Advance Renewal Offers Kill Brands

Written By Ted Grigg

As a diehard direct marketer who worships at the feet of offers that get great response, this blog shows my branding side.

Sometimes, we must look beyond pure response and look at what happens to our customer database when we continually insult them. Over time, the fickle customers stay and the committed ones jump ship.

Pardon the pun, but that's no way to run a ship.

Denny Hatch represents the seasoned direct marketer who has studied this business as a practitioner for years. And I agree with the theme of his recent editorial in the September 2008 issue of Target Marketing Magazine. 

He named the article "Going to the Advance Renewal National Bank" and advises publishers to sell their subscriptions in advance rather than going to their bank to fund the business.

He describes his proven subscription model this way.

The usual sequence for renewal efforts is as follows: 1) renewal at birth -- add a renewal effort on the initial invoice suggesting that the new subscriber sign up for another year at some ridiculously low rate (which I can offer you because you will save me the cost of sending out a renewal and save yourself the nuisance of receiving unwanted mail).

So far so good. But I take exception to his tactics listed in point #2 that may get sufficient response to warrant continuation, but risk killing the brand.

2) send monthly renewals at expire (X) minus six months, X minus three months, X minus two months, X minus one month, X, X plus one month, X plus two months. You keep sending renewals until they are no longer profitable.

As a customer, my preference is to renew at one month prior to renewal. Or show me how I can save by subscribing for longer periods as an option. But please, after 8 renewal offers, I have no idea what your best deal is. And worse, I begin to ignore all such renewals until I quite getting the publication.

But please, ask me what my preference is and respect it. You do nothing but cheapen the subscription to the publication in question with an endless series of renewal offers that confuse me, reduce trust by stating that my renewal is running out soon even though I have six more months (and you intentionally attempt to hide this fact because you know it reduces response as mentioned in this article).

To be fair, Denny Hatch expresses his own frustration when he renewed a WSJ earlier than he intended. He says: "I would rather have this money for four months than give it to Uncle Rupee."

Nonetheless, Denny Hatch supports the basic renewal tactics as stated in numbers 1 and 2 above.

Do you agree that sometimes we have to look beyond response to see how the offers impact customer loyalty, customer referrals, reputation and long term growth? Do direct marketers typically respect the "brand" or understand the negative impacts they may have on long term sales by focusing solely on initial response rates?

Ted Grigg

Ted Grigg is a direct response strategist who helps growth-focused companies reduce risk by identifying weak assumptions before they become costly mistakes.

Over the course of his career, Ted has evaluated several hundred million dollars in direct response testing across direct mail, digital, print, television, telephone, and other channels. His work combines direct response strategy, acquisition economics, customer analysis, creative evaluation, offer development, and disciplined testing.

Ted has worked on both the client and agency sides of the business. That experience gives him a practical understanding of the pressures facing executives, marketing teams, agencies, and service providers—and of the problems that arise when activity, media volume, or creative preference replaces a clear economic objective.

His consulting work helps organizations examine such questions as:

  • Are acquisition goals economically realistic?

  • Is the allowable Cost Per Sale supported by customer value?

  • Are targeting, offers, creative, media, and response paths working together?

  • Are tests structured to produce reliable business decisions?

  • Are unproven assumptions being treated as facts?

  • Is the organization measuring sales outcomes rather than convenient proxies?

Ted’s experience includes the development of direct mail and multichannel acquisition programs for insurance, healthcare, financial services, technology, nonprofit, manufacturing, retail, transportation, communications, government, and business-to-business organizations.

For a national direct-to-consumer insurance company, he developed a direct mail format that defeated established controls and helped expand the productive use of compiled prospect lists from less than 10 percent to more than 30 percent of total direct mail circulation within one year. He also planned Medicare lead-generation programs for more than 60 regional and national HMO and PPO organizations, with some programs exceeding sales projections by as much as 60 percent.

Ted founded Wyse Direct, a direct marketing division of Wyse Advertising in Cleveland, where he developed acquisition programs and helped launch a new technology product for Seiko Instruments by generating a predictable flow of qualified sales leads for its national sales organization. As vice president of new business development for the Grizzard Agency, he helped broaden the agency’s strategic capabilities and pursue new commercial and fundraising opportunities.

He is the author of The HMO/PPO Marketing Plan—A Step-by-Step Guide, published by Executive Enterprises, and has written numerous articles and conducted webinars on direct response strategy, testing, creative development, and marketing economics.

Ted earned a Bachelor of Arts degree from Abilene Christian University and completed two years of graduate study at Texas Tech University. He is the founder of DMCG, LLC.

http://www.dmcgresults.com
Previous

Do Seasoned Direct Marketers Bring Anything to Online Marketing?
Next

Client Agency Industry Experience Not Essential