Mass marketing is done; consumers are officially smarter. I remember when I was in my twenties hearing a great Icon in direct marketing say “Consumers are dumb.” The audience was aghast. He then said, “Why do you think they put warning labels on bleach?” With that a roar of clapping broke out. Fast forward only five years, the Icon’s multi-title catalog conglomerate failed. And soon after, we saw the rise of the Internet. The lesson is that times change, and they change really fast. The Icon did not know that the world would change within a decade. But we now know the world can change in a day, 9/11, the launch of the iPhone and the fall of the stock market.

None of us should be sassy enough to say who is dumb now. Today we have digital media and we have mobile phones that allow us to be connected 24 hours a day. We can watch and/or listen to programming on demand. We can find information on any topic at the tip of our fingers. And we can share information equally as easily. Consumers hold us accountable and they should.

In today’s world, however, we are all on shaky ground, surrounded by contradictions and conflicting information. Finding the path to move forward is tricky at best. Manufacturing seems to be increasing, but unemployment is expected to hover around 10% through the end of the year at least. According to Big Research, Walmart is the leading seller of apparel, footwear, groceries, and health and beauty products. At the same time, Unity Marketing reports, spending by luxury consumers has increased 30% in 2009 vs. 2008; although the number of people actually buying the luxury goods has decreased about 20% from those who bought luxury goods in 2006.

As we prepare budgets, we are projecting performance flat compared to last year through the end of the year; although we may even take these projections down by as much as 5-15% depending on an individual client’s business profile.

So what does this mean for the direct marketplace? Marketsmith has been assessing the lay of the land and we are prepared to help clients tackle the challenges direct marketers now face. Below is an expansion of our current Roadmap, which I touched on in my letter.

Key Strategy: Have multiple marketing strategies ongoing and in the queue to deploy. Be prepared to dial up and dial down based on response and season. A great CMO knows, like any talented football coach, you vary the strategy and tactics based on the playing field if you want to make that touchdown. To borrow from the character Troy Bolton in High School Musical, “Get your head in the game.”

1. We love transit media for certain categories of products. We see that our clients who are starting to rebound are those that make being at home more pleasant. Reaching out to them in an accessible format on their way to work makes sense to us. We believe they are thinking about fixing up the patio, entertainment by subscribing to satellite TV, picking out new pillows for the couch, replacing the old food processor with one that also makes smoothies and fancy coffee drinks. All of these purchases are likely to continue to rise, albeit slowly. So you need to chase them.
2. We still like Facebook and all Internet sites where customers can form and share opinions and gain insight. We are watching the iPad as a medium for interacting with customers. Customers don’t necessarily want to sever their ties with favorite retailers; consumers just won’t be able to engage with the retailer as they have done in the past. Make it easy for your customers to stay connected to you. Send them interesting news by email; invite them to join your Facebook page and interact with other customers/fans. Let them know that you value their patronage and loyalty; even if they are not buying anything right now. Consider sending them a sneak preview or a special offer for a product which is at the low end of your price points so that you can move your customer up as she has more discretionary income available.
3. We want you to love your call center metrics and strategy. Customers can be fickle. Now is the time to make sure that your customer service is flawless, that your call center and customer service reps are friendly and completely knowledgeable about your products and processes. Test multiple scripts to be sure you communicate effectively with your customers. Let them know when items have shipped and when to expect them. Let them know when their accounts have been credited with refunds. And be sure that you track every communication and its outcome so those results can inform future interaction.
4. We want you to have a great handle on costs to advertise. It is a good time to review your cost structure and make sure that you are being as efficient as possible. Fine tune your segmentation for your contact strategy; review your paid search strategy calculating a contribution for each word; determine how often you should be sending emails; make sure your inventory is being tightly managed; monitor call center performance closely; and always do the customer and performance analysis to set realistic and achievable results.
5. The Hispanic market is a new revenue channel. If you are not factoring it into your near future strategies you will be left behind.

According to NPD’s Economy Tracker, about 28% of consumers feel they are in a good place financially. While this is up from 24% who expressed that opinion six months ago, it is not a reason to start popping champagne corks. We are not there yet. But we at Marketsmith know how to manage budgets, fine tune strategies, and find growth where others fail. Let us help you squeeze the most performance out of the rest of the year.

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