Money Talks: It’s Past Time That Marketers Reconsider Reward-Based Promotions

Recently, Bill Warshauer provided Target Marketing readers with a timely reminder of the efficacy of reward-based promotions and their utility in replacing discounts in the promotional mix. Now let’s take it a step further with some modeling.

Recently, Bill Warshauer provided Target Marketing readers with a timely reminder of the efficacy of reward-based promotions and their utility in replacing discounts in the promotional mix.

Extremely interested, I commented and a somewhat updated summary follows:

It is past time that marketers reconsider reward-based promotions.

Let me give you one simple case history.

Some years ago, a client, a leading bank, found that they were sending pre-approved but unrequested credit cards to customers and were getting unacceptably few people “deblocking” or “activating” their cards despite a regular monthly conversion series urging them with various incentives like no annual charges for one year, to accept and use the new cards. The low conversion rate, plus the costs of up to six efforts per prospect with no revenue, were at least discouraging.

When we were asked for help, we proposed turning this system on its head. Our objective was simple: incentivize card recipients to use their new cards immediately instead of allowing the costly slow drip from promotions over months: make them, as mafia lore says, an offer they couldn’t afford to refuse but we could afford to make.

To do this we designed an elaborate mailing to be sent without fail, the day after the card, rehearsing all the card holder benefits but telling the prospect there was another “secret” benefit which could only be had by calling a special toll-free number.

Having determined in advance, the allowable cost per active card, we knew that we could afford to offer $50 per active card user. The caller was not to be asked to “deblock” or “activate” their card (unnecessarily bureaucratic words in our view) but rather, “May we credit your card account with a $50 gift you can spend right away when you use your card within the next five days?” (We also tested $20, $30, and $40 as alternatives to determine the most profitable offer.)

Want to know which was best? Ask me.

While the cost of the mailing package nearly got us fired, the results turned client fury into joy. We achieved the client’s objective of conversion, even after consideration of the cost of the reward, at a cost-per-conversion of less than half of what the client had been spending. And it was right away, a significant cash advantage.

Not exactly the proverbial rocket science, is it?

I had drilled into me over the years by the iconic Dick Benson and by others that Rule No. 1 of what was then called direct marketing was:

It doesn’t matter a damn how much you spend in marketing money so long as in the end, the unit cost of achieving your order gives you the pre-determined profit you desire, or more!

Why many marketers have the least trouble getting their minds around this is a total mystery to me. It should be hardwired into them.

However, taking advantage of the isolation of the pandemic, it seemed worthwhile to have another go at trying to explain it and providing those readers who are interested, with the tools to build a simple model to help them calculate it for themselves.

Using the activation of distributed credit cards as an example, let’s assume that the bank has determined it can afford to spend a maximum of $87.50 to generate each active credit card. In arriving at that assessment of the “allowable,” the bank has determined that it wishes to achieve a profit of a similar $87.50. And to make certain that their marketing geniuses won’t forget the need for that profit, the bank’s managers have made believe the profit is a “cost” and reserved it so the marketing guys cannot get their mitts on it.

Now, if the actual cost of generating the activation is exactly the $87.50 allowable, the profit will still be there. And if, due to the marketing team’s genius (or luck, or a combination of the two), the activation costs less than the allowable, the difference will go right to the bottom line and the applause will be deafening.

Let’s look at this starting with the knowns:

Determining the allowable figure 1For this hypothetical example, let’s accept that the historic active card revenue is $350 and that operating the card system and covering general and administrative costs is 50% of this revenue. Now let’s reserve an additional 25% ($87.50) for profit before determining how much we can spend for marketing.

As you can see, that leaves us with $87.50 which we can afford to obtain an activated card user and make a 25% profit. Put another way, if we spend exactly $87.50 for marketing including the cost of any incentive, then we will make the mandated 25% profit. Spend more and we will make less profit or even have a loss; spend less and the saving against the $87.50 allowable will add to the profit.

Now the fun starts.

What we wish to project is how much our response needs to increase from a non-incentivized baseline to justify the incremental cost of each level of incentive. Let’s assume that including the variable cost of converting the incoming telephone calls, the per-thousand marketing cost is $1,500. Before adding the cost of any incentive, the baseline at different response levels looks like this.

Non-incentivized cost per activated card, figure 2
Note that the white outlined cells are inputs and the shaded cells are driven by formulae. In working with the model, this allows you to play “what ifs?” and input your own assumptions, for example, different percentage responses or cost per thousand.

As you can plainly see, only the cost of a 1% response exceeds the $87.50 allowable and eats into the reserved profit. At 2%, the cost is $75 which means that the bottom line is the $87.50 allowable plus the $87.50 reserved profit objective, less the $75 cost per response, for a total contribution of $100 or 35% of revenue, a comfortable ROMI of 1.33.

But as aggressive marketers, we want more responses and profit. And we are prepared to offer an incentive of $20 to achieve that. Our question must be: How much does the addition of this incentive have to increase the percentage return to justify the additional $20 (or some other number you choose)?

To find the answer to this and provide a tool for answering other questions with different inputs, we built this model. It references the ACPO model above and matrixes the calculated cost of a given response percentage with the addition of the incentive.

Actual Cost, Figure 3To this has been added a table which permits us to input any combination of response rate and incentive and generate how much additional percentage response would be required to justify using the specified incentive, in the case of this example a $30 cash promise.

Incentive Justification, Figure 4
To help you should you care to build your own model, the equations which drive it are explained below the numbers.

As you’ll see, to justify the $30 incentive, response must rise by 0.86% from 2.0% to 2.86%. Any increase greater than 0.86% would make the use of the $30 incentive a winner.

There is no question that money talks. We just need to understand the language.

Any interested reader who wishes to have a copy of this Excel model, email with “Model Please” in the subject line.

Rising Above the ‘Noise’ of Digital Marketing With Direct Mail

As marketers, we have to ask ourselves how much “noise” we will be required to make to have our offerings heard against this cacophony of messages and how much our customers and prospects are willing to tolerate?

Remember in the 1960s when a direct mail campaign of a million pieces was a dream, but it was unlikely that even by combining house names, rentals, and trades, you could get your hands on that many names? (We hadn’t yet begun to call them data files or databases.)

And did you know what the abbreviations MM or M; B or Bn or Bil; T or Tn stood for? And if you did or could guess, it’s doubtful you could attach a specific number of zeros to each of them?

Things were quieter then, something like the quiet we have recently been experiencing in whole or partial lockdown. Admittedly, back then it was nice to hear the blare of trumpets on the Fourth of July holiday when the local brass band paraded through town, much nicer than the blasting sound of today’s boom boxes at full decibels. But paraphrasing the old saw, silence was golden.

Accepting that we are entering a totally different marketplace than any of us have experienced, it is fair to say that it is likely to be more boom box than brass band. According to the “Wall Street Journal,” WPP is forecasting “Political ad spending will total $9.9 billion in 2020…. up from $6.3 billion in 2016, when President Trump was elected.” That’s “B or Bn or Bil.” The same article projects the digital portion at “$2.8 billion, or 2.2% of total digital ad spending.”

If the spend was evenly divided among the 153.07 million registered voters, that would provide $6.53 each. But as we know, only about 30% of these, 9.5 million, are what are said by FiveThirtyEight to be potential swing voters and, if the spend was divided equally among them, it would allow $21.78 to bombard each of them with “electoral noise.”

As marketers, we have to ask ourselves how much “noise” we will be required to make to have our offerings heard against this cacophony of messages and how much our customers and prospects are willing to tolerate? We will need to contemplate whether the answer will be as T.S. Eliot wrote of the end of the world in “The Hollow Men”: “Not with a bang but a whimper.”

This may be one of the reasons why — along with the fragile and uncertain future of the U.S. Postal Service — so much recent interest has been generated by the resurgence of direct mail as a serious participant in the marketing mix.

Instead of being denigrated as “snail” (or worse) “junk” mail, the quiet “whimper” of a well-conceived and directed mailing, delivered in the mailbox, may single itself out and have greater impact than yet another loud explosion in the endless digital war for attention in the inbox.

Imagine Express put it succinctly:

“Direct mail provides companies with the commodity of time — time to communicate the message effectively, convey emotions and convert the customer.”

The “commodity of time” is often the secret asset missing from our frenzied marketing activities. It is so much faster, easier, even seemingly cheaper to fashion promotions for social media and digital than to weigh and choose all the interesting new options for direct mail, that this path of least resistance is the one chosen.

But wouldn’t be a good idea, especially now that we are emerging into new era, to revisit the past successes of direct mail as a major generator of leads, sales, and profits, and determine whether mail might make our messages raise above all the noise?

Disruption Planning Now to Get Up to Speed Later

As many of us sit at home, we have a unique opportunity to do some out-of-the-box disruption planning about our business, and perhaps, even our personal goals. It isn’t easy, but it is necessary.

When Facebook’s founder Mark Zuckerberg proclaimed that the way forward was to “Move fast and break things,” he was certainly unaware of the coming pandemic, which has indisputably moved faster and broken more things than he ever dreamed possible.

One of them is the framework under which we are accustomed to carefully plan our future marketing and career activities. That planning is usually based, at least partially, on our historic experience. However useful in the past, this may not inform dealing with today and tomorrow’s disrupted world.

As many of us sit at home with our kids otherwise occupied and our pets sleeping under our desks, we have a unique opportunity – one we seldom enjoy, even during vacations – to do some out-of-the-box disruption planning about our business, and perhaps, even our personal goals. It isn’t easy, but it is necessary.

Now is a good time to step back from the usual deadlines and other pressures to “do something” and think about the nature of that “something.” If our current sequestered state makes it impossible for some of us to move as fast as we might like right now, we might productively use this down-time to think of the things we might profitably “break” so we can get up to speed when the new normality takes over.

That said, the new normality is unlikely to look like its predecessor.

Newsmax reported that in an interview on CBS News “Face The Nation,” American Chamber of Commerce head Suzanne Clark said a recent poll carried out by the chamber showed “something like 50% of small businesses say that they were eight weeks away from closing forever.” Even with expected additional federal government help, that percentage is unlikely to be materially reduced as eight weeks is a very short time.

This is only a single instance of how “closing forever” would disrupt not only the small businesses themselves but the entire marketplace previously served by these enterprises. It is certainly not the only one. Just look at the current media turmoil. If you are dependent on marketing to sports’ fans during sporting events for example, what can you do to replace that business while these events are on hold?

What do we need to break so we can position ourselves for the new reality, and plan for a future we can only speculate about?

The first thing is our unending willingness to cling to the comfortable assumptions that got us our last promotion, bonus, or great sale. If our pool of marketers, supply chains, and distribution channels has been disrupted, how quickly can they be replaced, if ever? And should they be? If our jobs are in danger or worse – have been lost – how should we look to replace them?

I would posit that the place each of us should start breaking things might be to take a blank sheet of paper and unreservedly question old assumptions in the form of some very necessary disruption planning:

  • Is what I was doing before the pandemic something economically and operationally viable in a changed environment?
  • Was I happy and fulfilled doing it?
  • Was the structure and organization in which I worked optimum and if not, how would I change it for the unknown environment?
  • What are likely to be the opportunities in the “new normal”?
  • If I could do anything I wanted, what would it be?

There’s a planning challenge to keep you from going stir crazy.

Trust Capital Is the New Marketing Gold Standard

Now, more than ever, trust capital may become the new marketing gold standard, joining brand equity as a key metric for valuing a company’s relationship with its customers and prospects.

My father used to caution not to believe everything one heard or read. He was not a cynic but an optimistic realist. Nonetheless, like the majority of his generation, his basic intuition urged him to trust existing institutions and assume (that most dangerous word), that what they were saying or doing was for the common good. “Fake news” had not morphed from the lingua franca to become the lingua twitter.

That’s not always the case anymore. MediaPost shared the following on Mar. 19:

“The news business is battling public distrust. Nearly half of respondents to a new Axios/Ipsos poll said they do not trust traditional media ‘very much or at all” to accurately deliver information about the COVID-19 virus.’”

That distrust should inform how marketers must rethink their approach to customers and prospects as we plunge into a new and uncertain era.

On Jan. 19, the 2020 Edelman Trust Barometer published this worrisome finding:

“… despite a strong global economy and near full employment, none of the four societal institutions that the study measures — government, business, NGOs and media — is trusted. The cause of this paradox can be found in people’s fears about the future and their role in it, which are a wake-up call for our institutions to embrace a new way of effectively building trust: balancing competence with ethical behavior.”

If “disbelief” is the new normal gut reaction to our foundation institutions, it goes without saying that our commercial messages, however well wrapped in engaging narratives are likely to need the “suspension of disbelief” to be effective. That almost certainly means stepping back a little (or a lot) from our “act now” knee-jerk impulses and asking ourselves what we need to do to achieve that “suspension,” to establish the critical trust that my father suggested might be missing.

Building Trust With Customers and Prospects

If we look at the Amazon ethos, building credibility item by item, on-time delivery by on-time delivery, rapid refund by rapid refund, trust impacts each transaction more than efficiency. Not surprisingly, that same Edelman study found “ethical drivers such as integrity, dependability, and purpose drive 76% of the trust capital of business, while competence accounts for only 24%.”

Trust capital may become the new marketing gold standard, joining brand equity as a key metric for valuing a company’s relationship with its customers and prospects.

But how can we measure integrity, dependability and purpose? It may be easier said than done. Perhaps a good starting point is looking backwards.

How much feedback have you had from your customers, especially negative feedback? (We all love compliments but we seldom learn from them.)

One of my first jobs was to read complaint letters, research what had (or had not) gone wrong, and then write for the signature of the CEO, a truly personal answer. The number of “thank you” notes we received was the best lesson you could have in the value of real personalization.

If you don’t have a strong culture of responding to every complaint, not with a form letter or email but with a thoughtful and helpful personal communication, you should put one in place, now. If I can’t talk to a knowledgeable and helpful human being instead of an algorithm, like many others, I’m gone and your trust capital has tanked, or at best, taken a hit.

A recent blog post from Yes Marketing put it this way:

“In a world driven by access to options, an emotional connection with a brand can be the tipping point for consumers when deciding where to spend their dollars.”

You certainly want it to tip your way, and that means doing whatever is necessary to establish and retain that emotional connection and trust.

Whatever we do to build trust capital during these uncertain times, even if not immediately measurable, is certain to pay big dividends when the crisis is past.


Navigating Minimalism and Maximalism in Marketing

No doubt you’ve all heard of the poor guy who starved to death, equidistant between two three star restaurants with perfectly valid credit cards in his pocket. He just couldn’t deal with having to make the momentous decision to choose one or the other. Sound familiar?

No doubt you’ve all heard of the poor guy who starved to death, equidistant between two three star restaurants with perfectly valid credit cards in his pocket. He just couldn’t deal with having to make the momentous decision to choose one or the other.

Sound familiar?

Given the number of data and AI marketing options at our fingertips, the bewildering range of media to choose from, the unlimited possibilities for product and service pricing and delivery systems, are we sure that we aren’t facing the same fate — death by maximalism.

I thought I’d made up the word but as usual, Google put me right.

“The term maximalism can refer to anything which is excessive, overtly complex and “showy”, or providing redundant overkill in features and attachments, grossness in quantity and quality and maximalism the tendency to add and accumulate to excess.”

Discussing this maximalism with a sophisticated and highly successful marketing colleague, he just shook his head and admitted that while he certainly was guided by the wealth of data available, “in the last analysis” he said, “I just follow my gut.”

Regular readers of Target Marketing will have seen a number of thoughtful pieces on determining the optimum number of marketing messages to send and when enough is enough. Not surprisingly, despite their general recommendations, none that I can remember have come down solidly and told us whether to maximize or minimize the frequency of communications.

The essence of the maximum/minimum question would appear to be driven by priorities and these are likely to be different — not only for each marketer but for each product or service. Determining what’s most important to you is a very good place to start, and surprisingly not the metric that many marketers use.

Most of us start (or should start) by looking at the bottom line. That would be easy if there was only a single bottom line. But we all know that the priority of determining whether we are looking for a single profit point, a lifetime value, an increase in brand value, the optimum return on our marketing investment (ROMI) or some other metric, must impact our answer. Haven’t we all seen instances where, for example, late in the fiscal year marketing management discovers that approved promotion monies have not yet been spent and fearing that as a result, budget allocations for the following year might be reduced, rationalizes an immediate, urgent campaign to use this money?

Various studies of consumer attitudes to commercial email communications support research published by Campaign Monitor that clearly indicated that the largest reason subscribers flag email as spam (almost 46%) is “they emailed too often.” As we all know, too often can be a big turnoff. I stopped watching CNN because the multitude of “short breaks” were longer than the news content.

This doesn’t mean that we should abandon the maximalism of our marketing efforts for minimalism despite the current and trending rage among brands for “less is more.”

From Copypress:

“Minimalism as branding is a bit of a divergence from the historic take on minimalism. It takes its core principles from the movement and presents a unified, cohesive framework that emphasizes clean, simple designs with exacting focus.”

Think not only of graphic design but of total strategic marketing focus, as well.

On the basis of long experience with what works and what doesn’t, the Denny Hatch school of direct marketing applauds with good reason, maximized “ugly” presentation and beating the bushes for orders as long as it is profitable.

That said, there is an increasingly strong argument for stepping back a little and meditating on the possibility that instead of maximizing our promotional efforts, we test minimizing them. We could then determine whether the consumer trend is away from “the more the better” consumerism and we can develop more and better customer relationships with less communications.

With so many choices available to marketers, we are like the poor fellow who starved to death, in danger of starvation in the midst of an abundance of plenty. Perhaps it’s time to start listen more to our guts than to our data.

What Matters Is the Perception of Value, Not So Much the Product

A lot has been written recently on how the perception of value rather than a formularized multiple of “cost” can help guide your pricing decisions. If you can honestly get the customer to perceive a higher value for your product than a simple markup on cost, it permits you a higher ROMI and a greater ACPO.

A lot has been written recently on how the perception of value rather than a formularized multiple of “cost” can help guide your pricing decisions.

In a previous blog post, I recounted the story of the “thank you” gift given to the U.S. Ambassador to Brazil by the chairman of the American Chamber of Commerce. He presented Madame Ambassador with a small blue Tiffany box and said:

“Here is a small gift to show our appreciation for your support.”

Her answer should be writ large on Tiffany’s advertising.

“There is no such thing as a small gift from Tiffany.”

That says it all. Imagine that whatever was in the Tiffany blue box had actually been purchased less expensively from some other source. Would anyone question that the gift’s perceived value grew exponentially when it appeared to be from Tiffany? I remember a humorous ad in the university newspaper offering Brooks Brothers, Paul Stuart, and J. Crew labels to sew into your discount purchased garments to upgrade them by endowing them with the right Ivy League cachet. Somebody understood the magic of perception.

If you haven’t watched Flint McGlaughlin’s excellent presentation from MECLABS Institute you should. His insights make a very strong case for his pricing methodology, which is really worth studying.

Pricing of products or services is one of the key strategic aspects of all businesses. It is fairly easy to look at what your competitor is doing and use that as a benchmark. But “me-too” market pricing is seldom enough and certainly not the way to have a big success. If you can honestly get the customer to perceive a higher value for your product than a simple markup on cost, it permits you not only a higher ROMI (Return on Marketing Investment) but it also often provides a greater allowable cost per order (ACPO) — more money with which to promote, more customers and, hopefully, greater profits.

The profusion of “subscription” offers in the marketplace is testament to the simple economic truth that if you can engage or enroll someone in a program of purchases, the likelihood of being able to transform a “product” into a “service” is greatly enhanced. And services tend to have higher margins. You may remember the story of the 40 or so Microsoft executives in Brazil who, when asked how many had subscriptions, very few hands went up. But when asked how many had Netflix, virtually all of the hands went up. Netflix had managed to eliminate the negative perception some people have to a “subscription” simply by not using the dreaded “S” word.

What has been surprising is that Netflix competition’s pricing appears to have been forced down to undercut Netflix. Looking at all of the streamers, there appears to be much too little effort to segment customers, to determine their individual perceptions of the value of the services (other than to see how many people subscribe and at what cost) and to reengineer the offerings to cater to perceived values. As Rafi Mohammed, the founder of “Culture of Profit,” wrote in the Harvard Business Review:

A one-price-fits-all strategy fails to acknowledge the simple fact that for any product or service, customers have unique needs and a different willingness to pay. With few rivals, mandating all-you-can-watch pricing was once tolerable. But to win in today’s competitive market, streaming companies need to step up their pricing strategies by offering choices to better accommodate the needs of their customers.

He hits the jackpot when he observes, “ … customers have unique needs and a different willingness to pay” and these needs and this willingness are driven, to a significant degree, by how much each customer perceives the services to be worth. That perception reflects the subscriber’s assessment of the channel’s content. For certain affluent customers, the more content that is unique and the subscriber “believes” will meet his/her tastes, the more likely to purchase a premium package, especially if it has “exclusive” content. The couch potato who is less choosy and has a tighter budget will probably go for the cheapest option.

As we can see in this example, the pricing has little to do with the product and service “costs,” which are probably similar for both the premium and economy versions. What matters is the perception of value.

If you don’t embrace the reality that perception may matter more than some other criterion for pricing and how your prospect looks at your offering, you may never have given anyone a little blue box from Tiffany.

‘Crassmas’ Messages Show the Strengths of Snail Mail, the Weaknesses of Poor Digital Personalization

Even if the old-fashioned way of choosing, inscribing, and snail mail posting greeting cards has given way to “eCards,” the good intention is the same. It’s a reminder that someone is actually thinking of you. Which is why I was annoyed when I recently received cards from friends sent using the Jacquie Lawson platform.

Seasonal greeting cards are many things to both senders and recipients.

Starting at the top, they can be very personal communications of greetings, reminders of friendships often left to lapse during our busy year. At the bottom, they can be nothing more than purely commercial direct mail — with a bough of holly or a reindeer to give them a seasonal scent.

Either way, they are big business (estimated at 6% of the $7.5 billion greeting card market).

And even if the old-fashioned way of choosing, inscribing, and snail mail-posting them has to a great extent given way to “eCards,” the good intention is the same: If absence makes the heart grow fonder, the reminder that someone is actually thinking of you and expending time, effort, and money to send a greeting should be at least heartwarming, even if the non-digital examples have become somewhat anti-environmental.

Which is why, despite this un-Christmas like critique, I became really annoyed when I recently received cards from friends sent using the Jacquie Lawson platform. However brilliant the superb graphics (and they are truly beautiful) the gross commercialism of the accompanying messages totally detracted from the personal richness of the senders’ intent.

The notice in my inbox was straightforward enough. It said that my named friend had sent me an ecard. The “Correspondent” was simply, “Jacquie Lawson ecards,” a name I may or may not have known. And when, for no good reason, I had not opened the original missive, the day after Christmas I received a reminder. (Identification of the generous sender in the illustrations has been surpressed: what might her husband say?)

personalization absent
Credit: Peter J. Rosenwald

What Bothered Me?

These notices, instead of keeping the focus on my friend’s message to me and the hope that it would be something pleasurable, instead were Jacquie Lawson branding-dominant. Using the next-to-last paragraph of the reminder, right after “You can view your card here” to invite the reader to “learn more about us here” may be someone’s idea of a good promotional ploy. But to me, it was a rather good example of turning Christmas into “crassmas.” Can you imagine receiving a seasonal gift with a promotional message in the box?

Lest we have missed the Jacquie Lawson come-ons and just enjoyed the animated card, after the greetings message from the sender, at the bottom of the card this line with its links reminds us not of our friend’s greeting but of, you guessed it, Jacquie Lawson.

personalization absent, branding present
Credit: Peter J. Rosenwald

Perhaps this is a singular example, but there has been a growing tendency this past year for marketers to forget that “personalization” — the heart of truly successful targeted marketing — needs to stay focused not on the super technologies that make personalization and the accompanying graphics possible, but rather on not letting anything get in the way of truly personal interactions.

Sure, Jacquie Lawson has every right to promote the beautiful work done by her team and, no doubt, I’ll be receiving plentiful invitations to know more about it and purchase new designs from the company.  That’s the business we are in.

But in this New Year, let’s not let our desire for growth and profits outweigh the personalization sensitivities of our messages

Marketers Know Time Is Money, So Why Do They Care About the Other 271 Things?

Benjamin Franklin, one of America’s founding fathers and a tireless worker, is credited with the expression “Time is Money.” And we all know how true that is. Especially when we are wasting it reading 271 things we didn’t really need to know.

Readers will no doubt share my sense of deja vu at the overuse of numbers to catch our attention — 5 Essential Steps: 16 Mandatory Rules; 4 Impossible Challenges; Etc. signposting articles, inviting our interest so we’ll read on. It’s not all that surprising that the reason we find these so engaging is that most of us are conditioned to God’s 10 Commandments. You can’t get a better reference than that and the copywriter who penned them must be a paradise celebrity.

In and around our industry, there are lots more than 271 things you don’t need to know at all.

If you have Denny Hatch’s “Ultimate 85-Point Marketeers Checklist” on your desk, you hardly need any more commandments. And if you do, you can just Google your query and you’ll have the answer in seconds. What’s surprising is how many of these “musts” appear over and over in our daily feast of business media coverage. How many times do we ask ourselves: Haven’t I heard that a million times before, and does that stuff really matter, anyway? Keeping our attention on what does matter is important.

Last week, writing here, Bob Bly gave us a numbered list, “Why the 10 Principles of the Direct Response Mindset Still Matter” and made the important point that the primary objective of direct marketing “is not to enhance image, build a brand, increase awareness, or entertain. It is to get more inquiries, leads, orders, and sales.”  But what struck me as most important was his reference to a “Direct Response Mindset.” If you have that mindset hard-wired, you don’t have to worry about all those other 270 mandates. If it is not about inquiries, leads, orders, and sales, it’s not about direct and data-driven marketing.  If I had a numbered list, mine would incorporate getting sales at less cost than the amount you could afford, getting them below the allowable cost per order (ACPO) into No. 1.

The fact is that what really matters cannot usually be framed in a numbered sequence, but needs more open space to articulate and define ideas. (Although, the 10 Commandments is a great exception.)

Ask yourself this question: Which came first? Twitter or the fact that today’s C-level executives (sadly, including our president) seem to be too busy or too lacking in concentrated brain power to read anything longer than a tweet?

Perhaps that’s why one of the world’s largest and most successful corporations has done away with fancy PowerPoint presentations and requires the convener of a meeting to prepare a written (no illustrations) meeting brief covering the intent and objective of the meeting and providing the necessary business and financial background and action desired. At the start of each meeting, the participants are handed a printout and given the necessary quiet time for them to read the brief. What a great way to get everyone aligned to the issues and at the same starting point. Any company that would follow this procedure would be sure to make meetings much more productive and get over the fact that more often than not, executives have not read the carefully prepared presentations or memoranda distributed electronically.

Having had a lot of interactions with consultants who were tasked with and compensated for reducing costs in client companies, one thing I have never found them focusing on was wasted time, like knowing all 271 things that fill space and waste time. If, especially in service companies, compensation and related benefits are one of the largest expense categories, the productive use of the time of the staff must be one of the most fertile areas for savings. Because it’s hard to measure and, therefore, outside the remuneration parameters of most cost-cutting consultancies, the value of time doesn’t make the cut for priority issues to be addressed.

It is difficult to forget that at an Executive Committee meeting at a Brazilian company, while waiting for the CEO to turn up, the executives gossiped about football (a Brazilian religion), sex (another Brazilian religion), and other topics. A back-of-the-envelope calculation of the cost of the wasted half hour until the CEO apologetically appeared came to something in the region of $15,000. When subsequently informed of this calculation, the CEO shamefully agreed that it was outrageous that he should have been so late. “But” he said shyly on reflection, “It’s my $15,000.” One can only imagine how many other meetings have similar unproductive costs.

Benjamin Franklin, one of America’s founding fathers and a tireless worker, is credited with the expression “Time is Money.” And we all know how true that is. Especially when we are wasting it reading 271 things we didn’t really need to know. Franklin certainly would have endorsed “the importance of substituting zero-sum mindsets (fasting, complaining, and suffering) with additive-sum ones (plentiful-gratitude)”

That’s why he was a big fan of Thanksgiving, something for which we can all give thanks.

May you have a hearty one.

Wunderman’s Lesson: Marketing Isn’t a Product, It’s a Partnership

Over the past few years, relations between ad agencies and clients have been in an even greater state of flux than usual. The nature of just what a marketing agency is and what it does has many definitions. But the key issue is whether the agency, internal or external, is a strategic partner or just another supplier.

Over the past few years, relations between ad agencies and clients have been in an even greater state of flux than usual.

The nature of just what an agency is and what it does has many definitions. But the key issue is whether the agency, internal or external, is a strategic partner or just another supplier. Occupied with headcounts and finance, the suits in the C-suites often don’t understand the difference. And that spells trouble and bad work ahead.

I well remember a client lunch many years ago.

The location was a private room in an excellent restaurant in Lille, France. At the head of the table sat the president of La Redoute, France’s dominant mail order catalog company. Alongside were his recently appointed commercial director and some associates. Facing him from the other end was Lester Wunderman, flanked by Jean Larue, the CEO of the Wunderman French company, and myself. The atmosphere was polite, but tense.

La Redoute was our largest French client, by far; and until the arrival of the new commercial director, relations had been excellent and the measurable results of the work above anyone’s expectations. Drunk on his new power, the new commercial director, an ex-underwear buyer for a competitive mail-order company, was threatening to put the La Redoute advertising business up for review and search for new agencies he insisted “would be less expensive.” No doubt, that’s how he bought underwear. Our problem was that if we lost this business, we would essentially have to start the agency over, from scratch.

The arguments in French and English went back and forth over dessert and cheese, and were getting contentious — until Lester Wunderman held up one hand to silence the room and spoke for the first time. La Redoute, he said, was one of his favorite clients, because they had had the courage to invest in an innovative strategic partnership with the agency and great creative work. It had paid off handsomely.

“Now everything seems to have changed” he said. “We are no longer being seen as partners and are being treated no differently than the hundreds of salesmen for suppliers (fournisseurs) of goods, who pitch their products to the company every day.” Then, switching to French, he pronounced emphatically: “Nous ne sommes pas des fournisseurs!” (We are not suppliers). He then thanked the La Redoute president for hosting the lunch, rose and headed for the door.

Before he could reach it, the president had jumped up, taken him by the arm to sit next to him and, full of warmth and Gallic charm, asserted that there was obviously a misunderstanding, which he would personally and immediately put right. Summoning a waiter, an excellent Cognac was rapidly ordered and served.

The lesson was lost on no one.

Creating marketing excellence lives in a different universe than purchasing paperclips or underwear. In today’s fast-changing and highly competitive commercial environment, replete with excellent metrics, cost is only one factor in the multiple equations that measure success or failure. Head counts are no doubt very important, but companies and agencies would do well to chase value — rather than delude themselves into thinking they are saving a few pennies.

How does the CEO or finance chief know whether what they are paying for is worth the price? There is no easy way to tell, until the return on the marketing investment (ROMI) has been determined. The La Redoute president saw in Lester Wunderman’s demeanor and words about not being a fournisseur, that genius, pride, and integrity had a value that was unquantifiable.

Relations between agencies and their clients have always been sensitive, and moving the work inside the client company may superficially solve certain problems — but probably won’t. “Who knows best is a constant battle, which pits egos and backgrounds against one another in sometimes near-lethal confrontations. Imagine the argument over strategy between a 20-something data maven and a 40-something traditional creative director.

Agency reps who had never heard the word “data,” and whose attitude to “below-the-line” was, at best, dismissive, have been driven by technologies that are profoundly changing the whole concept of advertising, whether they like it or not. Below the line, as evidenced by the absorption of prestigious brand agencies like J. Walter Thompson into direct marketing groups like Wunderman, is more and more where the action is.

Many major companies have tried to solve this problem by building internal agencies with special skills dedicated to their businesses — with varying degrees of success. According to Forbes, ”64% of corporate America have in-house agencies today. Just 10 years ago, that number was 42%.”

The challenge will be if CEOs and finance chiefs can put their macro equations on performance aside and concentrate on building marketing excellence. If they do, they will no doubt see improved ROMIs, whether their marketing is internal or with outside agencies. Or probably better, with both.

Dog’s-Eye View: Marketing Thinking That’s Outside of the ‘Dog Box’, which has out-of-the- box marketing thinking that relies on proven methods, should inspire copy mavens to resist the boring, tried-and-true benefit recitals and think about better ways (“narratives”) to capture the attention of dog lovers and sell them stuff. It’s about building relationships.

[Editor’s note: Peter Rosenwald may be pulling our legs saying that his dog, Jordan, wrote this post.]

My name is Jordan, and I’ll bet you didn’t know that in England, when you’ve been naughty, you are sent to the “dog box.” (It’s really your usual sleeping spot in the household. But your person says, “Stop that barking, or you’re going to the dog box!” So I’ve been there a lot.)

marketing thinking from Jordan
Jordan | Credit: Peter J. Rosenwald

But now my person, Peter Rosenwald, is a big fan of, which he says has lots of seemingly out-of-the- box marketing ideas that rely on proven methods — but should inspire copy mavens to resist the boring, tried-and-true benefit recitals and think about better ways (I think they are called “narratives”) to capture the attention of dog lovers and sell them lots of stuff. As the gurus keep saying, it’s all about building relationships. We dogs can be very good at that.

Chet Womach is the human personality behind DogTrainingSecret and he is the one writing to you or speaking on the promotional videos. He comes over as such a nice guy, with all of the same dog training problems as his clients and prospects, that you can’t resist his almost daily come-ons.

For a dog training masterclass, Womach sends you a “ONE-HOUR WARNING,” with just a bit of a threat:

“Now for some bad news …
There are more people registered for this
class than the system can actually hold.
… So please get there a few minutes early
to avoid losing your seat.”

My person says that’s one of the best calls to action he has ever seen. I think it might have been better if Womach offered a bonus of free dog biscuits. But what do I know? I know that, like our owners (we actually own them as much as they own us), we have foibles that might be smoothed out with a good fix.

That’s why Womach rolls over the idea of a “most beautiful” competition, and completely involves the prospect when he creates a “Caught In The Act” VIDEO CONTEST” to “Show me your dog’s WORST behavior … any habit you can’t break!!! … And you’ll be automatically entered to win 1 of 3 GRAND PRIZES: Plus, be entered to win 1 of 7 FREE COPIES of my soon-to-be-released new dog training program.”

I’m sure my race of canines, especially the ones whose owners aren’t too embarrassed to enter them in a “worst behavior” contest, could do with some behavior modification. This contest ought to generate very qualified leads, while everyone is having a good bark. That “soon-to-be-released” new dog training program is what Womach is softly selling. Who would want to pass up the idea of improving his best friend?

Womach is always telling us dogs simple stories we can relate to. For example, after explaining to my person how wonderful it is to bond with your dog, he admits that “You’ve probably seen your dog get so hyper that he goes deaf to your commands … You tell him to “sit” or “stay,” but he doesn’t listen … He just goes about his business.”

The story continues, and then there is the part I like best. Because it is about Greeley, a Golden retriever just like me. “But if a small animal races by,” Womach tells us, “Greeley forgets his self-control and goes on a wild chase. Yelling ‘wait, stop!’ had zero effect on him.” He’ll end up in the dog box, for sure.

The owners of the dogs I hang out with fully understand this — and having become sufficiently involved in the narrative, they can’t resist a classic “no obligation, FREE trial offer with a hefty $37.95 monthly open-ended subscription.” If it works for them, I hope this won’t create any substance abuse problems.

marketing thinking about medicament

My person says that, like all good medicament ads, there has to be a big promise. And what could be better than Womach assuring us:

“Today, my friend can take Greeley anywhere and feel at ease around each other. If you’d like your dog to get in touch with his calmer side and develop self-control, Click Here Now.

Sometimes, these messages can be really way OOB (Out-of-Box) but you can’t argue that, however unusual, they are certainly eye-catching.

marketing thinking about 'Playing God'

I’ve often mused about the idea of playing God, and it sounds like fun. Womach must have thought so, too. Because, in addition to the video, he goes on and on and on like a possessed preacher promising Dog Heaven on Earth — and winding up, after very long copy, with a very personal promise:

And even though you’re getting a total package valued at $194 for just $37 … I’m still willing to let you have it all RISK FREE for the next 60 days, with my generous 100% money back guarantee.

marketing thinking about a free trial

I’m confident that “Socialization Secret” is going to make a significant difference in your dog’s life, transforming him into a happier, more relaxed, more confident companion in as little as 2 weeks.

Actually, while I know that my person really admires this imaginative promotional magic and he says he learns a lot from how Womach finds new ways to use tested DM methods, I have to admit that I find it all a bit too complicated and long-winded. But perhaps that’s because, at heart, I treasure what’s disparagingly called “a dog’s life” — playing with my toys, sleeping, eating, and being adored.

Please get your dog out of the dog box. Ask him/her what he/she thinks about all of this, and let me know. Barking preferred.