Commentary & Analysis
Really Stupid Marketing
by Mark Bonacorso Once a month,
By WhatTheyThink Staff
Published: April 25, 2005
by Mark Bonacorso Once a month, SBC sends a nicely designed, offset- color direct mail piece urging me to switch. The problem is, I have all their services already February 30, 2005 -- I don't know about anyone else, but when the "Do Not Call" registry went into effect October 1, 2003 (yeah!) it was like one water faucet was shut off and the another opened up full blast. Unsolicited telemarketing calls just stopped one day and gradually, my mailbox was pretty much filled everyday with direct mail (good for the printing industry and the postal service I might add). Over time, what I began to see in addition to the usual unsolicited "Dear Resident…" junk is what I think of as Really Stupid Marketing in the form of direct mail. Definition of Really Stupid Marketing Why do I think it so stupid? Because a good percentage of the direct mail I get, addressed directly to me, meets the following criteria: Comes from business with which I already have a relationship; that for the most part, that I have been doing business with for years; has a monopoly or near-monopoly on the markets they serve; has collected more data on my use of their service than anyone else on the planet; and fails to recognize that I'm already a customer. Let Me Give You an Example My local telephone company is SBC Communications; previously know as Pacific Bell in California, once part of AT&T before the break up in 1984. SBC is also one of Fortune's most admired companies for 2005, for what reason I can't imagine. In 2004, SBC spent between $17 and $29 million on "cost of sales" and "selling and general administration" which usually means marketing. For the most part, they have a monopoly in my region for providing land phone and near monopoly for DSL Internet service. As a result, I've been a customer of some kind with them since 1978 when I first moved out on my own. At a pre-sorted rate of say, 24 cents per piece, that's at least $24,000 in postage alone wasted per mailing campaign So what's all the huff about? About once a month, SBC sends a nicely designed, offset-color direct mail piece urging me to switch. Switch to their local phone service, switch to their DSL Internet service, or switch to their long-distance service. The problem is I have all their services already and they continue to market to me as if I didn't. After 27 years, haven't they figured out I'm a customer yet? The reason this annoys me is that I'm certain I'm not the only SBC "customer" who gets these types of regular offers. With 37 million nationwide local telephone service customers, I bet there's a good percentage of us out there that get these regular mailings. Let's pick a number, and for the sake of being nice, let's say 100,000 SBC customers get these enlightened mailings. At a pre-sorted rate of say, 24 cents per piece, that's at least $24,000 in postage alone wasted per mailing campaign trying to get some percentage of their 37 million customers to switch. I suspect this number is higher: perhaps a million customers get these mailings. If that's the case then I suspect this number roughly equals the salary of the person in charge of new customer acquisition at SBC. Good one, people The best one I received from them was another nicely designed piece (offset color again), urging me to sign-up for a promotion to combine my services with other carriers, local, long distance, and DSL and get a lower rates for all three. The problem is, once again, I have all these services already with SBC and come to find out, I'm paying way over the promotion piece and didn't know it. My prompt call to SBC insisting that I get the promotion rate was met by "the promotion requires that you sign a one-year contract," to which I replied, sure, love to since when it comes phone service in my area, SBC is pretty much the sole provider, so I don't really have a choice do I? While the list goes on of other companies who pretty much do the same thing--my cellular service provider, my bank, etc. My point is as a result of their really stupid marketing practices, the rates for these services continues to climb. Here's An Idea…. Come on, SBC spends at least $17 million a year on marketing, so why not take a million and get a little crazy. I'm not saying these companies should stop mailing their existing customers, but they should sit back and think about what they are doing. What would it take to take a serious look at their customer base, the data they've collected on them since over the last 20 years and do some semi-intelligent marketing? Come on, SBC spends at least $17 million a year on marketing, so why not take a million and get a little crazy. For example, find out who your customers are and stop trying to sell them products they already have. Next, take some subset of your customer base, find out what they are doing with the service they already have, or don't have, and put together a loyalty program that makes them think twice about switching to the competition just because they're annoyed at all the money you waste on useless direct mail. If you learn that some of your customer have landline phone service and don't have wireless, it's not unreasonable to assume in this day of omnipresent phones that they might have wireless service with a competitor. You think? Finally, look into adding some database analysis tools, variable data, and digital color printing to the mix. In the end, you might just save a few dollars and produce some digitally printed direct mail that's actually relevant to your customer's needs. While each piece might cost a bit more, you might find out if done half-decently, your response rate might be higher than the 0.5 percent you're getting now, and you can turn the savings back over to your customers. Okay, I guess the last is really wishful thinking. The point for print providers is that such practices are opportunities to show how digital printing and targeted messages can make much better use of marketing resources. Now the marketing folks at SBC that can't figure this out are hardly alone in the world of corporate marketing. Many companies waste money the same way. But the point for print providers is that such practices are opportunities to show how digital printing and targeted messages can make much better use of marketing resources. On the Bright Side So I don't sound like an angry old bald man in the twilight of his mediocre career, I'd like to end on a positive note. Last week I received two mail order catalogs from Levenger (www.levenger.com), a 28-year-old company providing "tools for the serious reader." The cover of one pictured a women's purse and matching accessories, the other a gentleman's wallet, key chain, and other manly stuff. The first was addressed to my wife, the second to me. Both were printed offset and the catalog's insides where identical. Both sat on my office desk side-by-side for a couple of days until I noticed the "women's" version missing, appearing later in my wife's possession. While calls to Levenger weren't returned, I can pretty much guess that their marketing department is pretty small, perhaps 1-6 people if that, and probably doesn't spend anywhere near $17 to $29 million dollars a year on marketing. SBC, I'd like to introduce you to Levenger, Levenger, I'd like to introduce you to SBC.