Dialogue marketing – finding success through interactive customer relationships

Marketing strategies have long attempted to treat the consumer as more than just a recipient of adverts. After all, while the message your business puts out is a crucial element, customer feedback is even more important. Even traditional forms of direct advertising, such as advertising letters or mail-order catalogs address the customer personally and request a response. Opening a dialogue with the consumer aids the growth of a customer base and ensures existing customers remain loyal. These traditional marketing methods still enjoy great popularity. But in the digital age, the need for an active relationship goes beyond advertising letters, order cards, and service hotlines, and the full potential of interactive customer relationships continues to be explored. Read on to learn more about dialogue marketing in the context of e-commerce.

What is dialogue marketing?

Although dialogue marketing is considered an area of direct marketing, this term is beginning to displace ‘direct marketing’ in common speech. While traditional direct marketing methods are primarily distinguished by their personal approach to addressing customers, dialogue marketing focuses on the reciprocal exchange of information between the provider and consumer. The Free Dictionary offers a succinct definition of dialogue marketing:

‘A marketing strategy or tactic in which one tries to make sales by developing a friendly business relationship with a potential customer. Assuming the product itself is good, dialogue marketing may result in repeat business.’

By paying attention to individual customers’ needs, dialogue marketing encapsulates the development of sales industry; rather than use mass marketing, businesses use techniques to address a specific niche. Even target groups have been reduced to individual customers. Instead of displaying advertising campaigns to an entire customer database and experiencing a high scattering loss, businesses are now opting to address individual customers personally through dialogue-oriented media.  

With the growing relevance of internet-based communication channels for marketing, sales, and customer service, creating a dialogue with the customers is a central priority. Dialogue marketing is now becoming a generic term to encompass all direct advertising methods, including traditional methods such as telephone acquisitions. This shift in focus is reflected in education curriculums and job advertisements; we now see job vacancies for experts in online dialogue marketing, indicating that traditional forms of direct marketing are on the way out.

How does dialogue marketing work?

In dialogue marketing, advertisers and sales specialists zone in on the interests and needs of potential customers. Internet users are addressed with an individually-tailored selection of ads for goods or services, which work to strengthen customer relationships. To do this, businesses rely on advertising channels that contain a response element, enabling them to measure the customer’s response. A customer response would include, for example, calling a service hotline, clicking on an online ad, or scanning a QR code from their mobile camera.

The range of interaction options varies considerably depending on the medium used. While advertising methods such as coupons and bonus programs only create a dialogue in an abstract sense, the term, ‘dialogue marketing’ can be taken literally when it comes to conversations on the phone with customers or when having face-to-face conversations, for example, at trade fairs.

Current dialogue marketing methods include:

  • Fully and partially-addressed advertisements
  • E-mail marketing (newsletters and mails)
  • Telephone marketing (inbound/outbound)
  • Customer cards, bonus and loyalty programs
  • Customer magazines, brochures and mail order catalogs
  • Coupons (online/offline)
  • Search Engine Advertising (SEA)
  • Online Ads (Content/Display Ads)
  • Traditional advertising with response element
  • TV or radio ads with response element
  • Social media profiles
  • Company and product websites
  • Trade fairs
  • Product samples

To enter a dialogue with customers, businesses should try to make responding to their ads as easy as possible. Typical response elements include customer helplines or pre-addressed envelopes. A popular dialogue marketing technique is to use financial incentives to generate customer reactions. Typical sales strategies include:

  • Discounts when submitting coupons
  • Money-back guarantee in case of dissatisfaction
  • Early bird offers
  • Discounts for recommending to a friend

Response elements enable businesses to measure the success of their ads through customer feedback and make changes to unsuccessful campaigns. For example, a money-back guarantee can provide clear signals from the customer as to whether a product is satisfactory or if it requires improving. And if an existing customer recommends a product or service, this signals satisfaction and trust in the supplier, and can expand the business’s customer base via their sphere of influence.

Dialogue marketing in e-commerce

Dialogue with the customer has now also become a central marketing strategy in e-commerce. The unique opportunities presented by web analysis are the central driving force behind this, in addition to highly interactive online channels.

User responses can be captured in detail and evaluated with tracking tools such as Google Analytics, Piwik, and eTracker. Taking e-mail marketing as an example, failed attempts to send messages (i.e. bounces), opening rates, and click-through rates can be recorded to gain insight into users’ reading behavior. Current newsletter tools rely on tracking pixels; these are downloaded from the server when a commercial e-mail is opened, giving a clear indication of user interaction. It is important to note that data on reading behavior must be recorded separately from personal data, such as the e-mail address – by using pseudonyms, for example. This applies in all cases unless the recipient has expressly consented to personal tracking.

Thanks to web tracking, online advertising formats, such as content and display ads, can also provide marketing strategists with detailed information about the advertising campaign’s success. The biggest advertising companies bundle different websites into gigantic advertising networks, which are recorded by powerful ad servers using adverts. The data collected is then stored in a central location. This data includes information about which customers see which adverts, which ads are clicked on, and whether this leads to further interactions on the landing page. The data is used to create mostly anonymous user profiles and is evaluated in the context of behavioral targeting.

Thanks to web tracking, online business can benefit from a wide range of options for performance review, which are not available to advertisers working in offline channels. A/B testing is essential for the optimization of dialogue marketing tools and response elements. If you want to increase the open rate of your newsletter campaign, for example, A/B testing provides different versions of newsletters for advertisers to compare. It should be noted that, unlike multivariate testing (MVT), only one element is varied for each trial series, such as the e-mail subject, a link title in the main body text, or the typographic design.

In addition, the Internet has produced different communication channels that enable businesses to communicate with customers in real time on their own level. Many online merchants have now extended their arsenal of customer care platforms to include live chats and manage customer feedback via their social media profiles and moderated support forums, in addition to long-established customer hotlines.

Aims of dialogue marketing

Companies engage with dialogue marketing techniques in an attempt to understand and positively influence interactive relationships with consumers and their attitudes towards brands, goods, and services. Dialogue marketing pursues simple and effective communication goals related to the level of brand recognition, as well as the brand or business’s image. Dialogue marketing is therefore geared towards increasing sales and profit. In addition to the acquisition of new customers, customer retention is a central goal.

Especially in highly competitive markets, investing time and effort into creating customer loyalty strategies is necessary to prevent customer migration to competitors. However, effective customer relationship management can significantly reduce scattering loss in advertising measures. The reactivation of existing customers is far more cost-effective than the acquisition of new customers. For most companies, however, a significant portion of the advertising budget still goes towards reaching out to new customers.

Monitoring the success of dialogue marketing activities is easier for economic communication purposes than for cognitive or affective communication purposes. Companies that provide a personalized offer to selected regular customers can then directly evaluate the effectiveness of their marketing measures by comparing costs and return rates.

However, it is difficult to measure the success of an advertising campaign when it relates to the customer’s perception of products and services, the corporate image, or an emotional reaction to a brand. Many dialogue marketing activities also function as adverts if the customer does not actively return feedback. Even if unanswered, an e-mail advertisement can benefit the reputation and change the perception of a business or brand.