Increasing Return on Marketing Dollars

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

CONTENTS

• Playing with a Full Deck (Part II)
• Do You Know the Way to San Jose?

Playing with a Full Deck (Part II)
52 Testable Factors That Impact Your Direct Marketing Results

Here’s the second installment of our four-part series on factors that influence the success of direct marketing programs.  Which ones will serve as trump cards?  Which, if played improperly, could cause you to fold?  Take heed – and don’t let the chips fall where they may!

Guarantees

14. Should you have one?  This is actually a stupid test – virtually every direct response effort, even lead generation efforts, should have a guarantee of some kind.

15. If you’re selling a product, how long should the money-back guarantee period be?  Some marketers put in 15-day, figuring buyers are not going to return merchandise in that period.  The standard is 30 days.  However, if your product takes longer to prove its worth, lengthen the period accordingly.  HairMax LaserComb offers a 12-week money-back guarantee because it takes 8 weeks for most people to see results.  Changing the guarantee increased upfront response without affecting net.

16. Should the guarantee include shipping the product back?  The trend is to have the customer pay shipping costs back, but many catalogers (particularly apparel merchants) pay both ways.  In the case above, HairMax LaserComb charges a 15% re-stocking fee which they tell you about upfront.

17. If your product is really strong, how can you make your guarantee stand out from everyone else’s?  L.L. Bean of course offers a lifetime guarantee on its clothing.  That’s about as strong a statement as you can make.  More common are one year guarantees (“if after a full year, this isn’t the best widget you’ve ever used, send it back and we’ll send you a full refund”) and double guarantees (“examine it for 30 days at your leisure and cancel without cost or obligation if you’re not satisfied; you can also cancel at any time thereafter and receive a prorate refund of your payment”)

“Integrated Marketing”

18. If you have a broad-based consumer product, can television support boost response enough to lower your total cost per response?  Publishers Clearing House is the classic user of television support.  When we say “support” we mean the television doesn’t sell, but only calls the prospect’s attention to the mail package.  The rule was that you needed a minimum 30% penetration of your market with the direct mail to make this work.  Then you need to test levels of support – how many GRPs you need to lift response significantly without spending too much.

19. Can email help boost direct mail response?  Generally, the answer is yes… if enough of your house file or the prospect file contains double opt-in email addresses.  The interesting test is whether you use the email to alert prospects/customers that the direct mail package is on the way, or you use the email as a follow-up, asking if the prospect/customer has received (and acted on) the mailing.  We’ve seen emails that didn’t refer to the mailing work on their own and also boost mail response.

20. Will telemarketing boost direct mail response enough to justify its cost?  We’re talking about b2b situations here.  Telemarketing is generally worthwhile where the universe is relatively small, the product or service is high-end, and the prospect reachable by phone. Of course, it is extremely difficult to get ahold of C-level executives, but contractors are just as hard.  You can test leaving a voice mail message to support the mailing, as opposed to actually talking to the prospect.

Envelopes

21. Does size matter?  Over-sized envelopes generally produce more response but they also cost more.  With the coming postal increase, those using 9x12” envelopes are going to pay dearly, and the 20-30% increase in response may not be enough to offset costs.  My own experience is that 6x9” envelopes are too promotional in nature.  I like using #11s and #12s to stand out from the rest of the mail.

22. Does using brown Kraft stock yield more of an official look?  We haven’t seen brown Kraft used much lately.  Simulated gray Kraft has taken its place.  Moreover, in head-to-head tests done years back with “Statement of Benefits” packages, white envelopes outpulled brown Kraft.

23. “Official” envelopes –those with generic copy relating to the delivery rather than the product or offer – seem to be the kings these days.  When does testing old-fashioned teaser copy make sense?  First, if you have an unbeatable offer, try putting in on the envelope.  Applications like fundraising, travel, insurance, self-improvement products and services should be testing curiosity or tension-building teasers.

Lists/List Segments

24. Are there response lists available?  You need to test them.  In almost every direct marketing application – lead generation and particularly direct sell – response lists outpull compiled lists by significant margins.  In the b2b arena, controlled circulation magazine lists are the proxy for traditional response lists.  Subscribers to these publications still open mail and answer questions (even though much of it is online).

25. Will hotline lists perform better?  Hotline lists are comprised of those who have taken a recent action (usually the last month or quarter).  This could be purchasing, renewing or changing their address.  In most cases, hotline names do perform better; however, if these recent names were acquired more aggressively (e.g., a sweepstakes) than older names on the same list, they may be of lower quality.

26. What selection factors, other than “direct mail sold,” could significantly increase response?  In b2b, assuming you have particular functions targeted, you’ll want to look at company size, SIC code, and perhaps indicators of growth.  One company we worked with recently did better among companies that were not growing.  In consumer direct mail, geography, age, income and home ownership are primary drivers of response. 

Do You Know the Way to San Jose?

In this case, it’s the San Jose that is capital of and gateway to Costa Rica.  The assignment was to develop a test campaign to generate leads for sale of condo and chalet units in a private hilltop development, close to one of the country’s most beautiful beaches.

The price of these units ranges from $225,000 to $369,000. 

Based on client input, prospects would be not only people with money, but with a passion for the sea (sailing, fishing).  The idea was to get prospects to the site for a tour. 

We were brought into this project by Jen Obrien, list broker for Statlistics.  She had been contacted by the client’s sales agent about one list, then found out the client needed strategy and creative development as well.

Jen thought the sales agent’s original recommendation – subscribers to Veranda Magazine – was sound enough to test.  The other four lists were the Forbes, Travel & Leisure, Sport Fishing, and Power & Motoryacht subscriber lists.

Now take a look at the creative (click here for PDFs of the package).

The 6x9” outer envelope was as non-promotional as you can get.  No teaser, no official language.  The idea was to convey both class and mystery. 

The letter is among the best I’ve written.  It weaves lifestyle appeals with details about the units and their environment.  There’s an immediacy to it, and a cogent explanation of the offer.

The Reservation Request spells out the offer once again, and gives the prospect three ways to make the reservation.

The brochure is meant to whet the appetite for the personal tour as well as provide basic information on the units as an investment, and on financing.

We did not include a BRE because that would have taken away from the immediacy of the situation.  The phone number was a U.S. number.

So how did this great package mailed to wisely-chosen lists do?

Unfortunately, rather poorly.  While the client will certainly recover marketing costs, he will still be left with at least half the units available.

The calls to the sales agent revealed what happened.  ALL those who called did not want to pay the $2,000 binder requested before the inspection tour.  If we did not have the binder as part of the offer, we probably would have had 3 or 4 times the number of leads.  It was the client who insisted the binder be prominent in the mailing.

You could argue that the binder was a qualifier.  I had contended that the cost of airfare for two (at least $1,500) to San Jose was qualifier enough.  No one is going to fly down for a weekend (even with hotel comped) unless they’re serious.

You see how critically important the offer is in virtually every effort you make.

2007 by Lee Marc Stein, Ltd.

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