Increasing Return on Marketing Dollars

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

CONTENTS

• “What Ever Happened to…”?
• Strategies and Tactics for Increasing Member Renewals

“What Ever Happened to…”?

Recently, I forgot to celebrate my 43^rd year in direct marketing.  ‘Twasn’t old age that made me forget, but rather thinking about trends and people no longer with us.  When you’re in an industry for a long time, there is a lot of passing going on.  So…

… What ever happened to ‘ONE-TO-ONE MARKETING’?  How come no one ever talks about it any more?  Have Peppers & Rogers gone the way of Martin & Lewis?  In its truest sense, One-to-One Marketing is impractical and unaffordable, so relatively few people use that term.  However, the spirit of One-to-One Marketing is being practiced by an increasing number of marketers.  Digital printing does make sense in many applications.  And with the ability to look at prospect and customer behavior over a long period of time, marketers can tailor offers based on both response and payment potential.

... What ever happened to list brokers and managers?  This past week, we read about long-time stalwart 21st Century Marketing’s acquisition by Specialists and Mal Dunn Associates filing for Chapter 11 bankruptcy protection.  At one time, throwers of the biggest parties at DMA Annual Conferences and Direct Marketing Days, the party has been over for most list brokers and managers for a decade.  Why?

First, although some embraced email lists from the beginning, email lists still haven’t come to fruition as a prospecting tool.  A few brokers had the wisdom to expand into helping clients with online buying challenges.  But in terms of direct mail, the model has not changed.  There are fewer names available, and the good lists are being hammered and stop working.  Neither brokers nor managers have been wise enough to embrace the kind of modeling (not traditional response modeling) that can open up new list universes and increase mailer profitability.

… What ever happened to Phil Herring’s prognostication?  You might ask first if you’ve only been in the business a short time “Who is Phil Herring?”  He was President of the West Coast agency Herring-Newman, one of the really hot shops in the late ‘80s and early ‘90s.  Phil was one of the forerunners of permission-based marketing, only he insisted on permission-based direct mail.  Any mail that wasn’t sent with permission was (yes) Junk Mail.  Phil thought Junk Mail or cold mail would disappear momentarily.  Now, nearly 20 years later, I’ve heard the DMA intimate that would happen.  I didn’t believe Phil Herring then and I don’t believe the DMA now.

Strategies and Tactics for Increasing
Member Renewals

The major factor in improving renewal percentage is the value you give to members relative to your dues.  If they are active users of the benefits you provide, almost anything you do will work to retain them.  If they are only occasional users, and you want to maximize renewal rates, you need to consider all three of these strategies and tactics.

Some organizations save incentives for the end of their series (mostly after expire).  By doing that, they are, in effect, rewarding members for delaying their renewals.  This runs counter to what most renewal marketers practice.  Generally, the more renewals you can garner before expire, the higher your overall renewal percentage will be.

• Test moving a strong incentive to your earliest effort.  Call it an “Early Bird” Gift and put a clear time limit on it. 
• Explore Internet downloads as premiums.  These are inexpensive to fulfill and will help capture more email addresses. Renewal forms in fact should offer downloads in exchange for email addresses.
• Consider “Members only” exclusives and/or tie-ins with other companies.

Converting first year members is always the most difficult task, particularly if they have been offered all or part of their first year free. It is worth spending more money on this group, because if you can get them to renew once, subsequent years will be much easier.  Here are some tactics that work with new members:

• Switch the sequence of terms on renewal forms.  With longer term members, you might show a 3-year rate first; with new members, list the one year member renewal rate first.
• After Expire, introduce a new class of membership.  This might be an “Associate” level at a rate 50% less than regular membership.  You’ll have to make it clear that this special membership status is non-renewable and you may have to strip away some benefits. Or consider a six month regular membership.   Either way, you have a reprieve. 

2. Optimize timing and frequency

One membership organization we work with has eight mailed renewal notices going to long-term members, along with one email.  Based on results for their results, we suggested that 120 days-prior might be too soon to start the process.  They were not achieving the response one normally sees on a first renewal effort. 

On the other end of the series, we suggested they might do better dispensing with the 150 days-after effort and throwing those names into their expire mailings.

Because the one email they did worked, we recommended that they schedule at least two more renewal blasts, and make them much closer to expire. 

Here’s the timing test matrix we suggested:

Among first year members, we suggested modeling to separate those most likely to renew from those least likely.  For those least likely, we recommended cutting renewal efforts from eight to five; for those most likely, we added two to the series.

3. Test new renewal package approaches

In membership marketing, particular among long-term members, package testing is lower in the hierarchy than offer and timing tests.  However, because the organization we worked with has more than one million members, we suggested they consider the following:

• As a first or second effort, test a “Statement of Benefits” package Because the organization offers such outstanding benefits, this should work well.  The outer envelope will not say “Renewal Notice” but “Explanation of Benefits” instead.  Inside, the top third of the enclosure will be the renewal invoice.  The bottom third will list all the benefits as “Included” or “FREE”. 
• In after-expire efforts, we suggested test reminding members of all the benefits they will miss.  This is best be accomplished by including a buck slip that spells out the benefits. 
• In targeting first year members who had high potential to renew, we suggested at least one high-impact package.  This could be a greeting card with a sound chip, or a box mailing with a freemium.
• Newer members should be approached much more emotionally, with copy referring back to how they felt when they first decided to join the organization.

2007 by Lee Marc Stein, Ltd.

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