Alan Portelli’s company maximizes incremental revenues to its clients by using a broad array of direct marketing channels. Liz French reports.

As online shopping has gained in popularity over the past decade, many direct response membership companies have turned to the Internet as their primary mode of communicating with customers, leaving direct mail and telemarketing behind. But according to Alan Portelli, president and CEO of Schamburg, Ill.-based United Marketing Group, those companies are not maximizing revenue for their clients.

“Once you sink the cost for a direct mail campaign, it is gone—it’s too risky. A lot of direct marketers have turned to the Internet because their margins are 10% to 20% higher than if they did direct mail or telephone campaigns. But from the clients’ perspective, these companies are not maximizing all opportunities to create significant, incremental revenue,” said Portelli.

To give its numerous clients in the retail, oil and gas, financial, and catalog industries the best bang for their buck, United Marketing Group connects with its clients’ customers by utilizing all direct marketing media: inbound calls, outbound calls, direct mail, and the Internet. “And it is all done at no risk to the client—we do all the marketing, so we take on all the risk.”

Alan Portelli

The majority of UMG’s business is in club membership programs designed to save its clients’ customers money. For instance, benefits of its Buyer’s Edge program include online discounts at over 400 major retailers, as well as discounts on travel, groceries, dining, movie tickets, and other categories. Portelli added that all club programs are marketed using a client’s brand name. “Our programs complement our clients’ brands and create more loyal customers.”

Inbound calling works when a customer orders merchandise from a catalog over the phone from Company X. When the purchase is complete, the telephone representative from Company X asks the customer if he or she would be interested in participating in a free 30-day, risk-free trial membership that will save them 5% to 15% on certain purchases. For online purchases, a similar offer promoting a $10 rebate on the customer’s next purchase (funded by UMG—not the client) appears after the online order is
complete.

Interested customers agree to pay a nominal monthly fee ($11.99 to $14.99) to join the membership clubs, and they receive a fulfillment package that contains the information they need to easily access the club’s benefits.

UMG also offers other programs that are designed more around peace of mind than saving money. For instance, UMG offers a legal service via a network of attorneys across the country that provides free consultations by phone. A financial service staffed by CPAs and former IRS agents is also available to help members with their tax and financial issues. “It’s like having a lawyer or tax professional on retainer but without the high cost,” said Portelli.

Portelli stated that the key to finding the right product for the right consumer is in statistical modeling and segmentation. Statisticians analyze customer information provided by UMG’s clients to identify prospects most likely to respond to different types of campaigns using a statistical tool called regression analysis. Portelli said that the two most valuable pieces of information are how recently and how frequently customers purchase items with their credit card.

Sometimes, the only customer information clients can provide is a zip code, “but we know based on the demographic and history which zip codes are more responsive to our offers than others,” said the CEO, adding that regression analysis allows the company to customize its offers to fit the demographics of its clients’ customer bases.

“Conducting this research is critical. If you sent a direct mail piece to every customer that bought something from a client in the last 12 months, you would lose a lot of money,” said Portelli.

UMG is the only direct marketer of club membership programs that also directly markets merchandise to clients’ consumers via credit card insert promotions. Last year, UMG mailed over 600 million insert promotions. Because the analytics differ from direct mail promotions, testing is key to a successful insert promotion, said Portelli. UMG tests more than 200 offers annually to find the winning combination. “It’s a turnkey operation for our clients. We create and print the promotion and handle the order processing, customer service, shipping, and billing. All we ask the client to do is to insert the promotion, and they receive a commission on every sale,” said Portelli.

The CEO explained that the merchandise offers are for products that customers find intriguing or useful but are not readily available in retail locations. One of the more popular items, he said, is a turntable stereo that will transfer traditional records on to a CD.

UMG has never lost a client, and Portelli cites the company’s creative approach, talented marketing team, and the use of all direct marketing channels as primary reasons. In fact, an independent study done in 2005 demonstrated that customers UMG markets its club programs to purchase more from its clients than customers who aren’t marketed to. “We make our programs simple and easy for customers to use because we want people to save money.”