DMA chief urges aggressive pursuit of new customers

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(Last in a series of executive outlooks)

Despite the current economic slump, b-to-b direct marketers should continue to aggressively court new customers, says H. Robert Wientzen, president-CEO of The Direct Marketing Association. B-to-b companies should also act smarter when it comes to database marketing, he says. Wientzen, who joined the DMA in 1986, recently discussed the trends he sees for this year with BtoB.

BtoB: When do you think the b-to-b direct marketing industry will begin pulling out of the recession?

Wientzen: Certainly, it's been a tumultuous year economically for all businesses, and, yet, throughout it all, b-to-b direct marketing continues to grow. This is not surprising, as direct marketers have weathered economic storms before. For example, in 1991, direct marketing held its own--in terms of ad spending and sales--while the country's economic woes ravaged other industries. Some people even said direct marketing was "recession proof."

B-to-b marketers [were] projected to spend $102.5 billion on direct response advertising [in 2001]. That's a 4.3% increase over [2000's] b-to-b spending. Looking forward, over the next five years, b-to-b ad spending is forecast to increase 7% annually.

B-to-b direct marketing remains a large contributor to the national economy in terms of sales revenue generated from ad dollars. U.S. direct and interactive b-to-b marketers [were] projected to generate nearly $858.1 billion in sales [in 2001], which is, despite the economic slowdown, almost 10% over [2000's] b-to-b sales. B-to-b sales over the next five years are predicted to compound 8.8% annually, hitting $1.3 trillion in the year 2006.

BtoB: What are the most important short- and long-term strategies b-to-b direct marketers should be undertaking now?

Wientzen: First and foremost, b-to-b marketers must keep a critical eye on new customer acquisition and resist the urge to cut back on prospecting during these challenging economic times. At this time, it is critical to focus on customer acquisition due to the need to constantly fight off attrition in customer bases. B-to-b marketers should adopt more traditional techniques to maximize return on investment and reduce customer-acquisition costs. This could be accomplished by using outside lists, tighter budgeting strategies, enhanced customer service strategies and a combination of online and traditional traffic-building techniques.

B-to-b marketers need to be smarter in the database marketing area by more effectively using all data elements on their customers to make offers as relevant as possible to customers and prospects. Marketers who managed their Internet operations as separate businesses made a costly mistake, yet learned that it is all about the customer and is the same customer both online and offline.

The ability to segment customer files and tailor various offers to different customers based on their value to the company is imperative during these times. Not all customers are equally valuable to a marketer and therefore worthy of the same commitment. By tailoring special offers only to your best customers and other offers to infrequent shoppers, b-to-b marketers stand a better chance of increasing the value of each audience segment. This will make best customers feel welcome and appreciated. It focuses dollars and energy where they are likely to produce the best ROI.

BtoB: What good is coming out of this recession for b-to-b direct marketers?

Wientzen: Given the economy, b-to-b marketers are taking this opportunity to reinvent themselves at an unprecedented pace. The industry has taken the appropriate steps to maximize their marketing dollars and concentrate more on acquiring and retaining customers.

Despite the current economic downturn, direct marketing showed stronger gains than some other advertising sectors due to its growing mainstream adoption. Direct and database marketing's efficiency amid economic uncertainty has resulted in an increasing number of non-traditional direct marketers incorporating direct response techniques into their marketing mix.

In addition, while researching new ways to become more efficient, b-to-b marketers have looked to utilize technology developments, CRM practices, the Internet and e-mail. Many have discovered that cross-channel communication with customers is a critical part of our ability as direct marketers to do well in this environment. The cross-channel synergy is really powerful, and it just makes good sense.

—Interview conducted by Philip B. Clark

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