Prove It Before You Promote It

In my last blog, I promised to outline 5 essential steps for developing a database marketing strategy. Here goes …

1.  Define what you want customers to do. Sounds basic, but it’s surprising how few marketers actually spell this out clearly. For customers, you want to retain them, getting them to come to you again … to buy from you more often … and even to cross-sell them other products. For prospects, you want to entice them to that first sale. Define the action you want them to take and break that down so your message leads them to that action in a compelling way. It may involved guarantees, first-time savings, a bonus if they order now, relevant up-selling offers, extra conveniences or services, VIP status, or something else.

2.  Set quantifiable metrics. Figure out how you will measure your success. The acquisition of sales “leads” does NOT equal revenue. Sales do. Track to see how many prospects buy on the first communication. How many on the second. At what quantities. In what kind of timeframe. And so on. Do the same with customers, but with additional measures on how much and how often they buy. In short, measure everything that contributes to sales success.

3.  Analyze your results. This step takes some contemplation. Set aside time to reflect on your current results, and consider ways to improve. A good campaign can be better — and even a failure can be turned around. For example, I have written several informercials, and I recall one that initially failed. I concluded that the introduction was too slow. After rewriting and reshooting the opening 3 minutes, it was instantly successful. So evaluate how to direct the behavior of your customers and prospects. Perhaps you offer automatic monthly shipments. Or you set up a loyalty program with rewards. Or you simply rewrite your headline so it grabs readers’ attention better than ever before.

4.  Budget for a Return On Investment (ROI). Our chairman, Steve Cuno, talked about this principle recently, and I recommend reading his insights (click here for the article). The short version is that when a campaign works, you do it again. Your budget should be based on how much you want to sell, NOT how little you want to spend. That is, if you want to double your sales, then double your marketing. Forget the old style of budgeting where only $X are available for marketing. Turn that thinking around. If every time you gave me a $10 bill I would give you back $100, chances are good that you would never stop handing me money. I cannot imagine a person who would decide that they could only give me a few $10 bills, after which they just couldn’t budget for any more. You get the idea.

5.  Dive into your metrics with gusto. Ask yourself “what if we did this, or that, or something else?” Do some data mining and comparisons. Determine the sales cycle, timing, and lifetime value of a typical customer. Determine the difference between typical versus best customers. Figure out who is buying what, how often, and why. Build models and profiles of your customers; then find prospects who are just like them. Set ever-increasing goals — and ramp up messages and offers accordingly. Continually work toward increasing the order size and frequency of sales to every customer. So test, test, test … and push, push, push.

Remember, database marketing actually reduces your marketing risks by testing and proving what offers work best. You can actually predict your sales and profits in advance. Your ongoing goal is to get better and better results. It’s fun. And it works.

Paul Martin

Every direct marketer hopes for a high response rate on their campaigns.   Yet few marketers take the critical extra step of making sure their list is up to date.

Of the 305 million people living in the U.S. today 43 million of them will move this year, but only 60% of those movers will fill out a USPS change of address card.   On top of that, after 3 months the post office only forwards first class and priority mail.  And nothing at all is forwarded after 12 months.   Add to that the 6.3 million who will have a name change this year due to marriage or divorce, and you can quickly see it doesn’t take long for a list to grow old.

There are other serious problems common to almost all lists that are even more difficult to fix.   The preponderance of sources that are used to collect customer information today means that there is inconsistent data on nearly all of us floating around out there.   Many addresses are truncated leaving off apartment numbers and street types (i.e. Cove, Trace, Trail, Terrace, Court).

Customer data collected from warranty cards, sweepstakes entries and the like must be typed into a computer resulting in typos and misspellings.  On top of that people often abbreviate their information when filling out these forms.   Most people have numerous name and address records of themselves that are nearly impossible for most applications to tell apart.   I have seen customer databases with as many as 14 variations of the same person, each having its own unique customer ID number.

The bottom line is that all these issues result in mountains of undeliverable mail, which represents wasted paper, postage, and money — and, of course, inaccurately reduced response rates!

There are many outsourcing companies today that will update your list and flag the ones that are undeliverable or cannot be updated.     There are fewer, however, that can cost-effectively reduce the duplicate data in your lists and databases.   The cost is usually 3 to 10 cents per updated name depending on how much “address hygiene” your list requires.    You don’t pay anything for records that are not changed.   This additional step almost always pays for itself with the savings in production costs and postage on your first mailing.  You’ll also be able to report a higher response rate to your boss.  Think about it before you do your next mailing.

Scott Hubka

Imagine you’re playing Monopoly. You have four houses each on Tennessee, St. James, and New York avenues. Four opponents are nearing them. It’s your turn. You have ample cash to upgrade to hotels. But you decide not to spend the $300. Why? Because when you planned this turn’s budget, upgrading to hotels wasn’t in it.

Sounds silly, doesn’t it. And, sadly, it happens in business all the time.

More than once, when we created a direct response program that earned a hefty profit, our happy client opted to retire the program rather than roll it out. Why? Because they’d used up the budget. Never mind that they now had more money than they started out with, and that if they reinvested in the campaign they’d end up with even more. If it ain’t in the budget, it ain’t in the budget.

But that only happens with big clients. Smaller clients tend to say, “That made money. Quick—let’s do it again.”

It’s fashionable for companies to talk about being entrepreneurial. Talk is cheap. Being entrepreneurial means being able to seize opportunities. Letting them pass by because, months earlier, someone entered a number on a spreadsheet is anything but.

Steve Cuno

I did an unofficial survey and I decided that there must be about a billion different kinds of fonts.

Okay. Maybe not that many. But, if you’ve ever been cornered by a designer at a cocktail party, you’ve probably heard about all the different font faces out there, and how most of them are awful or overused.

Fortunately, that isn’t a problem on the Internet. No. Websites have a very different problem. And that’s that there are only nine fonts that every user can see. Or, I should say, that probably every user can see:

Arial. Arial Black. Comic Sans MS. Courier New. Georgia. Impact. Times New Roman. Trebuchet MS. Verdana.

And that’s pretty much it. Which means that in order to make sure that the font you intended for a headline, a subhead or a block of text — as your art director will demand — you’ll have to use images or advanced code.

It’s an easily defeated problem for your developers, but it can be expensive.

Images take more time to create, but can be a very simple solution. And there are slick, open source solutions available — like sIFR, which not only ensures your font of choice appears, but scales it to fit your layout.

Of course, none of these solutions are perfect. Neither fully supports font scaling on-the-fly, which is a necessity for users with vision problems. Likewise, properly tagging images vastly increases the time it takes to create simple objects like a headline. And the flash solution, while sophisticated, only works if the user has flash — otherwise they see one of the default fonts (of the designer’s choosing).

What to do? Really, the best thing is to determine if a specific font is necessary to your design. If it’s integral to your brand, take the time to do it right. Otherwise, something standard will accomplish the ultimate job: communication.

Mark Martinez

These days, every company of just about any size has a customer database of some kind.  But are the companies’ mining that customer data and marketing for additional sales?  And will strategic planning bring even more effective results … plus build customer loyalty?

It’s a big step to go from a basic customer database all the way to loyalty marketing.  So it’s best to start simple.

Initially, you should carefully target offers to each customer based on their previous purchases and known interests.  Cross-selling is important — but start with “focused” selling.  Eventually you can enhance the lifestyle or business data you collect on repeat customers, and even attach commercially available marketing information.  With this ever-expanding data, you can treat each customer in a way that makes your communications and offers personal and uniquely appropriate to his or her interests. Including cross-selling.

As you generate more repeat sales, you’ll become a “preferred seller.” Whether customers buy from you online, at your place of business, or both — these customers trust you.  They appreciate the value, quality, warranty and service you provide.  These customers will often buy from you even if your price is slightly higher.  BUT your overall value (not defined as just price — but also a sense of service and quality) must still be excellent … because you could easily fall from your “preferred” status.

Ultimately, you can use your database to build models of your very best customers.  Then you can send relevant offers to prospects that are very much like your existing customers.  This takes the guesswork out of prospecting.  You’ll actually have the advantage of being able to predict response rates and revenues ahead of time.

And it’s all because you know which offers are the most relevant and appealing to your existing customers … and, very likely, to your new, better-variety of prospects.

Sound complicated?  It’s actually a low-risk approach to marketing and can be organized in a step-by-step fashion.  But it does take planning. And it requires a commitment to developing a smart strategy and then following through.

Finally, the holy grail of relationship marketing is implementing a loyalty program.  This can elevate you from a “preferred seller” up to “the seller of choice.”  In other words, you’re not just a trusted or favorite seller … you become the number one seller from whom customers will insist on buying, even if they have to go out of their way to do so.

Achieving this “seller of choice” status often involves customer rewards, points programs, memberships, special savings and more.  But any of these efforts on your part are worth it for the level of repeat sales and the long-term relationships you achieve.

In my next article I’ll outline 5 steps for actually planning a database marketing strategy.

Paul Martin

Many companies offer incentives with practically every campaign.   Other companies begrudgingly offer them from time to time – sort of thinking of them as a “necessary evil” when times get tough.

Although it is true there are a few products that sell quite well without the need of an incentive, statistics consistently show a positive ROI for campaigns with incentive offers.    However, with competition for customers ever increasing, choosing the “right” offer can be tricky and choosing one that just doesn’t quite “hit the mark” can kill an otherwise promising campaign.

The objective of an incentive offer is NOT to get people who have no need or interest for the product to go ahead and buy the product.   If that happens, you’ve probably spent too much on your offer.  This will lead to a negative ROI campaign and the acquisition of otherwise disinterested customers who will not likely become loyal, profitable customers.   The correct objective is to entice people who have already been thinking about your product or service and just haven’t yet committed to making the purchase.   With that in mind, the offer must also be significant enough to match the time and cost involved for the customer to obtain the product.

For example, a study was done on what it would take to get people to come in and simply preview a large-ticket item.  Letters went out across the nation.   One third had “no offer”, a third had a $15 gas card offer and the last third had a $20 gas card offer.   The results were very interesting in that the “no offer” letter pulled the same response rate as the $15 gas card offer.   The $20 gas card offer had an extremely high response rate, proving that the $15 offer was simply not enough of an incentive for people to come visit their show room.

This same correlation always parallels the cost and customer involvement associated with your product.  The bigger the commitment required of the customer, the bigger the incentive needs to be get those people on the fence about your product to think “I might as well do it now – this is probably the best offer I will see for a while.”  If the offer is not sufficient the majority will choose to “think about it some more” as they will feel certain a better offer will come along fairly soon!

Scott Hubka

In this instant-gratification age of cell phones, PDAs and e-mail, you might wonder if it makes sense to enclose a postpaid business reply card (BRC) with your direct mail. The answer is an unqualified: Yup.

We recently sent out an eNewsletter subscription offer. We weren’t sure about the need for a BRC. Wouldn’t people who want an online newsletter sign up … online? We decided to test it. In the final count, as many people signed up by mailing back the BRC as by registering online.

Based on that experience, we convinced a skeptical client to let us include a BRC in a recent b-to-b mailing. For two weeks, all replies arrived via phone and web. There were no mailed replies. At the end of Week Two, just as the client was readying to say, “I told you so,” the BRCs began showing up. As of this writing, BRCs account for 1/3 of our client’s inquiries, and are still coming in while phone and web inquiries are on the wane.

In both cases, leaving out the BRCs might have seemed to make sense in theory. But in practice, leaving them out would have been a costly mistake.

The moral? Your market will respond the way they want, and it may or may not be the way you think they should respond. Even in a high-tech world, some people still like to check a box by the word Yes! and drop a card in the mail. But they won’t if you don’t give them the card in the first place.

Steve Cuno

As the web grows more and more popular and social networking sites like Facebook and MySpace continue to grow, I have to wonder, will there ever be something that takes hold in the social networking arena on the business side? Yes, there are a few business social networking sites out there, but none of my clients use them, and I doubt yours do either.

But as the workforce evolves, and the kids that are addicted to MySpace enter the workforce, networking online is sure to change on the business end. People will actually begin using these sites as a tool to get new clients and referrals, and build relationships.

I, for one, am excited.

Jessica Trump

The more people who read your ad (webpage/direct mail/brochure/etc.), the more stuff you’ll sell.

After all, people who like to read will give up on your ad if you make it too hard to plow through.

Did you just roll your eyes and say, “Duh”? Point taken. But advertisers often unwittingly violate this most basic of rules.

So help yourself to the following techniques. All are time-tested and proven to increase — or least prevent you from decreasing — readership:

1. Use a logical layout, so that even indifferent readers can tell where to look first, and where to look next.
2. Make headlines benefit-oriented, direct, and clear. (Do not assume that a puzzling headline will engage. Readers have better things to do.)
3. Set body copy in serif type, flush-left, and in positive (not reverse) type. These steps alone will double readership.
4. Resist any urge to set type in a pattern that isn’t a rectangle. No circles, spirals, triangles, or swirls.
5. Choose a legible font.
6. Set type in a point size that your average customer can read without having to squint. (And remember bigger fonts for seniors.)
7. Keep paragraphs short.
8. Indent paragraphs about five spaces. It pulls readers along.
9. Break up copy with subheads.
10. The only rule about copy length is that it should long enough to do its job. Don’t make it too long—or too short. (Caution: don’t confuse long with wordy. Wordy means you can edit without losing content. Contrary to marketing myth, people do read well-written, long copy.)
11. If you insist on putting put a background color or photo under your body copy (not recommended), make it so light that the copy is still easy to read.
12. Be real. Use contractions and conversational English. I won’t argue if you think that expectorate sounds more professional, but in writing, use spit anyway. This rule applies no matter how sophisticated your reader may be.
13. Get quickly to the point.
14. Don’t show off. You’re trying to get someone to want a product, not to say, “Wow, what clever copy.”
15. Write what your customer wants to read. What you want to say doesn’t matter.

Steve Cuno

Many people used to complain about the “junk mail” they received in their mailbox, but the biggest complaint today is about the junk mail in their email inbox. I decided to do some research and see what marketers were saying about these two media strategies.

Target Marketing’s “Media Usage Forecast 2008” found that 34% of US Direct Marketers reported a higher ROI with direct mail for customer acquisition compared to just 24% for email. (The study results are from 21,678 marketers and were released in March 2008.) In regards to retention efforts email held a slight advantage with 37% reporting email with the highest retention ROI versus 33% reporting direct mail.

With most companies budgeting slightly more money to acquisition this year (vs. retention), direct mail will still be the preferred media for marketing dollars.

The reasons for the differences are great fodder for marketers, but many agree it has to do with targeting.   The demographic data for direct mail addresses is much stronger than it is for email.   Unless your marketing strategy takes the “shotgun” approach then you’ll want to use direct mail to effectively reach your target market, especially when it comes to customer acquisition.  Having an effective direct mail package physically in the hands of your targeted best customers and prospects will likely remain your best bet for years to come.

Scott Hubka