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February 5, 2007
Increase Your Marketing ROI
Tips for Achieving 20-percent Response Rates
By Mike Tobias
CEO, Cross Media |
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Ask most executives their opinion of direct marketing, and a colorful
response is likely to follow. Faced with response rates that average less
than 1 percent, the money-men consider most direct marketing strategies
as little more than throwing dollars down a hole.
What if direct marketing could instead be cash in the bank? It can be. But
the direct marketing strategies companies are using today must change
dramatically. The results can be astounding, coming in 20 times higher
than traditional methods – even in these budget-conscious times.
The era of “new” direct marketing
The concept of direct marketing is simple. Direct marketing includes any
direct communication designed to generate a response, such as a direct
order, a sales lead or traffic to a store. In fact, all good marketing should
generate a response. But more than any other type of marketing, direct
marketing is highly measurable.
Most companies take a mixed approach, balancing mass and direct
communications strategies. And while companies may not like the response rates for most direct marketing campaigns, there are a number of
factors pushing them to adopt even more and broader direct marketing
strategies than ever before. First, the number of communications methods
used by consumers is blossoming rapidly. Direct marketing of the past was
achieved only by mail. Today, companies can also leverage e-mail, text
messaging, voice mail and more. Since target customers may actually
enjoy and prefer to receive marketing messages via one of these methods,
the opportunity for improved returns increases.
Despite the growing number of channels through which to send marketing
messages, the number of marketing professionals available to manage
these programs is shrinking. Companies are downsizing their internal
marketing departments and outsourcing some marketing functions.
At the same time, marketers are being asked by corporate management to
provide measurements for each and every marketing program they
undertake. Rather than creating general return-on-investment metrics for
the year’s entire marketing department, marketing pros are now expected to
measure ROI for each and every program, from direct mail to web sites to
mass media. As a result, they need marketing programs with “built in”
metrics to gauge success.
In addition, the funding methods for marketing departments have changed
.In the past, a set percentage of sales was handed over to fund marketing
activities. Today, marketing departments are expected to generate a specific
number of leads, which in turn deliver a particular level of sales. Budgets
are allocated accordingly.
Finally, technology and data mining are allowing for more personalization
and better targeting of offers. In fact, consumers now practically expect
laser-printed direct mail pieces, as well as offers that match their particular
preferences.
Making direct marketing relevant
Let’s face it. The world of marketing is equal parts art and science. With
each campaign, a company is experimenting in the marketplace. Will
prospective customers like the creative? Will they be persuaded? And more
importantly, will they be spurred to action?
The answer is simple. The target will take action – if the materials
presented are relevant to them. Relevant direct marketing is the art of
understanding the audience so well that they receive information in a
particular way and tone that precisely meets their needs – every time.
Consider credit card companies, which send millions of credit card
applications by mail each day. Over time, these companies have learned to
expect a return of 0.25 percent. In other words, only one-fourth of 1 percent
of credit card application recipients will fill out the application or call the
company that sent it.
Instead of sending out millions of generic credit card applications to
everybody in the market place, why aren’t there more specific offers that
speak to specific market segments? For example, consumers with
particular credit scores might be more attracted to a particular offer.
In fact, this is one of the elements of good direct marketing, which include:
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- Targeted to the right customer – Does a small business owner need to
buy million-dollar industrial equipment? Does a retiree need to build a
college savings account? Should an individual who has filed for
bankruptcy recently receive a gold card application? Poor targeting leads
directly to poor response rates.
- An offer with a strong call to action – Mass media builds branding.
Direct marketing drives sales. That’s why every direct marketing piece
needs a relevant offer and a method to easily take it .
- Built-in measurement to determine results – Most marketers try to measure results when it’s already too late. Instead, measurement should be built into every direct marketing program. This might be through establishing specific URLs and 800 numbers, counting e-mail responses or asking customers to bring a card into a store.
- Good controls and tests – What really drove the customers into the store?
Was it the eye-catching creative? The offer? The way they were contacted?
It’s easy to find out. Simply establish a system of controls and tests,
where a portion of the target group receives varied creative or a different
offer. This quickly helps the marketing department establish best
practices and continually improve results.
- Link the marketing and sales departments – Want to really get bank for
your direct marketing buck? Stop segregating the sales department. Too
often, marketing decisions are made in the bubble of the home office,
without input or consideration of the sales force. If instead direct
marketing efforts were coordinated with sales, the sales force would have
much more powerful tools to help them meet or beat their goals.
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Getting real results – now
The beauty of direct marketing that encompasses the five elements above
is this: it becomes a self-renewing learning system that produces great
results - fast.
The concept is simple. Did a campaign work? Great, do more of it. Did
another campaign fail? Avoid using that strategy again.
Unfortunately, in the real marketing world, results don’t always drive actions.
That’s why direct marketing must become a strategic and systematic
learning system. It takes discipline and tracking, to ensure marketing
managers are acting on reliable information every time.
The payoff is well worth it. Cross Media has proven it in campaigns for its customers, who have: |
- doubled response rates by targeting the right individual
- achieved five times better response rates by hitting targets with the
right message
- hit 10 times better response rates by reaching targets at the right
time
- achieved 20 times better response rates by incorporating learning
into their direct marketing campaigns
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Put simply, by following the five simple steps above, direct marketing
campaigns can transform their dismal 1 percent response rates into power
-packed 20 percent response rates. And that’s ROI that would make even
the most skeptical executive proud.
Jeff Bradford and Mike Tobias are the president and chief executive officer of Cross Media (www.Cross Mediamgmt.com). Cross Media handles the back-end execution of marketing campaigns on an automated marketing platform, helping customers measure results to improve their ROI on marketing initiatives. |
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