Increasing Return on Marketing Dollars

A Newsletter Published by Lee Marc Stein, LTD.
August 2003 Issue

Contents

• Lessons from Kiwi Land - Theory
• Lessons from Kiwi Land - Practice
• A Thousand Clones
• Counter-GOOGLING

Lessons from Kiwi Land - Theory

As noted in our last episode, I was invited to speak at the annual conference of the New Zealand Direct Marketing Association.

The conference was held in Auckland over two days. Auckland is, of course, New Zealand's largest city. Its population is 1.2 million. The whole of New Zealand has about 4 million people. So, a very different marketing environment from the U.S.

I can tell you that what the direct marketing community lacks in size, it makes up for in smarts. There might be a slight lag in database technologies, but not on the strategic/creative sides.

On a percent of population basis, attendance at the conference was sensational - nearly 400 delegates. And at a DMA Regional Luncheon Meeting in Wellington the next day, there were 130 attendees.

I was only able to attend a few of the sessions. While the ones presented by New Zealanders were full of good content, they are not particularly relevant to U.S. markets. The blockbuster was a presentation by Paul Wang, Associate Professor of Integrated Marketing Communications at Northwestern University. He is also technical editor of the Journal of Direct Marketing.

Paul's topic was "Integrated Marketing with the Customer in Mind." Here are some highlights from his talk -

• When making promises, we have to be true to ourselves and to what we represent.
  
  
• Desperation advertising over promises what the brand can deliver
  
  
• Marketing courage is over delivering - making promises we keep
  
  
• Effective marketing is hard work - it's about doing ordinary things extraordinarily well at all times.
  
  
• Achieving long-term competitiveness requires capitalizing on investment opportunities, not in ability to reduce cost.
  
  
• Marketing approaches begin with either "Who," "What" or "How." Traditional marketing starts with "What," the product. "Who" is the customer; "How" is the process.
  
  
• Companies need to concentrate on core competencies. If they are expert at process, their marketing approach should start with "How" and then move to "What" and "Who."
  
  
• If you want to cultivate customers, you must start with "Who."
  
  
• Differentiation is key. The first level is imitation; the second, improvement; and the highest, innovation.
  
  
• In "Me Too" marketing, 80% of offerings bring in 60% of revenues and 40% of profits. In "Unique" marketing, 20% of offerings generate 40% of revenues and 60% of profits.
  
  
• When facing large competitors, always mislead the enemy, fight on your own ground at your own time, and strike when the moral effect is greatest.
  
  
• With small competitors, never refuse battle or show a sign of hesitation. When you get the enemy on the run, keep him there.
  
  
• Volume is not necessarily driven by price. If value is eroded as prices are decreased, volume will drop. Similarly, providing value innovation will help increase volume even if prices are increased.
  
  
• Value propositions can be emotional, economic or functional. No proposition can fully cover all three. More relevant and unique appeals go all the way on the emotional and functional axes, but only half way on the economic axis.
  
  
• Emotional connections make it most difficult for customers to switch brands.

Consider how some of these points match up with your own marketing strategies and tactics. If, for example, you are using deceptive envelopes to boost your response rate, what does that say about your company and its brand? What can you do to build emotional connections with customers you acquired through an economic value proposition?

Lessons from Kiwi Land - Practice

Now the business part of the trip is over. We had flown from my presentation in Wellington to Queenstown for a few days, then off to Mt. Cook, and finally off to Christchurch.

We arrived in Christchurch by bus late in the day. After registering at the hotel, we asked the concierge to make us a reservation at what she thought was best restaurant in town. The only time was 20 minutes from when we checked in, so we rushed upstairs, washed, changed our clothes, came down and hailed a cab.

It was worth the rush. The restaurant was absolutely sensational. Filled with corporate-types and well-to-do vacationers. Delicious salad, fish, vegetables, dessert. Professional service. And today, two months later, I can't remember the restaurant's name.

The next we thanked the concierge and asked for another restaurant of the same quality. Unfortunately, the All Blacks (NZ's fabled rugby team) were in town, and the top two choices were all booked up. She told us about another place - a longer cab ride, fewer guests going there. We were game.

We had a great feeling as soon as we walked into Rotherham's. We were greeted warmly by the hostess (co-owner with the chef). It was a much smaller place - we almost felt as we were in someone's dining room as special guests. The food itself was much more imaginative than what we had experienced the night before. The chef risked and won.

The reason I will never forget the restaurant, though, goes beyond that. The hostess came to chat briefly as each course was being served. She asked how long we were staying in Christchurch and we said it was our last night. We were heading to Sydney the next day, and asked her about restaurant recommendations. She said "I'm not that up-to-date. Let me bring my husband out."

The chef, Martin Weiss, came out and spent fifteen minutes asking what we liked and then making recommendations - what was good, what was overrated. He said "You should make reservations in the morning. Unfortunately, I have the telephone numbers at home. What's your hotel? I'll call you tomorrow."

Yeah, right. This chef who will never see me again is going to take time to call me. But he did call - exactly at the time he said.

He didn't do it to get me to return or even to have me write about his restaurant in a direct marketing newsletter. He did it because he said he was going to do it. Making a promise and delivering on it.

Marketing The Way It Should Be.

A Thousand Clones

Where do you think that television programming executives got the idea to clone their successful shows ad nauseum? Could it be from the wonderful world of direct mail? One would think so after looking at hundreds of similar packages.

I have no objection to cloning on television because it doesn't affect my livelihood, or the livelihood of my clients. Nor do I have any objection to "stealing smart" in the process of developing a direct mail package. But I do object to direct mail cloning, because that is not stealing smart; it's stealing dumb, mindless.

Certainly if an offer works in a particular application - four issues free in publishing; zero percent on transfer balances in credit card marketing - it should be tested. Offers are close to the marketing core. But it is incumbent upon the creative team to create a differentiating twist to test against the generic everyone else is using.

What's mindless is deciding that your product or service should be promoted using a particular FORMAT just because that format is used heavily by other mailers.

As a first specific, let's take SOB's (Statement of Benefit) packages (PLEASE!). This is the dirt-cheap format that started as a monarch-sized package with only one sheet of paper and a BRE. The outer envelope never had any copy other that a logo and address. The top of the sheet resembled an invoice - little promotional copy. The bottom half listed the product/service and the price, and then a half dozen or more benefits included with the product/service with no extra cost.

I remember that Forbes was a relatively early user of this format. It's a natural - Forbes is a well-known publication that doesn't need too much explanation; they have lots of bonus issues and features to promote in the listing of benefits; and they have a relatively low priced product. And the SOB is so cheap to produce!

Now what if you had a higher-priced product? If the product was an established one, the company was extremely well known, and the market segment knowledgeable, could the SOB work? Maybe… but to beat the control, a full-fledged package complete with long letter and color brochure, some tweaks to the SOB were needed.

The monarch OE was up-sized to a #10 to stand out more in the inbox and a teaser ("Professional Benefits Explanation") was used. Inside, the SOB itself was pretty much according to formula, but a full-color buckslip was added to show the product and emphasize the trial offer.

The good news: the package beat the control substantially. The bad news: the package beat the control substantially. Why "bad"? Because the same company wanted to use the same SOB format to market a brand new product (and brand new product category for them). There was no room for the company to explain the new product's raison d'etre, depict its substantial benefits and features, or to leverage the company's existing relationships with the customer.

SOBs can be useful within a portfolio of direct mail formats to pick off "low hanging fruit" at minimal cost. SOBs should not be used to try to penetrate secondary markets: those markets require show and tell.

Before SOBs, we had voucher packages, posterboards, and double postcards. These are all attempts to save money on classic direct mail packages. There's nothing wrong with saving money - IF THE FORMAT FITS THE PRODUCT AND MARKET AND OBJECTIVE. I would contend that you cannot nurture relationships or get people to respond to personal issues (health, finances) with self-mailers.

Second specific - plastic cards. For years, they've been the rage of the auto insurance business. You can't use them for anything, not even to report a claim. No one knows why they work, but they do… and now at least a half dozen of the segment's biggest mailers use them. The difference here is that all the users are in the same market segment, and they're all trying to generate consumer leads. That makes cloning a bit more palatable. There's an opportunity here, though, if someone wants to do more than clone around: mail a plastic card that's actually usable in some way.

The bottom line: before you bring in the clones, be sure the tactic meshes with your strategy. Format must be chosen by context.

Counter-GOOGLING

This was in the September issue of Trendwatching (www.trendwatching.com). I've abridged it slightly

Remember Roger & Peppers, evangelizing 1:1 customer relationships back in 1997? Well, just when you finally have your company's customer databases and filtering tools all worked out, and you actually identified that Lego-loving dentist in Taipei and emailed him a personalized offer for a family holiday in Denmark, Google changes the name of the game with a vengeance.

The art of 'Googling' (checking people's backgrounds on the internet via search engine Google) will soon be an integral part of corporate 1:1 marketing strategies.

With consumers disclosing their most intimate secrets online (voluntarily!), Google has created a 'domestic database', … loaded with your customers' details and profiles, with a depth of information you can only dream of. So instead of consumers Googling you before they buy your services, you should Google THEM, and instantly get more personal information than you'd ever be able to capture with traditional 1:1 in an entire lifetime. TRENDWATCHING.COM has dubbed this emerging trend COUNTER-GOOGLING.

Example: the Bel Air Hotel in LA already Googles first-time guests upon arrival, based on their reservation details (name and address), leading to personalized services like assigning guests a room with morning sun.

Where to start? All you need is a name and some address details, to make sure you're COUNTER-GOOGLING the right customer. Best chance of hitting the data-jackpot? Three million or so bloggers: consumers who keep an Internet diary, revealing their commercial preferences, daily doings, recent holiday photos, habits and customs, family matters and what have you. And what about millions and millions of online resumes, showing detailed career paths, marital status and 'life and work objectives'?

OPPORTUNITIES: Sure, putting COUNTER-GOOGLING to work could be seen as a form of spam. It may even feel creepy to some consumers. But as always, honesty will do the trick: if consumers put their entire life stories online, and you as a company candidly refer to this public information AND make them an offer they can't refuse, more sales may be on the way. And bloggers, savvy consumers by nature, will no doubt introduce a 'no unsolicited sales' seal, the moment they grow tired of COUNTER-GOOGLING, making it clear what's off limits and what's fair game.

TRENDWATCHING.COM sees a massive opportunity for COUNTER-GOOGLING experts; specialized companies who'll be Googling customers non-stop on behalf of 1:1 marketing-prone corporations like airlines, banks, hotels, e-tailers and car manufacturers. A logical extension for direct marketing companies, who until now have only collect broad socio-demographic data (guess Trendwatching editors need a course in database marketing).

How to get started? Ask your sales department for a list of 25 recent first-time customers (names and addresses), start COUNTER-GOOGLING, and be amazed at what you'll find, learn and dream up! Repeat for 25 long-time clients. Interesting, huh?"

I'm not sure whether to be joyful or very frightened. Although the information used in Counter-Googling is volunteered by consumers and posted in public places on the Internet, the information was not meant specifically for marketers.

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