That never caught on, really; maybe it sounds a bit too much like hard work. And of course there was Relationship Marketing, based on the fact that we are trying to build a relationship with customers. This grew into the CRM we all know and love.

Personally I feel this ingenuity has caused needless confusion. Going back to the meeting I visualised above, people must have wasted countless long, tedious days in such meetings – without knowing they were all discussing the same thing under different names.

Somewhere in the middle of all this torrent of nomenclature, out popped Database Marketing, which at one time looked like being the phrase, and has a great deal of logic, as the database lies at the heart of what we do, whatever we choose to call it.

Which name do you prefer?

Database Marketing sounds pleasingly scientific and important. I mean, which would you prefer to announce as your metier at a cocktail party? Direct Marketing – or Database Marketing? The latter seems much more serious and challenging, doesn’t it?

The trouble is, it is serious and challenging; so much so that half the people doing it are not very good. One problem is that woolly thinking and an amateurish approach prevail. Consider this definition of Relationship Marketing.

“A marketing approach in which a company seeks to build close relationships with its current and potential customers in order to encourage them to concentrate a disproportionately high share of their value with it. The company pursues this objective by developing and continuously updating a deep understanding of each customer’s present and future needs, and by tailoring the choice, delivery and communication of its value proposition to these needs as closely as is economically possible.”

This is such a dastardly assault on the English language that you just know it can only have been produced by management consultants – and you’re right. It’s something put out by McKinsey.

More to the point, it is what I call direct marketing without balls, because there is no mention of testing. That means you can’t measure what works and what doesn’t, or to what degree. Which is vital, because, as the saying goes, if you can’t measure it, you can’t manage it.

It is worth pointing out that this love of measurement is not peculiar to direct marketing. All the best marketers believe in it. In his excellent book, “The end of marketing as we know it” Sergio Zyman, former marketing head at Coca-Cola laments the way so few marketers bother to set quantified goals. Former head of Procter & Gamble Ed Artz said, “At P & G we measure everything.”

The reason for this critical omission by McKinsey (and quite a few others) is simple: none of the people who churn out this pretentious drivel has spent much time in the real world.

These people may have MBA’s; they are terrific at selling – and even better at charging – but how many have had to come up with results, or get fired. As far as I can make out, they stroll into some firm that’s clueless and in trouble – say AT & T or Marks & Spencer – bang out a few polysyllabic documents, take a lot of money, then on to the next likely punter.

Bamboozled by jargon
To my mind, far too many people are bamboozled by marketing jargon. It complicates what should be simple. It engenders fatal self-importance. It’s almost always intellectually suspect. And it gets lousy results, because half the time nobody knows exactly what they’re supposed to be doing.

By the time most marketing fads take over, it’s either too late to do well (who wants to be the last to introduce a loyalty scheme?) or they’ve been found out. In the US, Advertising Age reported a few months ago that over 70% of firms who tried CRM said it didn’t work for them.

“Has there ever been an IT solution that has promised so much, with so little to show in the final analysis?” asked Ian Mclachlan of Accurate Business Solutions in the UK’s Direct Marketing Week last October. In the same piece, Gartner figures revealed “50% of technology-enabled CRM implementations fail, and it is likely that a far higher proportion deliver only limited success”

Mclachlan goes on to point out the problem. “Today’s CRM tools can help minimise the cost of each customer interaction, but they rarely provide more than the most basic, and recent, transactional information about the customers themselves. As such, your people have no way of distinguishing a high value or high potential customer from a low value, low growth time waster.”

Well, well, well. Bad news all round. Machines can’t think for you. Who ever would have thought it?

Too many marketers hope and pray they will be relieved of a few crushing burdens – like understanding customers, or conducting tests to see what works and what doesn’t – by a machine, or a new piece of jargon.

The ironic thing about the quote above is that it deals with utterly basic factors – factors that direct marketers knew were important in those long-gone days when we talked about mailing lists rather than databases. Things like recency, frequency and monetary value.

Old tricks work in a new medium

The latest wave of excitement to hit our little world has been, of course, e-commerce, the Internet and all the bright promise of the future. Here again it is extraordinary how many of those involved have either forgotten the lessons of the past or, more likely, never knew them to start with.

The first point to be made is, of course, that all e-commerce transactions and communications are direct. This is obvious – though, not, it seems, to many e-marketers. Virtually all the known direct marketing principles and techniques apply – and those who have stumbled upon or adapted them, perhaps not knowing their provenance, have been hailed as geniuses.

Consider, for instance, Viral Marketing. This is just a supercharged variation on what has always worked in direct marketing – Friend-get-a-Friend, or Member-get-a-Member – MGM. It’s one of most potent on-line techniques – and the e-mail lies at the heart of it.

MGM has always been just about the cheapest way to get new business, for three reasons.

Generally the customer you want is like the customer you’ve already got – and customers’ friends tend to have similar characteristics.
You get a much higher response rate from customers than similar non-customers.
You are usually communicating with your customers regularly anyhow: it costs very little to make this extra request to give a friend’s name.
These principles all apply to Viral Marketing – with one or two added advantages. Traditional MGM always posed a problem: customers often wouldn’t take the time or make the effort to give friends’ names and addresses.

It took a lot of thought (and incentives) to overcome this – especially if you wanted customers to give more than one name. The problem vanished with e-mail. Instead of being a chore, it’s involving; in fact rather fun. It only takes a click of the mouse to pass a message on and it’s easy to send to several people.

The effect is extraordinary. Now, what was a slow, tedious process through the mail is speeded up immensely – and the numbers grow much faster. You might liken it to the difference between, say arithmetic and geometric progression. What was once a slow passage from hand to hand, as it were, becomes like an accelerated chain letter or even a pyramid scheme – without the negatives.

Permission has always paid; junk never has

Take two other much-used terms – Permission Marketing and Spam. These are not new – they’re just new words for old things, applied to e-mail.

Permission Marketing dates back to the dawn of modern direct marketing. In 1930, Harry Sherman and Maxwell Sackheim introduced the modern book club. You got so many books very cheaply if you agreed to buy a certain number each year. Customers gave the club permission to send them books they could reject or buy each month.

Anyone who has worked in sales or marketing knows you are wise to get customers’ permission regarding when and how often to talk. When a customer gives you their home phone number, if you’re smart you ask the best time to call: you consider that customer’s preferences. Poor marketers call customers after 9pm, or in the middle of dinner, get the kind of reception they deserve – and lose the sale forever.

In 1986 I recall helping a bank transform the profitability of their loan operations simply by asking prospects what they planned to buy in the year ahead, in which month, how much they were likely to spend, and the best time to call them. Just commonsense and a little imagination.

Sales reps have known for years that it pays to fit in with their customers’ schedules. They get “permission” to visit the customer, say, every other Tuesday at 9am. So it’s no surprise that this old technique works in a new medium – but the difference it makes is astounding. An Australian colleague tells me people who have given permission are about 8 times more likely to respond to an e-mail than the average direct mail respondent.

Nor, for that matter, is it any surprise that people hate “spamming.” They hate junk mail; so why would they react any differently when it is perpetrated in a new medium. They may even hate it more, as it comes via such a seemingly private medium

Bill Fryer of Fryer Direct has conducted tests that suggest the only direct marketing technique that doesn’t work on e-mail is the P. S. This is generally the most recalled part of a mailing, because people look to see who signed the letter. However, you know instantly whom an e-mail came from, and scrolling down is, of course, harder work than glancing down or turning over a letter.

The heaviest chain that holds down progress

A journalist who interviewed me last autumn asked if I agreed with the saying that e-commerce is direct marketing on steroids. I replied, “It may well be: but it is in chains.” Perhaps the heaviest of those chains is ignorance.

While writing this piece, I discussed marketing among high-tech firms with a colleague, Professor Srikumar Rao, lately Chairman of the Marketing Department at Long Island University and a Contributing Editor to Forbes magazine.

He commented that few people, especially in the e-commerce field, know anything at all about marketing. This is not surprising, as new industries tend to be driven more by new ideas than how to sell them. But it is perhaps the chief reason for the high rate of failure.

Perhaps the best-known U.K. e-commerce firm is lastminute.com. At a seminar last autumn, one of its founders, Brent Hoberman, was talking about their newsletter. He asked everyone who received it to raise their hand. Most of those present did so, which he saw as a proof of success.

He said one reason was that when planning it they threw out the rulebook, started from scratch and created something completely new. Someone then had the temerity to stick their oar in and suggest, “You are asking the wrong question. Never mind who receives it: who reads it?” So Hoberman then asked, “Okay, who reads it?” One or two hands slowly crept up.

Interesting, isn’t it? What they have managed to create with such ingenuity is what we used to call, in olden days, junk. Stuff you send out that nobody reads. (CompuServe’s pointless newsletter for members is another example)

Then someone else asked the talented Mr. Hoberman, “Well, have you done any tests?” He was clearly baffled. He had clearly never considered testing. I wager it had never crossed his mind, and possibly didn’t even understand the question.

Until these people start to grasp some of the basics of direct marketing, they cannot possibly succeed in a 100% direct medium. And our great opportunity is to teach them.

The big opportunity being ignored

A wise man once noted that nothing is ever as good as it seems – or as bad.

A couple of years ago, when absurd multiples (and amazing sums) were being given to e-commerce ventures based on little more than plausible moonshine, I compared the frenzy with the Dutch Tulip Mania and the South Sea Bubble.

I suggested these ventures would never do as well as people expected. Now, of course, what shot up has tumbled down. Perhaps now investors are being too cautious. After all, the investment crazes of the 17th and 18th centuries did not prove that investment is folly. They proved that bad investment is folly.

E-commerce still makes sense, but in marketing terms old lessons need to be relearned.

1. You can’t build a major brand in a few months. It takes years.

2. It’s hard to do through one vehicle – i.e., on-line, on TV, on posters or (suddenly fashionable because they’re short of money) direct mail. You usually need several.

3. It’s impossible if your service stinks. What you do is ten times more important than what you say.

4. It’s no use having a brand if nobody spends money with you.

5. The only way to get them to spend is to ask them to.

6. If that sounds simplistic to you, I’m sorry, but it has clearly escaped the attention of a lot of purportedly smart and certainly well paid people.

What good is a brand if nobody buys?

Apparently in 1999, U. S. e-marketers spent as much as $3 billion on brand building ads. Fewer than 5% got any awareness …and remember, awareness is just the first step in building a brand. You next have to get people to view your brand favourably, then consider buying from you. Last comes the considerable task of getting them to actually part with money.

One firm that succeeded in getting tons of awareness was Pet.com. The cute glove puppet in their brilliant, award-winning TV ads by those wonderful, creative folks at TBWA, Chiat Day is so popular it’s selling like crazy in Toys’R’us. Unfortunately, nothing else is. They’ve just turned turtle. And you can’t eat awards.

I suspect that, as with nearly all these people, their ads were splendid little cameos that ended with the www address – but not with the pressing injunction to do something. Now.

What should these people be doing? Why, what direct marketers do. Create and test messages, through whatever medium, that build a brand and sell at the same time. Messages that take people all the way from paying attention to being interested, then eager – then convinced enough to buy.

That is the great challenge facing the denizens of this brave new world – and the great opportunity facing direct marketers. Or, in these pages, should I say database marketers?

I wonder, though, how many of us yet grasped the striking parallels between what we have always done and what the future holds. Based on what has happened during the great – and costly – CRM jaunt, I am a little skeptical.

Contributed by Drayton Bird, Hon. F IDM

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*IMNewsWatch would like to thank Clayton Makepeace for granting permission to reprint this article.