The State of Advertising as Seen Through the Eyes of a Direct Marketer

For years, I've seen direct response TV advertisements that sell everything from vacuum cleaners and kitchen utensils to jewelry. Direct marketing newspaper, magazine and direct mail advertising now typically omit response coupons in favor of the toll-free phone numbers and landing pages. Even the Internet has strongly embraced the direct marketing strategy.

But this type of direct response advertising pales in comparison to the volume of advertising that creates awareness or positioning advertising in all channels (except perhaps the Internet).

I've always wondered why that was.

Perhaps it is the budget accountability required with the practice of direct response that does not appeal to agencies or some CMOs. Even today's social media craze requires little in the way of accountability for the effort and budget spent to maintain it. Awareness and positioning advertising strategies make sense as does social media. But how much of your budget should you allocate to these approaches if you do not connect them to sales?

I think those budgets get easily out of control.

On the other hand, direct marketing strategies are nowhere near their zenith in the marketplace. That may be because most advertisers do not understand database marketing and direct marketing to leverage their incredible moneymaking power. 

Here's what I see as a direct marketing strategist when I look at the whole of advertising.  

  1. Poorly understood direct response strategies.  
  2. An unhealthy attraction to anything that appears new. 
  3. A lack of respect for the importance of the company's customer and inquiry databases.
  4. A predilection to approve ever larger marketing budgets without requiring quantifiable proof that they achieve corporate sales goals. 

The fundamental principle underlying all advertising is its ability to acquire new customers and retain existing ones at an acceptable cost.

Here are a few examples of how direct marketing campaigns require accountability for results to survive.

Direct Response TV (or DRTV) advertisements must meet an allowable cost per sale. Successful DRTV advertisers test many spots against each other. They also check the CPS (Cost Per Sale) results by the local station on a minute to minute and day to day basis. DRTV schedules expand or shorten based on actual sales results.

Besides DRTV, you’ve seen hundreds of direct mail pieces in your mailbox. There are direct response postcards that offer a free phone if you sign up now for a 2-year mobile contract. Others push Internet subscription services with 90 days free for a one-year subscription. These postcards usually contain big headlines and a couple of paragraphs of copy.

Other mailers come in the form of the classic #10 envelope package with long letter copy, a brochure and a personalized response form. A/B split test results should determine the control format used by an advertiser.

Again, these results are evaluated based on an allowable cost per sale or cost per lead.  Yet many small and large advertisers cannot answer “Yes” to most, if any of these questions.

  1. Are you testing offers, mailing lists, and other media to establish winners?
  2. Are you tracking response by customer, by offer and by medium?
  3. Are you using broadcast and print as awareness builders? If so, have you considered converting some of your brand or positioning advertising to direct response?
  4. Are you giving proper results attribution to all channels in making a given sale? For example, did SEO or your direct mail piece take the prospect to your e-commerce website to buy your product? Are you tracking all leads and sales based on an offer? Does your DRTV offer differ from the one made in your direct mail piece when they are run concurrently? 
  5. Do you have an allowable CPS or CPL (Cost Per Lead)? Many large advertisers cannot answer this basic question.
  6. Are you testing and evaluating costs per sale for all available channels such as online, direct mail, DRTV, DRradio, print and so on regularly?

Advertisers sell through many channels and make various offers. But does this qualify them as direct marketing? No, it doesn't. They could dramatically increase their ROI by applying all direct marketing strategies.

One of the most important strategies is A/B split testing, regardless of channel. It is also the most underused direct response tool. Why is that so?

I think many advertisers do not test because they have not developed an allowable CPS or some similarly quantified evaluation tool. Either that or they do not understand the critical importance of incremental improvement that drives successful marketing programs. 

Once your evaluation tool is firmly established, then take every opportunity to test the following items across all channels. This represents a partial list.

  • new offers
  • new channels
  • new mailing lists and target markets
  • a variety of direct mail package formats
  • different creative approaches
  • DRTV spot lengths

Over time, your best channel and creative execution will weaken. Don't get caught dead in the water with marketing approaches that no longer work. Aggressively test to stay on top of your game.

Posted on January 3, 2017 and filed under Social Media.

How to Increase Your Direct Mail Response with pURLs

For decades, marketers believed that combining messages through many channels increased response rates. During my career, several tests proved that this strategy works most of the time.

These same tests looked at the cost of combining several channels to support each other. I tested these combinations on an A/B split basis against single channel approaches. 

For this reason, I think all companies should leverage the Internet when promoting with traditional media like direct mail. Personalized URLS leverage your direct mailing with a landing page to lift response.

Most responses today come through an Internet based application or ecommerce website. This gives the respondent 24-hour access to a user-friendly format to buy your product. 

 Notice the personalized URL in this direct mail letter.

A pURL enabled mailer merges the domain name with the recipient's name. When typing or clicking the pURL, the displayed landing page contains the recipient's name. You can also insert other relevant information that is available in your database within any landing page.

Here's an example of a pURL landing page.

According to a Boingnet study (a company that provides advanced pURL support and reporting), pURLs can increase response by 3x for B2B campaigns. This higher response assumes you follow up each pURL with a phone call, email. and other appropriate channels. pURLs that are not supported with detailed reporting and response follow-up do not work as well. Here's an instance where automation makes a significant difference.

The following flow chart shows how to set up an effective pURL system that will increase response rates and reduce your Cost per Sale.

With proper support, adding pURLS to your direct mail program does not have to keep you up at nights. Please contact me if you want to test such a campaign for your company. My email is tedgrigg@dmcgresults.com.

 

Posted on October 4, 2016 and filed under Direct Mail, Database Marketing.

The 3 Most Successful Direct Mail Formats

Self-mailer, jumbo postcard or window envelope direct mail package? How do you pick one? What package should you use to generate leads or sell your product?

Assuming you have determined your offer and selected your mailing lists, then you must choose your direct mail format.

Do not pick your format based on cost alone. The proper format will pay for itself and improve profitability. The trick is to make your decision based on what works most of the time. Do not try to reinvent the wheel until you have tested your direct mail many times.

Your first package format choice

The Classic Package

The Classic Package

Your first direct mail tests should use the proven envelope direct mail format. It's used most often because it works. The package contains three elements inserted into an outer envelope.

  1. A #10 outer envelope with single window 
  2. A personalized one or two-page letter with the address showing through the window
  3. A personalized response device produced with the letter
  4. A #9 Business Reply envelope for the response device
  5. An 81/2 X 11 flyer as needed to lift response

More often than not, added package elements will improve response rates.

Your second most successful format choice

The Snap Pac

The Snap Pac

The most effective format of all time is the official looking Snap Pac. It contains the same elements as the Classic Package. It usually beats existing direct mail controls using the same content. This rarely happens based on format alone except for the Snap Pac.

My favorite size is the 6 X 9 personalized Snap Pac containing a letter, the reply form, lift note and reply envelope.  

Some heavy mailers such as banks, insurance companies, and large associations use this format. Some companies use the Snap Pac as their super control. This means that they have been unable to beat it with repeated tests after many years.

Your third format choice

The Self Mailer Front Side

The Self Mailer Front Side

The Self Mailer Back Side

The Self Mailer Back Side

Only after you have tested one or both of the above should you go to my last format choice, the self-mailer. This mailer is self-contained using no outer envelope.

It consists of a  folded brochure with an included coupon or response piece. Postcards of all sizes fall into this category. 

Rarely containing letters, these formats work best with existing customers who know your product. Postcards do not create the emotional pull of the letter. Some self-mailers incorporate a personalized letter to create a hybrid package.

Simple postcards work best for couponing and discount offers that need little copy support.

The other options

There are other choices beyond these three formats that meet specific needs.

For example, new perfume introductions may use scratch and sniff to use another sense. A manufacturer of a new flooring material may insert a product sample in a box to flooring retailers. The applications for 3-dimensional formats are endless.

A hybrid Classic Package that contains a solid object the recipients feel through the envelope prompts them to open the package out of curiosity will increase response.

The key point when selecting formats: your first choice is the Classic package first. If that doesn't work, then another less expensive format will not likely make your mailing successful. It's better to concentrate on your offer and list testing rather than cheapen the format. 

 

Posted on August 15, 2016 and filed under Direct Mail, Direct Marketing Strategy, Planning.

Direct Marketing Consultant Reveals Top 3 Response Killers

Photo by Imilian/iStock / Getty Images

Direct marketing (or any marketing effort) suffers from these barriers in client companies. Most of them fall within the realm of common human weaknesses. They may hurt the whole business enterprise and not just the direct marketing program.

1. Worshiping at the idol of the status quo

Clients often fixate on the status quo despite evidence that shows the need for a new direction.

This management flaw remains the biggest response killer for almost all marketing programs. But the idea that "if it ain't broke, don't fix it" serves to restrain growth.

Successful direct marketing programs need a lot of work to remain successful. No matter how successful, direct response rates will drop over time. Direct marketers understand that their job entails ongoing program replacement. 

This means frequent testing designed to beat existing controls. 

Managing effective direct marketing programs over the long term requires controlled risk taking. 

2. Working in the haze of routine

Human nature has a way of lulling managers into a dangerous comfort zone.

Here's what I hear from clients who face clear evidence that they need to upgrade their processes.

- "We've worked with this vendor for over twenty years. We're not going to consider other vendors."

- "Our internal database procedures cost us new sales and opportunities. But we don't want to outsource the work. That move makes us uncomfortable."

- "Taking production outside will cost much less and deliver superior print quality. Outsourcing the work would help our customer image. But we don't want to reallocate internal jobs."

- "We don't think our prospects want to read a letter. All we've ever done is send postcards because they are less expensive than other formats. So we don't want to test other options."

3. Not challenging the company's direct marketing efforts

Clients should never assume that their vendors or staff observe best direct mail practices. Yet many clients rarely challenge the marketing work so long as it is profitable. 

Perform these evaluations at least once every one or two years.

- Audit the database and direct mail deliverability levels.

- Audit all direct mail production to assure quality and competitive pricing.

- Check internal procedures for accurate database input processes.

- Review inbound telephone scripts, inquiry response procedures and  accurate response tracking.

These three response killers do not go away. These are not tactical issues but strategic management issues. If left alone, they will kill long term marketing success.

Experienced consultant may attempt to correct these issues. But it is a waste of talent and energy without CEO support.

Have you found ways to overcome these barriers in your company? If so, how did you do it?

Posted on June 10, 2016 and filed under Planning, Direct Marketing Strategy, Consulting.

You Have To Know Who Your Customers Are to Find New Ones

Knowing Your Customers

During a casual business lunch with a CMO friend, he began to go over his marketing plans with me.

"We have hundreds of restaurants nationwide with a well recognized brand. But some stores are not doing well at all. So we need help in developing a distressed store program to improve their sales.

We know most of the store managers are doing a good job. We also know the competition for most of our stores have similarities. 

I say direct mail, because we are active in social media and promote special sales by email to participating customers. But our lists are pretty small."

I then asked him if the email list contained customer names and addresses. It did not. Did he know who his customers were? He answered: "Why of course. We know they have families of X size with incomes of X ..."

But my question wasn't whether he had a customer profile, but whether he knew his customers? Does he know their names, addresses, how often they came to his restaurant? How much they spent? When did they come last? Without these answers, the CMO cannot target either his existing customers or qualified prospects.

Why is that so? His organization does not maintain a transaction database

Direct marketers use the database to identify the best customers by matching them to external mailing lists. This creates a high quality prospect file by finding people who look like the best customers. This process also shows customer concentration by geography. We can then promote to the prospects in areas with the deepest customer penetrations.

A customer database would also allow the CMO to determine why some of his stores are in distress.

Perhaps some restaurants have too few customers. Or their one time buyers who convert to repeat buyers are lower than successful stores.

Some distressed stores may not have enough qualified prospects within their trade area. This means a relocation is in order and spending more money on marketing makes no sense.

When a direct marketer asks if you know who your customers are, he wants to know what your database contains. Does it have the needed information for prospect targeting and marketing program evaluation.

 

Posted on May 16, 2016 and filed under Mailing List, Research, Direct Mail.