Beth Harte, who blogs about marketing in The Harte of Marketing, who I respect immensely, recently wrote about Social Media rulesin her post,  “Who Made the Social Media Rules?.” She made the statement,

“As marketers it’s our nature to test, test again and re-test…and to push the limits.”

Unfortunately my experience has been the opposite.  I find most marketers, unless they have a background in Direct Marketing, don’t know how to or frankly don’t want to test effectively. Too much risk to their careers and/or the organizations they work for don’t tolerate, never mind find value in failure.

Consider the company you work for. Do they put 10% to 15% of their marketing budget aside for testing? Do you have a documented testing strategy? I bet they don’t.

If you decide to be the exception consider the following 10 rules will help you develop a testing strategy. They may seem obvious but, based on frequently observing their absence and as often seeing them being broken, you will be well served if you print them out and refer to them every time you consider a test.

Hip Shots

1. Test a single element / approach—be sure you have isolated the thing you are testing or you won’t know whether or not it’s the cause of any change you observe.
2. Test big things—blue versus green is rarely the answer to your question.
3. Record test results—obvious I know but record your results so you, or a subsequent manager, can compare future efforts against the current test.
4. “Beat the Champ”—don’t fall victim to Board Room Boredom. Whatever is and has been successful is the Champ to beat not the approach to abandon.
5. Results must be statistically valid—determine what quantity is required for statistical validity and work backwards to determine the size of each test cell.
6. Analyze carefully—even a successful test will have further learning in the details if you are prepared to look.
7. Test for yourself—don’t take past performance as absolute. Run your own tests and draw your own conclusions.
8. Results aren’t forever—markets change, economies change, media change, even consumers change.
9. Avoid over-testing—test something, then run a confirmation test, then roll it out. Analysis paralysis isn’t pretty, or productive.
10. Don’t test what you can’t roll out—start at the end and work backward to the test. If the end is a valid business then you will be able to roll out a successful test.

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© James for Hipkin's Hip Shots, 2008. | Permalink | One comment | Add to del.icio.us
Post tags: Business Strategy, Direct Marketing, Marketing Strategy

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A lot of small businesses use Direct Mail marketing.  But, is it the right tactic for your small business?  It can be, but Direct Mail is not as easy to execute successfully as you think it is.

Sure, it’s easy to put a flier in an envelope, pay for postage, and off it goes.  All those potential customers receiving your message.  But wait, have you thought it through?  When you consider creative development, list rental, production and postage, Direct Mail can cost $650+ per thousand.  Are you getting the ROI you think you are?

Some things to consider:

• All consumers aren’t responsive to Direct Mail marketing. In fact, very few are and the number is getting smaller every day.
• All consumers aren’t your customers.  Only a portion of the consumers you reach with Direct Mail are in your category and only a portion of them are in the market for what you are offering.
• All consumers aren’t of equal value to you. If you acquire a heavy user Direct Mail might pay out but generally speaking you don’t and it won’t.

Now a question, do you have a CRM (customer relationship management) program in place; do you have a follow-up program designed to secure subsequent sales, and is this cost included in your calculations?

Now that I’ve tried to convince you Direct Mail is a bad idea, here are some tips that will help you use Direct Mail successfully.

List, Offer, Creative

The Direct mail lists you select are the single most important element of a successful Direct Mail program.

A house file or direct mail list of current and former customers is best. If you are renting lists, find a reputable list broker. They will save you money in the long run.

The offer is key. You are asking recipients to buy a product or service, sight unseen, from someone they don’t know, you. The Direct Mail package needs to work hard to overcome their obstacles and the offer can put the sales message over the top.

Creative is third but still important. Design supports copy, copy sells.

For acquisition, Direct Mail to rented lists, a full package will generally perform better than a postcard or self mailer. The Direct Mail has to work hard, so give it the landscape.  The exception is for brands that are very well known.  Be safe, assume yours isn’t, unless there is overwhelming evidence to the contrary, and then you should still assume your brand isn’t well known.  (That last sentence was a bit Palinesck but you get the idea.)

Hire a consultant who know Direct Mail, who know how it works.  It will make a difference. Good Direct Mail isn’t DIY.

For current customers a lower cost postcard or self mailer is usually enough. They know you and, assuming all has gone well so far, they will be receptive to your sales massage. The exception would be for a new product or category that they don’t associate with your company.  Then you will need to work hard to convince them. In customer communication keep the tone of voice friendly and personal. They have bought from you, don’t talk to them like perfect strangers.

Numbers are your Friends

Before embarking on a Direct Mail campaign do a pro-forma P&L. What will the effort really cost? How many packages will you send? How many responses do you expect? How may of the responses will convert to customers? What’s a customer worth?

(((PACKAGES X RESPONSE RATE) X CONVERSION RATE) X CUSTOMER WORTH) – COST = ROI

Is the ROI positive or negative?

RFM is your Friend

Direct marketers say, “The most important sales isn’t the first sale, it’s the second.”

RFM (Recency, Frequency, Monetary) is a time honored analysis technique used by direct marketers to increase the efficiency of customer communication. The theory is: the customer who bought from you most recently, buys from you most frequently and spends the most with you is the customer most likely to buy again. In practice, this means analyze your customer file so you don’t send direct mail to every customer, you send direct mail to the customers most likely to respond.

Hip Shots

• List is number one. Start with a house file and use a list broker to manage list rentals.
• It’s the offer stupid.  Make sure you have the most compelling offer you can afford.
• Copy sells.  Give it the landscape it needs.
• Understand the financial implications of Direct Mail before you launch the program.
• Follow-up customer communication will maximize repurchase among and increase the value of new customers and best customers.
• RFM is your friend. Track responses. If they don’t respond after a few attempts take them off the mail list. If they respond, record what they purchase and mail another relevant offer right away.
• Use lower cost Direct Mail (postcards or self mailers) for customer communication.  Your have a relationship with your customers, you don’t need to work as hard to sell them.
• When you’re talking to your customers, leave the plaid jacket at home. Don’t use a sales-oriented acquisition package when you mail customers. Talk to them like you have a relationship with them, because you do.

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Post tags: SOHO Marketing

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I worked with an account person in Chicago who understood that customers are important and that understanding them, speaking to them in their terms was key for successful direct marketing.

One time she was working on a new product launch for our client and needed to write the creative brief. I knew the project had special importance so, probably to her chagrin, I inserted myself into the review process. The brief went back and forth several times. Then she came to my office and asked a simple question,

“What am I doing wrong.”

“You aren’t defining the target from their point of view.”

I told my colleague to empathize with the target, to get into their skin and define them as they see themselves. She did this, and did it very well. In research customers spoke in glowing terms about the direct mail package that came from the brief; what the piece said and how it said it, resonated with them. In the mail box the package broke through the clutter and connected with the audience. The business results broke records. The direct mail creative won awards.

Define the Target as They See Themselves

Define the target audience as they see themselves. This is the most important element in a creative brief. The more information you can provide, meaningful information that brings the target to life, the better the creative team will know the target. The copy they write will speak to the customer like they know each other. The design will resonate with the customer’s perspective on life. Keep in mind, only in rare circumstances are we speaking to our peer group. In most cases the target lives a life that is very different from yours, and from the creative team’s. A simple idea, but effective.

Look at your recent work and ask yourself, “Does this speak to the target in a way that’s meaningful to them or does it speak to me or worse does it speak to everyone?”

Hip Shots

• Defining the target audience as completely as possible. How completely you define the target makes the difference between advertising that is accurate and advertising that works.
• Go beyond demographics. Describe their attitudes. Describe how they think, and how it’s different from others. Define the problem the product or service will solve, in terms of their lives, and in terms of their competitive choices. Sum it up with a key insight into the target.
• Resist the urge to try and speak to everyone. You want the the advertising to speak to a specific, real person. Advertising created this way is much more likely to break through the clutter. Advertising that speaks to everyone becomes part of the noise and speaks to nobody.

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© James for Hipkin's Hip Shots, 2008. | Permalink | One comment | Add to del.icio.us
Post tags: Business Strategy, Marketing Strategy, Marketing Tactics, Online Marketing

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