DM is still seen as a creative delivery mechanism, and not as an end-to-end process.

If direct marketing in India has graduated from a somewhat peripheral function to a discipline viewed with a greater amount of respect and seriousness, some credit has to go to the Cannes Lions Direct gold and the local Grand Effie that iContract won last year for client ICICI. If nothing else, the agency proved to the industry that DM can be creative. It also proved to clients that DM can be effective. However, there's a long way to go before the industry finds its place under the sun, cautions 35-year-old S Swaminathan, senior vice-president & head, iContract. In this interview with N. Shatrujeet ofagencyfaqs!, Swami (as he is usually referred to) talks about the issues that dog the Indian DM industry. Among other things, he calls for the creation of a DMA in India and argues for a re-engineering of business models to keep pace with the changes at the client's end...

Edited Excerpts

The way I see it, they are interlinked. And if I were to build an analogy, I think it's something like the structure of an atom. An atom cannot exist without protons, electrons and neutrons. Similarly, if you are really talking about focused consumer marketing on a one-to-one or direct or relationship basis, if you don't know the consumer, you can't do one-to-one, if you don't know the consumer one-to-one, you cannot talk directly, and if you cannot talk directly, you can't build relationships. The three coexist to make the structure function better.

If you really have a one-to-one communication without building relationships, it really doesn't make sense. If you are having relationship marketing without understanding what the customer value is - and what segmentations and interests each of these segments have - you can't do focused, personalized communication. Therefore, these have to be interlinked to make it successful and, at the end of the day, deliver ROI to clients.

If you were to build a pyramid, I say relationship marketing is at the top-end of consumer-driven focused one-to-one marketing. The basic direct marketing - direct mail or telemarketing, based on basic databases - is at the base of this pyramid. One-to-one is when you say that I know who these customers are, so let me do a little bit of focused communication that is a bit more personalized. This is the next step in the pyramid. The final step is when I start talking to them continuously, because I know their interest, and as I start learning more about them, I start having a customized dialogue with them. I see these three as a progressing in the communication process.

At the expense of being slightly controversial, our business models have not changed since the days the basic DM started. We continue to go back to our clients and say, 'I will give you DM solutions, I will do direct mail…' I would think that is the reason why there has been some amount of stagnation, if I were to call it, in the quick adoption of this concept. We just keep talking about old models, when our clients have changed fast.

I also think the DM industry here has some basic infrastructure problems. My data information structures - consumer data and consumer information - have to be available for me to do focused direct marketing. That has not yet developed to the extent it has in the US and the UK, where customer information is tracked to the last purchase. Out there, I can do pinpointed direct marketing, which is still not the case in the India environment. That's an infrastructure impediment to the growth of this industry.

If you have to do a good direct mail exercise, you have to have a good database. The cost of reaching your target is also expensive. What this means is that the more you target your database, the more effective your direct mail is going to be. There is no use doing mass mailing like mass media, and that's really where direct mail has failed. The question is, how can you get targeted in your database so that you reduce the number of mailing to a focused number, so that your returns, in terms of responses, are much better? How do you reach the right 100 and not the irrelevant 1,000? That's the issue that DM has been grappling with in India.

Then, if you look at the DM business in the US - which is a large organized industry - there is a rating of lists that the DMA in the US has already done. Which means that when I go and ask for a list source from a list vendor, the list I am provided is rated by the DMA. This rating is one of the first quality checks. Now that's not happened in India. There are hazaar list vendors in India, but I really don't know a thing about the quality of the data, so that even if I do a mailing exercise with those lists, I have no clue what I am going to get out of it. Lists haven't been updated properly, and there is a huge amount of data decay.

Another thing is the manner in which the US has organized data. There is a huge piece of work done by the US Post on the national change of address. This has been databased. So when you subscribe to a mailing list, you also subscribe to the US Post listing of a change of address. So when I want to do a direct mail, I pick up a list vendor's list and use it against the national change of address register to weed out decay. As you see, there are whole entities that have to come together.

Well, the retail boom is happening right now in India. Then there are the telecom, insurance, loans and banking sectors. Now in all of these, you need consumer data to actually give out money or services. Which means data will get collected. So I am seeing a consolidation of these different institutions, where the data that they have becomes synchronized. The Income Tax department is getting centralized too. I see all this as a means of laying hands on usable data.

Also, look at the kind of industries and sectors that are being opened up. Insurance, banking and financial services, telecom, automotive, retail… These have been the traditional drivers of our industry. These sectors will need a lot of customer-centric processes, which is the reason for my optimism. I believe that the next 10 years are going to be exciting for this industry.

My point is simple. India needs innovation. You can't have the traditional US model of direct marketing here. If you tend to look at existing models, you will continue to face barriers. The need is to look at new models for the Indian environment, and that is going to be the success of any DM exercise. Look at new models, look at new channels, look at new touch-points, look at new ways of reaching the customer, look at new ways of getting responses… There are new mediums that the consumer is using - how do you take advantage of that to deliver a cost-effective solution? These are things that the industry should be looking at.

I would agree that enough initiatives have not been taken by the industry. We have not come together like, say, the Nasscom, and driven an agenda for this industry. And it's time that we did that.

That's the first thing. The second thing is what I would call the people issue. I think we need people outside our industry to come in with a viewpoint. For instance, someone who has been doing marketing in financial services, or someone who has been in the customer service business of a services company, or someone who has been involved with the technology part of a large bank… Such people have to come into our business, as these people are the critical wheels that can make this whole thing run. I don't think we have enough good people in our business. I think we have to get people who are committed to this profession, who have the right knowledge and skill-sets.

It is up to us to go beyond our traditional industry recruitments. It is on us to go to other industries and get people. And that's really how we've done it at iContract. For example, we've set up a separate specialization called the Digital Assets Group, which actually focuses on analytics, technology and database management. And it's an entity on its own, to support my account management function.

For example, we have a lot of people from a sales background who have come in. When I go and talk to a company for sales force automation and the creation of a customer-centric sales force automation tool, if I have not done sales, I wouldn't be able to advise the client on the solution. See my point? That explains the kind of people we have attracted at iContract - people who provide a knowledgeable perspective. And that is the reason why clients want and value this partnership. This is how we believe this industry has to grow, and we will continue to look at people beyond our industry.

I was speaking to someone from DMA Singapore, and what was interesting was that DMA Singapore lobbied for a tax break on spend on direct marketing. Therefore, companies started putting more money into direct marketing. I think the point really is that we need that body that works for the greater good of everyone. The way I see it, the client, the agency, IT services companies all need to come together to set up the body.

For instance, I for one know that TNT (courier) is a key player in the DMA Singapore setup. TNT has a product called Mail Fast, which works as a hybrid courier-and-post business. What happens is that when you send a mail through TNT, it goes as a courier half the way. When it reaches Europe, it gets into the post. Therefore, the cost of mailing is half. Their agenda in this is to ensure that direct mailing grows as a business. Isn't that a big initiative? Take another example - Royal Mail in the UK is a very strong player in the body. They promote the DM awards, they promote the reason to use direct mail… That's what I mean by an agenda. And we are lacking in one.

I think a body for the DM industry is extremely critical. Otherwise, we will continue to be dispersed, we will continue to do our work, but industry growth will be adversely affected. However, I go back to my earlier point. It is the people, the infrastructure, the body… all this has to be there for things to look up. Any one thing, by itself, cannot solve our problems.

Nothing has really prevented its creation… I just think someone has to champion it. And we are trying to champion its creation. There was an effort to create a DMA in India some four-five years back, but it just fizzled out. I think somebody just has to take the baton and run. That's what we are waiting for.

The industry players… We have to come together and initiate a dialogue. We have to build a round table, not just with agencies, but even with corporates. So the CII has to come in. Nasscom has to come in, because IT services is their business. And it has to be driven by an industry player like us.

I am very keen. I must add that the initiative has started, and I am already having a dialogue with key constituents on how to do it. However, since it is a dispersed lot, we just need to get people together, and that is taking a bit of time. I think it is just a question of time before things fall in place.

It should.

As I said, we have consciously tried to take people from other businesses - people who have had a customer-facing experience. We have people from sales, people who have implemented technology for institutions like large retail banks… We continue to do some strong work in training people.

But most importantly, we have not constrained ourselves to the traditional DM model. We do not say, let's do mailing, or let's do telemarketing. We see everything as an integrated process. So, what we have done is that within iContract, we have created specialists, and each specialization has an agenda to build a skill-set and a professional input for the business. If I have an account management team, that team is extremely passionate about direct marketing. I have a creative team that delivers on the one-to-one idea. That's really the difference that I feel we bring to this business. We have even done two-day training programmes with our clients to tell them what is direct marketing, what is analytics, what is CRM. And therefore, we have built an internal consensus with the clients' marketing teams on the way to drive customer-management programmes. We've had some very strong partnerships with the sales teams of some companies through our sales force automation solutions. In fact, we have delivered our sales force automation solution to one of our clients - Kimberly-Clark - that is now being taken to 15 countries. These are some of the things we have been extremely successful at.

My point is, I need to have a specialization within my company to understand the process and deliver upon it. That's the reason why we have structured the whole company along specialization lines. Our key differentiator continues to be people. Whatever tools and techniques and models you have are bound to fail if you don't get your people and their attitudes right.

Let's go back to some basics. Who do you have strong relationships with?

My neighbour grocer doesn't send me a birthday card. The guy who owns the place where I get a haircut doesn't have a sweet voice over the phone. Yet, I keep going back to them - why? Because I trust that they will do the best for me, that they understand my needs, and that they have my interest in mind. Take a doctor. He does not call you to enquire about your health, yet you build a relationship with him based on trust and honest counsel. These are the fundamental platforms on which relationships are built. Now apply the same principles to a brand. The last time you bought your two-wheeler from that dealer, how many times did he come back and remind you to get it serviced? Or did he at all? Does he really care if your vehicle is serviced or not? If you think he cares, that is the beginning of relationship marketing.

Relationship marketing is not about member clubs or loyalty points. Points never buy loyalty, and the moment somebody offers me more points, I go into that programme. So much for all the loyalty points you gave me. Relationship marketing is when a customer need is identified and a solution is offered to the customer where products are built into a larger solution, so that the customer begins valuing you enough to have a relationship with you. When I sell you a two-wheeler, it meets your need to commute independently. Fine, but what about ensuring that your need to commute has no hitches, for which I keep track of your two-wheeler's service record and keep reminding you about timely service? When I do that, you will see that I have your needs in mind, I will gain your trust, and we shall have a relationship. Unfortunately, I do not see many of our brands having this kind of a concept.

When we define personalization, many a time we define personalization by the creative. I am saying, why not look at personalization by the interaction. Just change the benchmark to say, how do I personalize the interaction? Personalization by interaction means when I go to a dealer, and he tells me that I didn't service my car last month. Now that kind of interaction doesn't cost you anything. It's just a process.

Now how do you put that process in place? That is the question. And I believe that clients have to look at DM agencies from that point of view. They should not be coming and telling me, 'Here's a brief. Can you deliver a mailer to me?' That way, the cost of personalization and dialogue starts increasing. But if they tell me to personalize their interaction with the customer, the benchmark becomes totally different. Then I will look at the dealer point, figure out how to personalize that interaction and build a framework. The point is that very often, the customer himself is contacting you, and you are doing nothing about it when it comes to personalization. The cost factor comes in when you insist that your personalization is going to be in terms of such-and-such delivery mechanism or the creative idea.

I think the reason why they are not attaching enough importance is because there is not enough evidence to suggest that direct marketing is an end-to-end process. DM is still seen as a creative delivery mechanism, and not as an end-to-end process - because we are a part of a communication business. So it naturally gets relegated to the back.

But if I were to say that I want to get into a customer-centric interaction process, there are many things that I immediately start putting into place. And from that point onwards, this business is not about communication but about interaction. That's when direct marketing will get its rightful place. Till then, I believe that it will get relegated into saying, 'Can we do this mailer?' or 'Can you do some telemarketing for me?' or 'Can you do fulfillment?' These are not my agenda. My agenda is to ensure that the larger customer perspective is not lost. I say, don't look at DM as a turnkey process to meet short-term objectives.

I like to call iContract as a customer-lifecycle management company. We are not in the DM business. The lifecycle of a customer changes within the company from time to time. So how do you ensure that you help and partner your customer across the lifecycle of his relationship with your enterprise? At some point in time, your customer might have a relationship with marketing, at another point in time he might have a relationship with sales, while at another, he might have a relationship with service. Now how does iContract ensure that its clients play a role in all these stages of their customers' lifecycles? That is our job, and we will take up the challenge. And when we, as an industry, meet the challenge, this business will gain importance.

Increasingly, clients are going to ask us, 'what's the service delivery?' Internally, I keep telling that we have to move from 'slide-ware' to 'delivery-ware'. We cannot just keep making PowerPoint presentations. Today, clients know about loyalty, and they are aware that they can increase loyalty by building relationships, so don't give them that gyaan. Tell them how you are going to deliver on that. Gone are the days when you tell clients that here's the problem and here's a creative that will solve the problem.

The way I see it, we must take ownership of our clients' customers. If I have to do that successfully, maybe my model will be very different from what I am doing today. So what will those models be? That is the area that we are looking at, as that is what the client wants to know. We have to show clients the method we have of owning their customers. For the industry, this is the only way to grow. After all, when clients are re-engineering their models, isn't it time you asked yourself what are you doing with yours.