Think Tank: US direct marketing - Direct from the US

The UK adopted American DM techniques a long time ago. But do our US cousins have anything left to teach direct marketers in the UK?

There's a scene in the Monty Python film The Life of Brian where a group of disgruntled Jews ask "what have the Romans ever done for us?".

After much complaining, the group grudgingly acknowledges that the Romans had, in fact, gifted their country with a highly advanced physical and political infrastructure.

With some stretch of the imagination you could imagine a similar scene featuring UK direct marketers. After all, it is the American Lester Wunderman who is credited with inventing the term 'direct marketing' back in the 1960s, the practice of selling directly to consumers having been common place in the US for decades before.

There's recent evidence that the Americans still have a trick or two to share with us. As the UK General Election draws near, the Labour and Conservative parties are importing the data analysis techniques used in the recent US elections to target voters on issues that appeal to them. Surely this is proof that innovation in direct marketing still emanates from the US?

Not so, says our panel of Think Tankers - a cocktail of UK direct marketers from US-owned enterprises, some US ex-pats working in the UK and independent British practitioners.

Mass mailing culture

For David Perkins, chief executive of European data services group Wegener DM, the big difference between the two cultures is the US view of DM as a mass marketing tool. The average UK household receives 14 pieces of mail a month, according to DMIS, while US homes receive the same amount per week. Does this mean the UK is better at targeting than the US? There was some difference of opinion on this.

What the Americans call 'mailing the phone book' is a practice that dates back 40 years and, according to Kevin Cordray, the US-born managing director of Sitel Direct, is no longer commonplace. US data analysts use the same regression modelling techniques, Gains Charts and SAS software as their UK counterparts. As Mark Patron, database marketing consultant, points out: "You could take the analysts out of an American organisation and put them into a European one, and vice versa."

A key factor propelling mass mailing in the US is its data landscape, says Tim Lewis, director of Diners Club EMEA, at Citigroup, who has marketed cards for US credit card companies American Express and Chase Manhattan Bank. "The US has a much richer data landscape than Europe has," he explains.

"There's far more data to prospect with more accurately. I may have the Electoral Roll here, but in the US I could access people's credit histories, what mortgage they hold etc - the full financial picture. Over here, I can't see that."

Will the UK data situation follow the US model? Lewis doesn't think so: "I don't see UK politicians taking up the release of credit data as a popular bandwagon. Quite the opposite, in fact."

Commercial versus creative

Steve Barton, chief executive of Keevil Barton Kershaw, is an ex-pat who left the US in 1990. "One reason I was less interested in staying in America to do creative is the focus on the commercial equation - that if you send out x million packs you get a certain return. It matters less how you do it or what that pack says, but that you get it out on time."

Cordray says the ROI factor above all is driving mass direct marketing in the US. "Public companies don't work in three-year cycles - they chase dollars every quarter. That's why taking the long view is hard. At the end of the day, you're trying to return 10 or 12 per cent to a stock holder and that's why consumers receive so many offers."

The bad news for Barton is that this equation is taking root here. For many years, US consumers have been more likely to change brands than their UK counterparts, partly because of the choice available. But the British market is catching up.

There is, of course, a downside to there being so much data available in the US - that consumers there feel they have lost control of their data. "The consumer here feels legislation is there to protect them," says Patron.

America's laissez faire economic culture is underlined by its Constitution, the mention of which raises eyebrows around the Think Tank table. "It's a great document, but as with a lot of legislation you can hide behind it to defend the indefensible," Patron says. "And silent calls are indefensible."

The end of telemarketing?

The panel agrees telemarketing has been overused in the US to the point that it faces extinction as a marketing channel. More than half of US households, fed up with receiving an average of eight telemarketing calls a day, have registered on the US government's Do Not Call list.

Cordray, who sits on the Telephone Preference Service (TPS) board, sees an opportunity for the UK telemarketing industry to avoid a similar kind of fate. "A big impediment to the telemarketing sector is that regulators find it an easy target," he observes. "To avoid this the UK needs to get on the front foot and tell consumers about the benefits of what we do, such as the employment it provides and the services it delivers."

It seems the UK could follow the US experience in this regard, with 15 per cent of UK households now barring calls via the TPS. Mike Pervis, enterprise sector director at Vertex Customer Management, believes there's a positive lesson to be learnt from the US. "The Americans have started to use outbound in more contextual way. They are pioneering the very targeted, customer service-type call as part of customer lifestyle management." He cites examples of credit card companies calling customers who are extensive travellers about travel insurance. "That's not an invasive call and is relevant to their needs," Pervis says.

The panel agrees that e-marketing, unequivocally a US innovation, is going the same way as telemarketing because of that other, more dubious US invention, spam. Initially the US email regime was opt-out but is now following Europe and moving towards an opt-in culture.

UK's creative focus

The Americans around the table agree that the UK market is better than the US at using creativity as a point of differentiation with consumers.

"US consumers are more interested in the actual offer, not how it's put across," says Ruaraidh Thomas, general manager of Vertis Marketing Technology.

"Here we've had to be more creative because the postage is more expensive, you didn't have the data or the easily organised routes."

Cordray agrees, and there's laughter when he concedes that: "The average person in the UK is more clever, more culturally aware and less easily hoodwinked, which is why UK DM has to be more creative." Having chaired the US DMA's Committee for Ethical Business Practice, Cordray knows how far US direct mailers have overstepped the line. "I haven't seen any instances in the UK where a mailer would create a piece of mail that looked like it was from the government, to get people to open it. Those were the kinds of things we had to deal with in the US."

Several of our panellists work for American companies based in the UK.

Do Americans tend to arrive here with an understanding of the UK direct marketing scene? There is some inhaling of breath when the question is posed.

"Vertis bought Olwen Direct Mail in the late 1990s and they've learnt from us as much as we've learnt from them," says Thomas. He says the big lesson from America was the importance of ROI. "We have a fair amount of autonomy but we've had to fall in with the US style of reporting. That's a positive - to have this astute parent behind us."

Jon Cano Lopez, European services group leader at Acxiom, points to the view in some US quarters of 'the United States of Europe'. Perkins adds: "Americans do have difficulties recognising the differences country by country. For example, they may want to implement a campaign across Europe but then realise there isn't a national data file in France." It seems a lot of education has had to take place.

Leaders in technology

One truism is that much DM technology has originated in the US, in some cases to deal with the country's huge geographical spread and time zones.

Sitel has developed a worldwide private network, which allows call centres to distribute overflow calls worldwide in nanoseconds - a process it calls 'right shoring'. Cano Lopez also points to Acxiom's Abilitec database technology, which has been imported to Europe but tweaked according to local data protection laws.

"We take a lot of our developments from the US because the market is so much bigger and it can afford to develop things we in the UK can't," he adds.

Building loyalty

The panel is not too upset to concede that the US is a technological powerhouse, believing it pointless to reinvent the wheel. However, it's not a view the UK has taken with regard to loyalty. Though the concept of rewarding consumer loyalty was invented in the US, there's agreement that the UK has improved on the original.

"So much of the US experience was 'mail them a coupon or a birthday card' and that's considered a relationship," says Perkins. Tesco and its database-driven brand extensions are considered the ultimate example of the UK playing the US game, only better.

Had this panel discussion taken place 15 years ago, there's no question that in terms of data, technology and the internet, the UK had a lot to learn from the US. Now that technology can be transferred so easily, the conclusion is that the gap is closing in terms of the application of that learning.

The wheel isn't being reinvented, but passed back and forward across the pond, improved each time.

THE PANELLIST LINE UP

TIM LEWIS, director, Diners Club EMEA, Citigroup

Lewis recently joined Citigroup from Royal Bank of Scotland, where he was director of credit and debit cards.

DAVID PERKINS, chief executive, Wegener DM

Perkins joined Dudley Jenkins Group in 2002 and spearheaded its relaunch as Wegener DM. He was previously MD of BHWG Proximity.

STEVE BARTON, chief executive, Keevill Barton Kershaw

Barton has been chief of two DM agencies, Leonardo and DLKW Dialogue, after which he became a consultant for firms such as Unilever.

MIKE PERVIS, enterprise sector director, Vertex Customer Management

Vertex is one of the UK's biggest customer management outsourcers. Prior to his current role, Pervis worked at Sitel and Experian.

RUARAIDH THOMAS, general manager, Vertis Marketing Technology

Thomas has worked in DM for more than 12 years. He took up his present role in 2003.

MIKE PATRON, database marketing consultant Patron is a consultant and non-executive director of Thinkdata, Rocket Science and eCRM specialist RedEye.

JON CANO LOPEZ, European services group leader, Acxiom

Cano Lopez co-founded database bureau Altwood Systems in 1991, which became part of Acxiom in 2003.

KEVIN CORDRAY, managing director, Sitel Direct

Cordray moved to the UK in 2001, and is a member of both the TPS board and the CCA CEO Forum.

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