The Pros & Cons of Direct Marketing for Small Business

The Pros & Cons of Direct Marketing for Small Business

Marketing is about telling your target market about your small business. The definition of sales is to make people buy from you directly and with little to no delay. Direct marketing for small business is where both these techniques come together. But there are pros and cons you should consider first.

What is direct marketing?

In direct marketing campaigns, you provide information about your products or services. And you include a response element that enables recipients to order from you right then and there.

For example, the response elements in direct marketing for small business could be:

  • In telesales, they can buy and pay immediately over the phone.
  • Your email campaign contains a direct link to your online shop.
  • direct mail or leaflet drop provides them with a coupon.
  • Your advert includes a specific URL for the campaign.
  • The Google and Facebook ads link to a customised landing page.

But is this a good way to increase your reach and grow your small business? Let’s have a closer look!

Find out more about how to create a successful marketing campaign for your small business.

Does direct marketing work for small business?

The Pros & Cons of Direct Marketing for Small Business The answer is yes and no. Direct marketing has been used to generate new leads and sales for decades. And for many companies, it’s still a valid and proven method to generate new business.

But it has its disadvantages and it is not easy to make it work, especially for small businesses. One downside is certainly the high cost that comes with direct marketing campaigns, which makes them often too expensive for small businesses.

But it can be worth it, especially if you’re a visible local business or need to build up the brand awareness of your new company. In combination with other marketing channels, direct marketing for small business certainly has its place.

To help you make up your own mind, I’ve collected the main pros and cons of direct marketing for small businesses.

The cons of direct marketing for small business

Con #1: Reputation

AdBlockers are popular for a reason: On a daily basis, we get bombarded with offers, discounts, new releases and seasonal specials. Be honest, how do you feel when you get a cold call? Exactly. And the same goes for unsolicited emails or leaflet drops from local shops and delivery services.

The main problem of direct marketing – for businesses of any size and shape – is that it is invasive and more often than not unwanted. People are frustrated and hang up on sales calls, throw away direct mail and flyers and delete unsolicited emails on sight.

Because of this, it is hard to get through to people while maintaining your small business’s positive reputation.

Con #2: High volume

The Pros & Cons of Direct Marketing for Small BusinessBecause most direct marketing campaigns are unsolicited, they usually have a very low response rate. Take email marketing, for example. If you send an email to businesses in your area, your open rate will very likely not be higher than 11-15%.

Additionally, it’s very likely that less than 1% will click the link to your online store. And in my days as a direct marketer, a response (or click) rate of 0.3% was a win for our mailshots.

And direct marketing for small business is even worse because their target market can be quite small. For example, if you email to 1,000 cold addresses, you will very likely end up with less than 10 people actually clicking on your link.

And at that point, you still have to convert them into customers and make them complete the order. For direct marketing to work, you have to contact A LOT of people to get a large enough response.

And high volume costs money. So before you get started, check if there is a realistic chance of a positive return on investment (ROI = total profit – total cost).

Con #3: Availability

Depending on your target area, you might find it hard to get enough contacts for your direct marketing campaign. There are a lot of reliable address brokers out there. But they might simply not have enough data for you, especially if you are targeting a specific niche.

You also want to make sure that you get valid address details. For example, if you are planning an email campaign, you want to have personalised emails from decision makers in a relevant department.

You also want them to be up-to-date, otherwise, that person might have already moved on to another job. And make sure you get personalised contact details. If not your direct mail or call is very likely to end up in the (figurative or literal) bin.

And especially with the current strict data protection rules (like GDPR), it’s not easy to buy addresses that you’re legally allowed to contact.

The pros of direct marketing for small business

Pro #1: Relevance

The Pros & Cons of Direct Marketing for Small BusinessOne way to make your direct marketing campaign a success is to deliver something of value to the recipient. If what you’re offering is something I need right now, I am much more likely to look into it.

And if I like what I am seeing, chances are that I might even order it straight away. For your content to be relevant and interesting you have to do a lot of research.

You need to know your target group inside out and have a really good contact database. Everything from your timing, your wording and your addressee of choice is crucial to the success of your campaign.

Pro #2: Trust

Relevance alone is not a safe recipe for success. When it comes to direct marketing for small businesses, you also have to build trust. No matter how tempting the offer, you have to make up for the fact that they probably do not know your small business.

In order to make the impersonal personal, avoid using a detached businesslike tone and show them the person behind the business. Sign the letter in your name or include information about your small business in your leaflet.

Show them where they can find out more about you. For example, linking to press releases or media mentions is a great way to prove your trustworthiness and increase your conversion rate.

Pro #3: Warm up

The Pros & Cons of Direct Marketing for Small BusinessLast but not least, the best way to boost your direct marketing campaign is to turn your cold contacts into leads. You can do that by building a mailing list that people have voluntarily and actively subscribed to.

Or you can call people ahead and introduce yourself before sending them your email campaign or vice versa. Similarly, a print advertising campaign works better if flanked by advertorials, press releases and online advertising.

And you will see the difference: An email campaign to your own mailing list has an average open rate of 40-60% and a click rate of 10% and more.

The response rate of a direct mail to your existing customers is also a multiple of the meagre 0.3% that define a success for cold mailshots. It might take longer than your average direct marketing for small business, but it’ll be worth it.


KEEP READING

If you are interested in reading more about this topic, have a look at these:
Email Marketing for Small Businesses: Why You Should Use It & How to Get Started
Customer Focus: Marketing Your Small Business Doesn’t Have to Be Annoying
What Does GDPR Mean for Your Small Business Marketing
How to Respond To Negative Reviews – with Examples


 

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Published byDenise Strohsahl

Denise Strohsahl is an Edinburgh-based marketing consultant, specialising in helping small, local businesses get more of their ideal clients.