If the question of “What is direct marketing?” leaves you drawing a blank, then this from  Chris Combemale, executive director of the Direct Marketing Associationexplains how it can drive sales for your business.

Direct marketing is, broadly speaking, the approach of targeting customers with tailored, one-to-one marketing messages and giving them the means to respond. This can be done via any number of media channels – email, direct mail, social media, SMS, telemarketing, leaflets – all are suitable for personally addressing your customers with information about your products or services.

An investment in sales

For small businesses, direct marketing is a particularly cost-effective option for driving sales. Direct marketing is scalable, which means that regardless of budget size any company can afford to mount an effective campaign. Direct marketing is also highly accountable, allowing companies to easily measure the number of sales generated by a given email or direct mail piece and determine the exact return on investment.

Of course, this means finding the budget in the first place. In tough trading climates it’s tempting for companies to cut back or even slash their marketing budgets. However, it’s counterproductive to reduce costs by cutting marketing expenditure. Businesses must outperform their competitors if they are to succeed in 2012. Lessons learnt from previous economic downturns tell us that businesses that invest in data-driven, measurable marketing are better placed to achieve growth and greater share of market. Companies that fall silent will lose out to competitors that continue to invest in marketing to promote and sell their products.

Getting the DM ball rolling

Irrespective of your career background or professional skill set, the chances are that if you’re running an SME then you’ll have quickly learned to deal with every business function – not just those with which you’re most familiar. Because direct marketing is part science and part art, it’s an area that can be all too easy to get wrong if you lack the necessary in-house expertise or don’t employ the services of a specialist agency.

Whether you’re a direct marketer by training or not, if ultimate responsibility for marketing rests on your shoulders, then you need to understand the core values that underpin direct marketing. Doing is crucial to the practical stages of devising and executing a successful sales campaign.

Direct marketing novice or veteran, these are the eight strategic principles you first need to consider:

1. Know your customers

The large volume of available consumer data and today’s analytical tools now offer unprecedented insight into consumer preferences and behaviour. Companies that really get to know their customers will be able to develop compelling value propositions tailored to their interests.

2. Retain your best customers

Retaining customers is far more profitable than continually seeking new prospects. Marketing communications plays an important role in building a long term relationship with the customer, fostering brand loyalty and stimulating repeat purchases.

3. Concentrate on lifetime value

For most companies, the Pareto Principle applies: 20 percent of customers account for 80 percent of profits. The best investment to make in adverse economic conditions is to find and attract more customers that look and behave like your best customers. The right marketing channel to reach quality new customers may not be the cheapest option available, but the investment will pay off.

4. Understand what influences the purchase decision

Companies must build a complete picture of the customer journey when making online purchases in order to understand what factors really influence consumers to make a purchase. Investing in good attribution modelling and response analysis will help indentify the critical influencers and tell you how best to spend your marketing budget.

5. Segment your offers

Making the right offer to the right customer at the right time is a simple marketing principle, but is all too easily forgotten. You’re wasting money making an offer to a consumer who’s not in the market to purchase what you want to promote. Segmenting your audiences and creating tailored offers is the route to effective marketing.

6. Customer service is the new marketing

Consumers’ product reviews on ratings websites and discussions in online communities are hugely influential among fellow consumers. The customer service experience you offer must therefore be treated as a form of marketing: better service means better reviews.

7. Build trust

Effective direct marketing relies on good-quality data. Research shows that consumers are more willing to share their personal information and preferences with companies they trust. Building trust is therefore just as important to financial success as short-term sales tactics.

8. Embrace innovation

The digital era has ushered in some incredible ways to reach consumers in real time and get them to interact with your brand. However, it’s not enough to just use email, mobile or social media marketing in isolation. Industry research has shown that marketing through online and offline media is most effective when the channels are integrated in novel, innovative ways.