by Mark Levit
Direct response is the fastest growing — and most measurable — discipline in the marketing arena. Direct response marketing skills are among the most sought after today. It’s a discipline that’s been honed to a science.
Here’s an overview to help you make sure you’re getting the most out of your direct response investment.
The mail isn’t always the cheapest route to the customer (nor e-mail marketing). The cost per thousand can be as much as 20% higher than with mass media. But the payout is much higher if targeting, the offer and creative execution are on-strategy.
Direct response is advertising with which you hope to elicit immediate action — often a sale, usually of a single product.
Every aspect of a campaign must be tested. Testing is a form of insurance, without which smart direct marketers would never rollout.
In short, “testing” means creating what you believe is an effective direct response strategy, introducing one variable (a different mailing list, offer, creative approach, or other), and releasing it to a list of about 5,000 prospects.
To determine whether the variable you’ve introduced will merely pay-out or will actually increase the effectiveness of the initiative, a mathematical model should be developed to extrapolate how the test results will produce in quantities of 100,000, 500,000 — or whatever quantity you’re prepared to finance.
That way, you can constantly improve the "pulling power" of your campaigns.
There’s a long held myth about direct response generating a predictable 3% return. It’s not that easy! That’s not a statistic with any basis in reality.
House lists are comprised of customers who have responded to offers in the past. These are the people who will show the greatest probability of ordering from you again.
Over time, models can be developed to track the lifetime value of an average customer. The lifetime value is different for every product and every marketer. You’ll be able to track customer "fall off" over one, one-and-a-half or maybe three years and, of course, that’s the point at which you’ll start your “win-back” campaign. The customer’s lifetime value helps determine appropriate spending levels for new customer acquisition.
You’ll probably discover that more recent customers will respond more often. They, in addition to other frequent responders, make up the "hot list" segment of your house list.
In an effort to add new customers to their house lists, direct response marketers constantly test new lists. Good brokers are helpful in finding new lists to test. Once a customer from a test list responds to you, they are added to your house list.
Offer Me Anything
If you’re mailing a list of likely buyers this rule may change. For example, consider the sale of insurance through direct response.
Insurance marketers often mail to association members and other affinity groups who are predisposed to an offer endorsed by their group. Whereas a physician might not respond to an insurance offer mailed directly from an insurance company, the same doctor is much more likely to respond to the same offer if it is accompanied by the endorsement of the American Medical Association. Sometimes the insurance is presented as a benefit of association membership when, in fact, the association is receiving a fee for the opportunity to solicit its members.
The product must have relevance to the prospect. For example, don’t solicit Fortune 1000 CEOs with an offer for office supplies.
Besides the product, a component of the offer is its price. Price has enough of an impact on response that most direct marketers find it profitable to "price test."
Sometimes the offer needs to be sweetened with a premium offer. You’ve undoubtedly seen offers for The Wall Street Journal subscriptions promising a free guide to "Understanding Wall Street" with your paid subscription. Sports Illustrated lifts their direct sales with an offer of a free "Greatest Moments" video with your subscription.
The premium should have a greater perceived value than its actual cost to you. It should make the total offer almost irresistible. Testing will help determine whether a premium will lift response.
People are procrastinators. Even when they see an offer they wish to act on, other things take priority. A telephone call. A luncheon appointment. A visit to the dentist. These events can stand between you and a sale.
So, include a sense of urgency: "We can only offer you this exciting DVD if you order before February 15…" "Supplies are limited, so order now." "You’re FREE software will be included with your shipment only if your order is received before November 1." These are all common notes of urgency. The tactic provides your audience with a reason to order now, and to not push it off to the pile of items to be dealt with later.
The offer accounts for about 25% of the success of a direct response solicitation.
Good offer, good result.
Timing Isn’t Everything
Do you want to make another 15% on your investment? We would! So think about the most appropriate times of the year to release your direct response campaign.
Obviously, don’t send an offer for tax preparation services on April 16. And don’t try to offer books about summer vacation destinations just before Labor Day.
Even products that don’t have an apparent seasonality have best times for mailing. If yours isn’t apparent, testing will tell you.
Make sure the timing’s right — and make another 15% on your investment!
Their work can impact sales as much as 5%, enough for companies to invest in "copy testing."
Copy testing can involve emphasizing different product benefits, suggesting ways the product will solve the customer’s problems, presenting the product in different ways—and can even involve trying to sell the product with longer and shorter copy (tip: Longer copy usually scores better).
The Package Deal
In some categories, the package may be more important than others. One of our clients finds themselves competing not just with other publishers whose mailings are generally unimaginative, but also with the big pharmaceutical companies who have substantial budgets with which they compete for doctors’ attention.
That’s why we’ve taken special care to make that client’s packages sophisticated and high-impact in tone, message and appearance. Doctors are accustomed to slick, medical and pharmaceutical advertising. Those are the aggressive messages with which our client competes.
We also know that doctors perceive their time as limited. So, we develop creative concepts that communicate telegraphically, that "grab" the physician’s attention based on the product’s benefits.
The Great Unknown
There is a 2% "unknown factor" in direct response marketing. That is, a 2% effect from the political tone of the country, chance that everyone on your mailing list will have a headache when they receive your offer, the spiritual world—or whatever. It’s unknown.
If you’re just beginning your direct response initiative, profitability won’t occur overnight. Rule of thumb: 3-½ years investment to break even. Partners & Levit can help you minimize that unknown and maximize your direct response ROI.
Partners & Levit has a deep heritage in selling through the direct response. And we’re pleased to share our knowledge with you.