Getting more from your business to business direct marketing.

It used to be that banks didn't have to do much more than respond when business came calling. Word-of-mouth referrals and walk-ins guaranteed a steady flow of traffic. When family businesses were passed along, so was the preference for the bank with which they worked.

For these reasons

and more, business to business direct marketing has traditionally been a low priority marketing activity for most banks. It's not uncommon for this type of direct marketing to be relegated to a small fraction of the overall marketing budget. Yet the business segment represents a proportionally larger share of the bank's total assets.

In the past, bankers have been guilty of the phenomenon known as "drive-by business" - that is, driving right by the business on their way home each night, While this article focuses on direct mail marketing, it will also show you how business to business marketing has change from what it was in the past to what is possible today.

Reactive Versus Proactive Marketing

In the past, business marketing was, for the most part, reactive. Banks depended heavily on word-of-mouth advertising from existing customers, walk-in traffic and the prevailing attitude among family businesses that "if it was good enough for my dad, it's good enough for me." Unfortunately, the days are gone when the customer comes begging for money because your bank is the only lender in town.

Today, reactive marketing won't cut it. The banking environment is much more competitive, not only due to the presence of other banks, but also because of the pressures from nonbank financial institutions. With everyone vying for a piece of the same pie, banks cannot afford to stand on the sidelines and wait for the business come to them.

These competitive times demand proactive marketing - targeted to a specific clientele. The good news is that it's entirely possible for banks of any size to mount an aggressive marketing campaign to businesses that get the most bang for the buck using a combination of available avenues. The two most common are direct mail and telemarketing, generally used in conjunction with each other. Other commonly used methods are advertising on television, radio, business publications, newspapers as well as sponsored seminars, networking and personal sales calls. And with the proliferation of personal computers with modems, advertising through a site on the World Wide Web of the Internet is an increasingly viable alternative. Each of these methods can be used as a way to get off of the sidelines and into the game of business to business direct marketing.

Common Foundations of Direct Marketing and Sales

One of the common errors in all business to business direct marketing is the failure to recognize why customers buy. Experts agree that all business purchasing decisions boil down to these six categories:

"Reasons Why People Buy"

1. To Increase

Profit Satisfaction Confidence Convenience Pleasure

2. To Improve

Customer Relations Employee Relations Image Status Earnings

3. To Protect

Investment Self Employees Property Money

4. To Reduce

Risk Investment Money Energy

5. To Make

Money Satisfied Expenses Competition

6. To Save

Time Customers Good Impressions Space

Today you have to convince the client that you can deliver one or more - or all - of these advantages, and that you can do it better or less expensively than your competitors. If you analyze the elements of these six basic characteristics to better understand what motivates your customers - before you begin your next direct marketing campaign - you will be well on your way to producing a more effective campaign.

The Most Important Components of a Direct Mail Campaign

One of the most effective and efficient ways of sending your message to your potential clients is a well-executed direct mail campaign. What separates a well-executed campaign from one that is poorly executed? It almost always comes down to three components:

* The List. The basic foundation of any direct mail campaign. If you don't send your solicitation to the right person at the right business, your chance of success is very limited. There's nothing like a bad list to turn the most creative, enticing direct mail campaign into a total waste of resources.

* The Offer. The motivating factor in any solicitation. It must be powerful - good enough to get noticed and, more importantly, revolving enough to entice someone to not only respond, but to buy. Put yourself in your client's shoes and ask yourself, "What's my perceived value of this offer?"

There are generally two types of offers. One is the product offer or product pricing - soliciting the business by competitively pricing your product or pricing it below the competition. The second type of offer is the incentive offer, most often a supplement to the product offer, (for example, "open a free checking account and receive a phone card worth 60 minutes of free long-distance calling.")

* Creativity. Often the deciding factor in the purchase decision. Just as a bad list may not get your offer into the right hands, a lack of creativity will send your efforts straight into the circular file - unopened and unread. In business to business marketing, it is extremely important to grab a share of your audience's time. While most bankers think of their competition as the bank down the street, the competition in direct marketing is for a share of the prospect's time. If they don't read it, they won't buy it.

Americans are bombarded all day, every day by advertising messages. It doesn't matter if your bank is in the heart of a thriving metropolis or in small-town America. Your advertising message is competing for a share of your customer's time with mega-advertisers like Nike, Coke, McDonald's, Pepsi and others. Your message needs to be powerful enough creatively to compete with the other messages that your prospects see on a daily basis.

Creating the Offer

The main objective of your campaign is to deliver the offer and, along with it, the message that you can provide customers with advantages they don't currently enjoy. The first step in creating the offer is to focus on the customer. What do your customers and prospects want you to provide to them? A good way to look at it is to take a step back from your position as a banker and look at what you are proposing from your client's perspective.

Compare your product offer to the "Reasons Why People Buy" listed in this article. Does your product offer and incentive offer satisfy one or more of these fundamental needs? Are you truly satisfying their wants and desires? If you can satisfy your customers' needs, you will also be well on the way to satisfying your own needs through higher response rates as well as increased sales and profits for your bank.

To promote a strategic connection, you may want to tie your offer to information or planning expertise you can provide to the client. To promote a product connection, you may want to tie your offer to a special rate, preferred terms or some type of discount for that product. Your particular approach in any direct mail campaign is likely to be determined by your existing marketing strategy and the realities of your business market.

Using Creativity to Reach Businesses

One of the most important truths of direct mail is that businesses don't sell to businesses - people sell to people. A common mistake by marketers is to try to sell business services to a business, rather than having your individual employees selling to the people who are your customers' decisionmakers. It is still a person or a group of people who will make the decision to purchase your products and services. To that end, make your business solicitations personal and directed toward satisfying human needs as well as satisfying business needs.

You know from your own experience that, given a choice, you're more likely to work with someone with whom you have some degree of affinity. For this reason, it is vitally important for any direct mail solicitation to come from a person, not an institution. And it's equally important that the mailing goes to a person, not a department or a company.

The Importance of Positioning

The key to invoking a response and selling is to position the product to be benefit-oriented. In other words, from the customer's perspective, "What does it do for me?" To position a product correctly, determine the key customer benefits, then creatively show the customer what's important.

For example, say you're selling a money market savings account. The key product features are the liquidity and the attractive rate. You can creatively communicate this with a visual and strategic connection to "liquid." Then play off the visual with clear and concise copy that explains the advantages of having funds readily available while receiving a high rate of return on the investment.

Key Characteristics of Customer Segments

There are two key characteristics to which you'll want to pay attention when it comes to segmenting customers for purposes of solicitation. The first characteristic is geography. You can improve results dramatically by targeting prospective customers in a geographic area that you can reasonably service. By analyzing your current customers based on ZIP codes, you can readily identify those areas that are more likely to respond to an offer.

The second characteristic is segment profiles. While the general population's retail buying habits have been the subject of much more intense research than the purchasing decisions of businesses, there are still general characteristics that will lead you to business segments that are more likely to respond to your solicitation. Some of the characteristics you may want to pursue are Standard Industrial Classification (SIC) Codes, number of employees, or company sales figures. You may also want to go after vertical markets - if you have had success or developed expertise working with certain industries, you could pursue similar industries within your service area.

Product Demand and Untapped Opportunities

Most businesses have multiple relationships with financial service providers. By comparing the type of services your customers are currently using with the type of services you provide to them, you can cross-sell your existing customers multiple products. To determine the level of opportunity, compare the usage or volume of current customers' products with the total volume of those financial services within industry norms. In most cases, you'll find a large spread between what you are providing and your customers' needs. Typical products offering cross-sell opportunities are equipment and operating loans, checking accounts, cash management, business or corporate credit cards and investments.

Market Planning and Development

Once you have determined the bank's overall marketing goals and objectives, you can rank the segments that you wish to market to in order of importance. The first step is to develop a competitive product package and offer, as well as an incentive offer. The second step is to determine the level and type of marketing support you are willing to put behind the marketing effort. Because business to business marketing programs are highly targeted, one of the most effective campaigns is a direct mail program followed up with telemarketing and supported by an advertising campaign in local business publications.

Differences From Consumer Direct Marketing

Many banks have a long and successful history of consumer direct marketing, but have limited experience in business to business direct marketing. There are similarities between the two. In both cases, customers are contacted through direct mail, followed up by telemarketing and the desired effect is increased sales. However, that is where the similarities end.

While the objective on the consumer side is an immediate direct sale of the product, the objective on the business side is most often lead generation. The express intent is to set up a personal meeting between the banker and the principals of the business to begin the process of relationship building. This longer-term view is part of the relationship-oriented nature of business to business direct mail. When retail products are sold to consumers through direct mail, it establishes more of an "arm's length" relationship with the consumer.

That view also accounts for the tendency of consumer direct marketing to feature quick-hit offers for simply understood products. Direct marketing to a business, on the other hand, is likely to feature more complex products, carrying higher balances and requiring more in-depth explanation. Finally, one of the biggest differences comes down to the numbers. Consumer direct marketing is usually to a large base of prospects while business to business is directed at a small base of prospects. Consequently, the pressure is on business to business campaigns to perform at a higher level, requiring different executional strategies.

How the Business Package Is Different

The vast majority of direct marketing to consumers is packaged as a letter or a self-mailer to deliver the message inexpensively to a very large base of prospects. For the message to get through the various gates and filters that stand between you and your business prospect, it needs to make an impact.

One of the best ways to make an impact in the business world is to go with a three-dimensional package: a box, a tube, anything that's not flat and easily dismissed. Boxes and tubes get opened and examined. Their contents also get read, so you want to be sure that your copy is specific to your client's market and that it focuses on anticipated needs. This is in contrast to consumer copy, which is usually written to appeal to the specific lifestyle segment of the recipient.

Because of the importance of differentiation and impact, expect both your overall marketing costs and your per-piece cost to be higher than the average cost of a consumer package. Include in that cost an allowance for first-class postage for your business package rather than the third-class rate budgeted for a mass consumer mailing.

The Importance of Follow-up

Differences also carry over to the follow through methods used after the mailing is received. In a typical consumer direct marketing scenario, it's up to the consumer to take the next step. He or she is expected to call the bank or stop in at a branch office to personally follow up on the offer. The business to business approach is to take action to secure the client while they are still "basking in the glow" of the wonderful direct marketing package you delivered. The mailing is followed up by a telephone call and a personal visit by a banker during the crucial period when that client is still potentially predisposed to working with you.

This phone call and visit are an excellent opportunities to make a formal or informal needs assessment with your potential client. Again, the emphasis at this time is on personal relationship building. You don't want to be making recommendations for products and services before you've heard what the client's needs are. The focus should be on listening to the customer, taking note of their expectations and perceptions, and following up on the message of the direct marketing piece.

John Welsh is president of Welsh + Danielson Bank Direct in Minneapolis, Minn. He may be reached at (612) 359-0401.