|
|
|
Subscribe to Advertising & Marketing Review!
Contact Ken Custer at 303-277-9840.
|
|
|
|
|
|
|
Direct Marketing: The Measurable Results Medium That Works
Compiled by Ken Custer
“Dear John Doe.
Thank you for celebrating your anniversary with us in June at Quality restaurant. We sincerely hope we provided you with a wonderful experience. We would like to have you try our prime rib special during the month of July. Enclosed is a coupon for $5.00 off the total bill for two or more people. Please come and join us in July.”
The copy could be better but you get the idea. Today you have the ability to create and maintain a relationship with a customer through Direct Marketing. Some form of direct mail has been around as long as the Post Office, but the ability to personalize and talk directly with the customer has only been available the last few years. Computers and computer software programs can now capture and sort personal data. New printing technology can now take that data and transform it into a personal message to a current or potential customer.
The Direct Marketing Association (DMA) predicts that direct marketing will be a $161 billion industry this year and continue to grow at 6% for the next several years. How and why this phenomenon is occurring is a combination of technology and the need for one-on-one relationship marketing. According to the DMA, in 2004, direct accounted for 47.9% of total ad spending. “Direct marketing lies at the core of marketing today and is the future of marketing tomorrow,” said DMA President & CEO John A. Greco, Jr. at the 2005 DMA conference.
Having this data and printing technology alone does not guarantee success in any direct marketing program. You still need creative design, emotional copy, a good mailing list, a good offer and a method of testing and analyzing results. And of course, the big push is on results. As Pocky Marranzino, President of Karsh+Hagen stated in Advertising & Marketing Review January panel, “there is an ROI tsunami” as everyone wants to know what is the return on investment.
Jeanette McMurty, Vice President Marketing at G.A. Wright, notes from a paper on the 2005 DMA conference:
One of the most critical distinctions of direct marketing: accountability. Marketing officers everywhere are feeling the pressure to prove a positive ROI for marketing investments. In fact, a few years ago while working for American Express Travelers Cheques division, I was part of a team charged with developing a highly sophisticated test to statistically prove that mass advertising, specifically TV, had a direct impact on sales. At the time, we couldn’t find another Fortune 500 company, or leading worldwide advertising agency, that had had to be this accountable. Today, largely due to the advancements in direct marketing technology and capabilities, proving ROI is far simpler and can be tracked to the individual level.
Here are some guidelines:
Develop a standard to which you are going to compare your results: In other words, how will you define success? Do you want to measure year-over-year sales? Customer responsiveness or satisfaction increased value per sales transaction? If you’re measuring customer retention, you need to know your current ratio of repeat customers so you can determine an increase or decrease among existing customers after your campaigns are done. You need to define your goals per marketing campaign and overall.
Analyze response down to the individual level: With the sophisticated database and CRM Systems available, you can determine precisely who responds to your campaigns and who doesn’t. You need to monitor impact among your customer segments to determine which segments respond the most, spend the most and present the greatest revenue stream per message and offer delivered. You need to determine both the response rates to marketing campaigns and revenue generated per piece delivered. The real measure of success is in the revenue generated. As Gary Wright, CEO and Founder of G.A. Wright Marketing, an expert in testing direct marketing points out, “you can have a great response to a campaign and generate zero sales.”
Create a response mechanism for each campaign: It is critical to know how many leads you generate from each campaign and communications channel – direct or mass communications. If you run ads in trade journals, list a separate phone number per magazine to see which generated most leads and where your money is best spent. If you are driving prospects to a website from a given campaign, use a unique URL code so that you can track precisely how many hits you receive from a given letter, advertisement, or trade show exhibit.
Direct marketing provides the most powerful ability to measure results because you can determine exactly whom from your list of campaign recipients responded and who did not. It also allows you to build relationships more effectively than any other medium as you can direct personalized messages toward individuals with specific needs rather than general messages to mass consumers with varying interests and familiarity with your brand.
Testing Initiatives on DM Responses
By Gary Wright, CEO and Founder of G.A. Wright Marketing:
The challenge direct marketers face is how to make their marketing dollars go further even as production and postage costs continue to rise. We have all scratched our heads and wondered if we could save production costs on paper and still produce the same results or if using a different mailing list, headline, or even color scheme, would enable us to realize bigger gains. Yet most companies don’t take the time to integrate testing into any type of marketing campaign to help them learn just how effective their efforts are, and the worthiness of a particular investment.
Unlike most traditional advertising mediums, direct marketing can be easily and affordably tested. By testing various elements of your marketing campaign you can pinpoint precisely what motivates and inspires your customers to action, and what doesn’t. Without testing, marketers make assumptions based on intuition and past experience. It is a costly gamble to base big decisions on educated, and sometimes not so educated, guesses. Our testing was created to share the findings of more than 20 years of direct marketing testing so that you can improve the effectiveness of your direct marketing and gain an understanding of how and why you should integrate testing into all of your direct marketing programs.
The Method
Marketers can test variables such as product, target audience, offer, timing, production formats and creative. By changing only one variable at a time, you can see where there is room for improvement. Sometimes marketers recognize incremental increases in response rates while other time there is a goldmine waiting to be discovered. As a result, your marketing programs in the long run can generate a higher return on investment. We conduct a monthly lead generation program targeted to independently owned retailers nationwide and mailed, on average, 200,000 pieces monthly to prospect businesses obtained through the use of rental lists. Each new test is designed to determine how to get the best possible response and is conducted as a split run test – where the list is divided into two lots using a random select to create a test and a control lot to ensure statistical viability. Each lot consists of approximately 50,000 pieces. The percentage difference determined on the response rate is not indicative of all programs and is only applicable to this model.
Samples of items tested:
- Local phone number where respondent would be charged for the call vs. toll free number. Results: Local number 16% higher response than the toll free number.
- Bold headlines and graphics vs. conservative headlines and graphics. Results: Conservative outperformed the bold by 55%.
- Letter or self-mailer: Results: Self-mailer 20% over the letter package.
- White envelope with small yellow graphic vs. bright yellow envelope with same call-out graphics. Results: White envelope by 13%.
- Copy and photos personalized to the recipient vs. more generic applications. Results: Personalized generated 27% more responses.
These are but a few of the myriad of tests run by G.A. Wright. For more information and additional test results, contact G.A. Wright at 303-333-4453.
Does data analysis really improve the bottom line?
G.A. Wright had an existing database of prospect information as well as existing clients. The database had been used primarily to handle communication with existing clients and follow-up with prospects. But it was not actively being included within the monthly lead generation program. Through the use of data mining, the prospect database was tiered into multiple segments such as past clients, past prospects that had requested promotional services, past prospects that had requested product information as well as segments based on industry. Each segment had different criteria, which related to date of inquiry, size of business and type of industry. These segments were included in the monthly lead generation mailings. In addition to mailing monthly to these new segments, the use of personalization was also utilized in order to boost response rates.
The results:
2001, before any data mining
Pieces mailed: 2,080,986 at $0.36 ea.
Leads Generated 8,902
Gross Profit/Piece Mailed: $0.45
In 2002, after data mining
Pieces mailed: 1,945,290 at $0.38 ea.
Leads Generated 8,573
Gross Profit/Piece Mailed: $0.51
In 2003 after data mining and use of personalization
Pieces mailed: 1,643,382 at $0.38 ea.
Leads Generated 10,488
Gross Profit/Piece Mailed: $0.66
G.A. Wright was able to reduce the number of pieces mailed each month by targeting their best prospects. As a result of data segmentation and personalized mailings, even as production and postage costs increased, they were able to control costs and increase leads at the same time. Productivity per piece mailed increased 49% over the course of 2 years.
Conclusion
This feature has only touched on the complexities of Direct Marketing. Direct marketing today is a lot more than just mailing a letter with an offer. The campaign that works has been tested for copy, color and offer. The mail list is not just a list of addresses but also a list of proven prospects. The results are tabulated and weighed to insure the results desired. Now integrate the use of the Telemarketing, Internet, Email marketing and general media to enhance the direct marketing program and increase results.
It is not less expensive to do direct marketing today. In fact, it will probably cost you more. The difference is response and results with cost of each sale being reduced and the profit of each sale being increased. When compared with other media, Direct Response advertising will always show better measurable results.
If you are going to do direct marketing for yourself, read-up on the subject and be ready to spend some time and money on the project. Otherwise, contact the experts and pay them to help you. It could cost a lot less in the long run. To find a list of companies that specialize in direct marketing, contact the Rocky Mountain Direct Marketing Association at 303-914-8407 or go online to www.rmdma.org.
Sources:
G.A. Wright Marketing, 303-333-4453 or online at www.gawright.com
For more advertising and marketing help, news, resources and information visit our Home Page.
Back to top
|
|
|
