Consumer acceptance a top concern

Privacy, consumer acceptance and the economy are among the key issues named by delegates to the Canadian Direct Marketing Association's spring conference as inhibiting the growth of the direct marketing industry in Canada.Tony Keenan, president of Regal Greetings & Gifts, a...

Privacy, consumer acceptance and the economy are among the key issues named by delegates to the Canadian Direct Marketing Association’s spring conference as inhibiting the growth of the direct marketing industry in Canada.

Tony Keenan, president of Regal Greetings & Gifts, a mail order distributor of general merchandise, says for him, the issue is the same now as it was when he entered the business 27 years ago: consumer acceptance.

Dearth of quality offers

‘There are just not enough quality offers in the marketplace to attract new tryers of the [direct marketing] concept and to keep them,’ Keenan says.

‘We lack credibility in the marketplace, and that’s not only in the catalogue business, but that applies to all direct marketing offers,’ he says.

Keenan says the solution is more quality product, better service and good prices.

‘And I think that we’re seeing a little bit of that coming in through the u.s. cataloguers J. Crew and Land’s End,’ he says.

‘They are doing a reasonably good job coming across the border. They could do better, because the concept of charging for product in Canada in u.s. currency doesn’t make any sense.

‘They should come into the country and do it right, instead of trying to skim off the surface from the outside. But all of that aside, that’s where the opportunity lies.’

Keenan says he looks forward to more competition from u.s. cataloguers.

‘I see nothing but good things coming from some of these quality organizations coming into the marketplace and generating interest and credibility and, therefore, more names for me to mail to,’ he says.

‘That’s my problem, I can’t get enough Canadians [from list brokers.] The numbers are so small that it really inhibits my growth.’

Sherry Martin, senior manager of direct marketing at Royal Bank, says the biggest threat to the growth of the direct marketing industry in Canada is still the privacy issue.

‘It’s not going to go away,’ Martin says. ‘There’s more pressure from certain groups to have the government regulate the industry.

‘The key issue for the cdma is to make sure we can maintain our self-regulation,’ she says, citing the cdma-sponsored privacy code introduced Jan. 20.

Transfer of information

Under the code, cdma members must give new customers the chance, no later than Jan. 1, 1994, to stop the transfer of information about them to third parties.

Existing active customers must be offered the chance to opt out of information transfers before January 1995.

‘The whole reason behind direct marketing has been the ability to reach a specific target audience very cost-effectively,’ Martin says.

‘If you start to take that away, the whole premise upon which direct marketing is built starts to weaken,’ she says.

Martin says there is a fundamental conflict between consumers’ desire to protect their privacy and their desire to protect the environment.

‘The ability to target is based on knowing factual information about clients and prospects,’ she says. But if we have a problem with the privacy restrictions, we’re going to have to mail more and not be as targetted.

‘So the issue is not one independent problem really, but interrelated.’

Tony Lovell, director of individual giving and business development at the United Way of Greater Toronto, agrees.

‘Privacy and the environment are feeding on one another,’ Lovell says.

‘More paper is bad and that raises concern over the efficiency of the industry,’ he says.

Better databases

‘To move away from the inefficiency, you have to build better databases. And that raises more concerns over privacy, because you are sharing people’s names electronically.’

‘Obviously, self-regulation and self-policing will help the direct marketing industry in this area.’

Barbara Ritchie, vice-president, product marketing at Hume Publishing, a publisher and marketer of home study courses and financial newsletters, is another delegate who sees the right-to-privacy issue as one of the biggest concerns.

‘Database technologies are going to allow us to capture information about existing clients or prospective clients and, obviously, from the client’s perspective, there’s a fair degree of nervousness in terms of what it is we know about them and what we do with that information,’ Ritchie says.

‘We have to make sure there aren’t unscrupulous marketers who are abusing their access to the information that is out there,’ she says.

‘The steps we have taken in terms of the privacy issue go a long way in that direction, but that is something we are going to have to continue to monitor.’

The best way to deal with the privacy issue is through education, says Marco Marrone, director of card marketing at Canadian Tire Acceptance, the financial services division of Canadian Tire.

‘The big thing is consumer education,’ Marrone says. ‘We want to put it into consumers’ hands that they have choices about direct marketing, if they want to receive an offer or not receive an offer.

‘We have to show consumers we are taking into consideration their well-being,’ he says.

‘And there is recourse for consumers if they feel they are being mistreated, for example, that their names are being passed around without their consent.

‘There has to be open dialogue between direct marketers and consumers. You can’t hide anything from the consumer, otherwise you’re asking for trouble down the road.’

Lagging behind U.S.

Roger Logan, president of Herbert A. Watts, supplier of data processing, merge-purge, lettershop, list brokerage and telemarketing services, says in his opinion, Canadians are lagging behind the u.s. in technology, and that is the biggest hindrance to the growth of direct marketing in Canada.

‘I’m not in the printing business, but the complexities of some of these packages coming out of the United States are overwhelming,’ Logan says.

‘And I know that they are an in-line process, just because of the amount of personalization on them,’ he says.

‘By in-line, I mean cradle to grave – the data goes in one end of a machine and out comes a finished, personalized piece of direct mail.’

Donna Urban, director of Canadian marketing for u.s.-based Publishers’ Clearing House, the world’s largest direct mail subscription company, says the biggest factor slowing the growth of direct marketing is the economy, both sides of the border.

‘Assuming we’ll all behave now there is a privacy code in place, and direct marketing’s name is not smeared up in Canada and consumers remain responsive, what would prevent the industry from growing?’ Urban asks.

‘It’s the economy,’ she replies.

‘We were looking just recently at the budget in the province of Ontario and I don’t think that bodes well for any direct marketer.

‘When you talk about civil servants and austerity cuts, you are taking a lot of people out of the buying market. That’s just one example.

‘I’m just saying the present state of the economy works against the dramatic growth of direct marketing in Canada.’

Marsha Copp, assistant vice-president of direct marketing at Toronto-based Household Financial, says direct marketers stand to lose out on a lucrative source of income if they fail to increase their understanding of the various groups within the seniors market.

‘It’s very easy to alienate seniors by labelling them seniors,’ Copp says. ‘If you treat a 50-year old like a 70-year old, you’re going to shoot yourself in the foot.’

Copp says the cdma could help by providing a forum at its next conference to u.s. direct marketers who have experience in direct marketing to those groups.

Consumer cynicism is also a concern, she says.

‘I think most marketers would like to believe that consumers believe what we tell them, Copp says.

‘But they don’t,’ she says.

‘We all need to wake up to the fact that they are cynical, they have been exposed to a tremendous amount of advertising and we’ve got to be a lot more real with them. More honest.’

Neil Gallaiford, national director of donor-based campaigns with the Multiple Sclerosis Society of Canada, says the key issue, in his opinion, is the size of the market.

‘It seems to me that the market can be increased in size in a couple of different ways,’ Gallaiford says.

‘One is for Canadian direct marketers to start looking beyond the short horizon and start looking across the border at the u.s. – make free trade work for us for a change,’ he says.

‘And the other is to actually change the size of the market in Canada by increasing the level of confidence Canadian consumers feel in direct marketing.

‘I think you can do that by increasing the quality, service, attention to the customer, and so on.

‘So that Canadians start to think that it’s okay to buy by catalogue, or, in my case, make donations through the mail.’

Gallaiford is quick to point out he is not talking about the availability of lists. ‘That’s a symptom of the problem, rather than the actual problem,’ he says.

‘I think there’s a bigger market north of the border than we currently have, and we can tap into it by improving the level of quality and professionalism of direct marketers.

‘I look at the stuff that’s available from catalogues in the u.s., and they’re terrific. The quality’s there. You call and it’s a perfect experience every time. They bend over backwards to help you.

‘I ordered something recently and it came with instructions on how to return it. There’s no hassle. I get my new sweater in the right size, take the wrong size, put it in their packaging and mail it back to them at their expense,’ Gallaiford says.

‘We can do stuff like that here, too,’ he says.