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Increasing Return on Marketing DollarsA Newsletter Published by CONTENTS
Dancing Tweak to TweakWhen you have a control package that’s performing near or on budget, you may not want to risk testing a completely different approach. You should, however, test “tweaks” to the control package that have the potential of generating small increases in response/profitability. Theoretically, a series of successful tweaks will add up to a major improvement in your program. There is a danger in tweaking. It results from not understanding the difference between a tweak and a substantive (and possibly damaging) change to the control package. Here’s an example from the world of publishing. The control package is comprised of a promotional outer envelope, four page 8½ x 11”, four page full color brochure, lift letter, response form with offer labels, and BRE. OE: The control has a teaser on the front that says “What if _______ is good for you?” If you change that to read “Is ______ good for you?” that’s definitely a tweak. If you move copy about the Free Issue from the back of the envelope to the front, that’s a tweak. If you change the background color of the envelope, that’s also a tweak. You are not dancing tweak to tweak if you take the question off the OE and use assumptive copy – e.g., “A free issue of XYZ Magazine is awaiting your confirmation.” Letter: After the Johnson box, the control letter answers the question posed on the OE, then provides a series of bullet points covering benefits, specific content of the magazine, and subscriber benefits. It also includes testimonials. If you change some of the bullets relating to content (to update them) and the testimonials (you believe you have stronger ones), these would be considered tweaks. If you change the opening and not answer the question on the envelope, that is much more than a tweak. What if you change the Johnson box completely, but leave everything else in the control alone? I would contend that’s a tweak as well, but it’s certainly open to debate. Brochure: If you change the magazine cover you depict on the front panel of the brochure, that’s a tweak. If you decide to use a lifestyle shot instead of a magazine cover, that’s more than a tweak. On the inside spread, if you update photos and content descriptions, those are tweaks. Response Form: If you change what the response form is called – say “Free Gift & Issue Certificate” vs. “Free Issue Certificate” – that’s a tweak. If you remove the two pressure sensitive labels to be placed on the return portion, or add a third label that says “Maybe”, that’s a significant break. The point here is to understand what a control package is and what the implications are when you make changes. Often, marketers look at control packages and perform tweaks without reason and without testing. Recently, the mailer of an assumptive control package (which I did not originally write) asked me to supply a “much stronger” last paragraph to the letter. I do not think the mailer realized that this request moved the paragraph completely away from the tone of the rest of the package. There was not enough quantity involved to test this change. Why, then, risk what this faux tweak might do to response? Sometimes what you think is a tweak turns into a significant change. Years ago, I handled Hanover Fire & Casualty Insurance. At a focus group, I learned that prospects used the term “Renter’s Insurance” rather than “Contents Insurance.” We changed that one word – classically a tweak – in subsequent mailings without testing it and response shot up dramatically. Seven Keys to Loyalty MarketingBy Daniel Flamberg (Danny Flamberg is one of my favorite marketing bloggers. This entry was published on Manhattan Marketing Maven recently). Everybody wants loyal customers. Everybody wants to zero-in on that 20 percent of the customer base that drives 80 percent of profits. Finding and caring for the people who love you, buy a lot, buy often and tell everyone they know about you is the rationale for massive spending on customer loyalty programs, which for years were based on the rats-through-the-maze premise that points, air miles and rebates will guarantee and secure your best customers and turn half-hearted customers into brand loyalists and outspoken advocates. But Colloquy's loyalty census suggests that the rush to set up programs has resulted in bloated lists of people who aren't really participating and who just aren't that loyal. Active program participation across all business sectors is 39.5 percent, a "dismal" result according to the researchers. The old metric of total program members seems a lot less meaningful than actively participating members, defined as those enrolled and actively changing behaviors to earn rewards. Consider these highlights.
The data suggests that marketers have defaulted to loyalty programs but haven't connected the dots in terms of meaningful data, insight or personalization to get them to pay off. In some sectors the mere existence of a loyalty program has been equated with the benefits of a well run program. But the bottom line is that customers have a limited amount of focus and attention. No one really has 12 favorite merchants and even when they have a favorite in each category, the interest and intensity of the relationship varies by circumstances, need, cost and time. Its no wonder that categories with high repeat sales have the most actively engaged members. But given the ubiquity of credit card programs, its actually surprising how many customers feel that the rewards aren't worth the trouble or that the ratio of points to dollars spent are meaningless. We all know card holders that look at the reward catalogs make a quick calculation on the cost of goods and quickly conclude that the cost to acquire a toaster, a trip or a flat screen TV by redeeming points is much greater than buying the same item at retail. The subsequent judgment, usually made with a healthy amount of skepticism and frustration, is that the loyalty program isn't worth it. So now you're in a program where you've amassed points that don't buy much or buy things at inflated prices so you're locked into a currency that's not worth redeeming and you head to Points.com to see if you can salvage the situation. The net result is the opposite of the program's intention. You have high-value customers who invested in the brand and who are frustrated and sometimes angry, that you've saddled them with undervalued points. This isn't exactly the prescription for building brand loyalists and advocates and probably explains the relatively low engagement levels of program members. It seems to me that loyalty programs work best when ... 1. They are geared to high frequency/high involvement purchases. 2. They integrate and leverage purchase histories and customer data or preferences to maximize personalization, There is zero trophy value in a one-size-fits-all reward. 3. Point levels are set (and re-set) to drive specific behaviors. The do-this-and-win formula works. The trick is to make it simple, frequent and pay it off instantly. The classic RFM principle from direct marketing applies here big time. 4. Points must be awarded and communicated frequently. When members hit selected point levels they should be recognized and redemption options plus incentives to get to the next level ought to be presented. Recognition ("You are a PLATINUM member") is as much a part of the game as the one million points. 5. Members must perceive the points/merchandise relationship to be a good deal. Consumers have a knack for quickly assessing the value-for-money equation in any situation. You cannot get around this and you cannot cheap it out. And while it flies in the face of marketing orthodoxy, it probably helps if points are transferable or options exist to combine points from several programs to get a big ticket item. Brands can still get partial credit for the new car or the amazing family vacation even if they didn't do all their purchases with you. 6. Value propositions, messaging and the rewards themselves must be different and differentiating. Its no surprise some programs are experimenting with Broadway walk-on roles, customized vacations and narrowly targeted experiences and merchandise to resonate with specific groups of members. 7. Make a serious effort to engage and activate members. Then focus everything on the active players. If the 80/20 rule holds this will be the most effective marketing dollars you ever spend. Not everyone can or wants to have 12 best friends. If they pick you, reciprocate and disproportionately love them back. The DM/Branding War: Battlefield Report #186So the man, having disguised himself as a direct marketer for decades, stands up there and, in his 15 minute presentation, quietly says “All direct marketing is branding.” This battlefield reporter raises his hand and asks “If I run a paid SEM ad promoting a free newsletter on direct response creative, and my company name is not in the ad, is that branding?” Later, privately, the general proclaims “Every communication is branding – good branding or bad branding.” I cite American Express Publishing and its marketing of magazines, continuity clubs, and books. With the magazines, every time they try to abandon sweepstakes, their results drop precipitously on both front and back ends. The general agrees that sweeps are anathema to “good branding.” He proclaims that by sticking with the sweeps/bad branding, American Express is ignoring the 95% who don’t respond to the sweeps. Hum, but what is the objective here? Seems that it is to increase circulation of the magazines. Yet, when the “bad branding” is abandoned for edit sells of the magazine, much more than 95% of the potential subscribers are being ignored. I point out that even in online marketing, direct marketers measure results against costs by effort, campaign, site, etc. It is profit from the relatively few that drives direct marketing, not the opinion or feeling of the many. He tells me that direct marketing is no longer like that. Is he right? Is the “new direct marketing” about getting prospects and customers to feel good about your product or service, even if they don’t buy it? Will all this good feeling eventually result in higher profits than the old results-driven direct marketing? Def DefyingHere’s a definition that defies understanding and usefulness. It’s the new official definition of marketing adopted in 2007 by the American Marketing Association. “Marketing is the activity, conducted by organizations and individuals, that operates through a set of institutions and processes for creating, communicating, delivering, and exchanging market offerings that have value for customers, clients, marketers, and society at large.” Let’s look at its implications phrase-by-phrase:
I would suggest this re-write to the AMA: “Marketing is the process for creating, communicating, and delivering product and service offerings to customers, clients, prospects and centers-of-influence.” Actually, the older AMA definition is better: “The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.” Again, there’s a value judgment at the end. Look at this definition from the MSN Encarta Dictionary: “The business activity of presenting products or services to potential customers in such a way as to make them eager to buy. Marketing includes such matters as the pricing and packaging of the product and the creation of demand by advertising and sales campaigns.” The “make them eager to buy” may be contrary to marketing’s ultimate goal of creating customers with maximum lifetime value. Here’s the classic textbook definition from Kotler: “Marketing is the social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.” And a final one from the U.K.’s Chartered Institute of Marketing (CIM): “Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably.” Why the definitions? Reflecting on them helps us gain the 30,000 foot view of what it is we do every day. 2007 by Lee Marc Stein, Ltd. To unsubscribe, type “No More” in the subject line and e-mail to lmstein@leemarcstein.com.
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