Increasing Return on Marketing Dollars

A Newsletter Published by
Lee Marc Stein, Ltd.
January 2007 Issue

CONTENTS

• What's Up for 2007? (Part II)
• Pressing the Home Field Advantage
• Time and Time Again

What’s Up for 2007? (Part II)

Here are my own top seven predictions for what lies ahead in 2007 in the world of direct marketing.  I wish they were rosier.

1. The postage increase will warp many marketing programs.  Of course, we’ll see cutbacks in volume, and for a majority of mailers that is the right move.  Smart marketers will spend more money on response and profitability modeling, and on finding breakthrough creative. 
   
   Less savvy marketers, however, will make the mistake of mailing completely stripped-down makes to try to save money.  This will result in fewer responses and higher lead costs. 
2. Email still won’t work as a prospecting tool to cold lists.  With spam being back, results will continue to be poor.  And with a plethora of email newsletters going to opt-in prospects, you can expect open and click through rates to decline severely unless the content of those newsletters is absolutely superb.
3. Natural and paid Search will continue to increase their share of marketing dollars for prospecting.  However, this is because the cost of both is escalating rapidly.  Smart marketers will spend more and more on the conversion process, beginning with an increasing number of landing page tests.
4. We’ll see an increasing number of marketing partnerships.  The prime driver: desire to cut new customer acquisition costs.  These partnerships will likely with non-direct marketers, since so many have already been formed within the direct marketing realm.
5. DR-TV will be used in different ways.  Short-form will be even shorter – 30 seconds, and will be primarily to push viewers to web sites.  Infomercials will continue as is and be successful.  They’ll also be broken apart into 5-7 minute segments and streamed over web sites, with incentives for views (discounts and/or sweepstakes) for continuing to watch.
6. Mobile marketing will be a failure for most direct marketers who test it.  Even more than TV, it’s a medium for instant gratification.  Retailers will profit, though.
7. NetPromoter Score advocates will begin losing ground to more traditional direct marketers.  Response, revenue and profitability eventually rule in direct marketing, no matter what other theory of measuring a company’s health are in fashion.  This is more true today, when profitability is a direct reflection of how well you treat your customers. 

Pressing the Home Field Advantage

A number of years ago, I was contacted by a Colorado business owner named John Holzmann.  John and his wife Sarita run a direct marketing company that has been serving the Christian home education market since 1990, and they serve it well.

It was a frustrating experience for me.  Everything I suggested in terms of projects or tests resulted in a “we can do that here” or “we’ve tried that already” response.  So John and I never got to work together.

In early December of this past year, John entered a subscription to this newsletter.  I remembered who he was and we began an interesting dialogue.

Before I report on that dialogue, take a few moments to study the Sonlight Curriculum web site.  The “above the fold” portion of the home page is incredibly well done – catalog request on the left; free newsletter on home schooling on the right.  The center has a compelling tag line and promise and then 6 action bullets.

On the home page, you also are introduced to the Forums, Product Reviews and News Announcements.  Highly visible boxes on the bottom of the page offer online help choosing curriculum, free shipping, time payments, guarantees, even remind buyers there is no sales tax.

When you click the link that asks “Is Sonlight Right for You?” you land on a page that is actually a self-qualifying quiz.  There are nine statements.  Answer “Yes” to five of the nine and you’ve qualified yourself. 

In a menu box on the upper left hand side of this page are “27 reasons NOT to buy Sonlight” and “13 reasons TO buy Sonlight.”  How disarming!  Why would it appear that a company lists more reasons not to buy its products?  You’ve got to click, and when you do, the reasons for not buying are masterpieces of inducing guilt:

• They want a program that requires little reading.
• The parents' schedule is crowded and they can't give as much attention as required by the Sonlight Curriculum approach.
• They want a program that focuses on something other than academics and scholarship.
• They are convinced that a quality curriculum authoritatively communicates the truth the whole truth and nothing but the truth, at all times.
• They want a curricular program that never mentions false, foolish, or questionable ideas.
• They want a program that provides the features of a classroom school, with regular quizzes, tests and grading services.
• They want a non-religious program.
• They want the promotion of unique doctrines of their Christian denomination.
• They want a "Bible-centered" curriculum.
• They want their children to be shielded from the world and world system.

Each of the reasons is linked to longer explanations of the point in question.  Note the “They.”  This in itself is smart because the stigma of being a person who would turn down Sonlight is removed.  Here are the introductory paragraphs and context for the reasons:

Sonlight Curriculum is not for everyone. We have never pretended it should be.

Why do some families choose another curriculum over Sonlight? Over the years, we've compiled 27 reasons from our (former) unhappy customers as to why our curriculum wasn't a good fit for them, and why it may not be a good fit for you.

If a Sonlight Curriculum program is inappropriate for you, we believe you will be far happier to discover that now, while you're reading our catalog and browsing through our Web site, rather than later, after you have become frustrated and wasted time trying to use a program that's just not "you."

So . . . why do people say they DON'T want to buy Sonlight Curriculum?

There are so many other smart things done on this site, but now back to the dialogue.  My initial email thanked John for his subscription, reminded him of our previous contact, and asked how his business was doing.

John

Business is doing great. . . . We’re "finally"--after 16+ years--beginning to get the hang of using more DIRECT methods of marketing. (It helps to have competent staff who can learn what needs to happen.)

A year ago almost to the day, we did our first A-B split test and discovered it makes a huge difference to our customers when my wife signs a letter instead of me. An identical series of emails with only our names being different led to Sarita garnering 150% more revenue (or something like that). It was also striking to me that "my" emails received four very negative responses, include two absolutely blistering attacks for my supposedly offensive behavior. Sarita received no negative responses at all.

We now send as much as possible over her name rather than mine!

Something else we "discovered": it really does help to write follow-up letters. Back on September 1st, I wrote the following to our sales manager after we held a special sale that included an initial email and three follow-ups--one halfway through the sale, and the last two just a day or two, and then 12 hours or so before the end of the sale:

Historically, obviously, we have (Sonlight has) been leaving a lot of sales untapped, customers unserved, and money unearned . . . out of our fear of offending our potential customers. Historically, it wasn’t all that long ago that we used to send out only ONE appeal on any special offer. I think it was only a year or two ago that we first sent out a single reminder on special campaigns . . . and we didn’t send out "last-minute" reminders as the third and fourth emails in this series were.

* We have NEVER, as I recall, done such a thorough, coordinated, multi-faceted and/or multi-front campaign . . . where we have used email, shipment stuffers, home page and latest news links, etc.

* When [your] 36-Hour notice went out, I thought--and said to [you], yesterday morning--that I didn’t think it was worth bothering to send a final notice yesterday.

Obviously, I was wrong! WOW! MORE click-throughs (114 index) and ALMOST as many sales as a result of that 4th email as compared to the 3rd (97 index) and almost as much revenue (96.5 index)!

* But I'm most impressed by the bumps in sales we would have missed had we not done our follow-through emails.

*Initial email:	100.0 index in sales
*Second email:	25.4 incremental sales index
*Third email:	18.3 incremental sales index over original
	14.6 incremental increase over first two emails
*Fourth email:	17.4 incremental sales index over original
	12.1 incremental increase over first three emails
Put that all together: the three additional emailings improved what would have been our email performance by just over 61%!

NOTE: I have converted actuals supplied by John to indexes.

Lee

Thanks for taking time to share your experiences.  After 42 years in direct marketing, I'm still thirsty for knowledge.

Am I right in thinking that a sizeable majority (80%) of your customers are female?  Then the results of the A-B email test make total sense. 

Re: frequency of emails, the rules seem to be changing daily.  To a customer base, 4-5 emails over a two week period isn't anything like saturation.  Traders Library was emailing its base of buyers and prospects every day.

John

Yeah, our end-users are 99%+ female.

Take some time to study Sonlight’s marketing.  They truly press the home schooling advantage.

Time and Time Again

Recently, we wrote about TDD (Time Deficit Disorder). Now there’s a new Yankelovich study which indicates that consumers across all income levels consider the lack of time a more pressing concern than a lack of money.  Lack of time well-spent is a regret most people take to the grave. The study concludes that savvy marketers will recognize this ad consider time saving the ultimate added value benefit.

Yankelovich literature says that the challenge for marketers is NOT establishing a need for time-related products. It seems that 77% of consumers say that most products and services that claim to save them time really don’t make a noticeable difference.  So if “Time Saving” is your USP, it had better be real and provable. A second challenge is “marketing your product in a way that better resonates with how consumers actually experience time famine.  The time management solutions consumers seek are not always centered on finding ways to jettison some tasks and doing what is left more quickly.” 

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