Top 3 Questions I Hear About Direct Marketing

Clients and friends who are traditional marketers often seek my advice on direct response. Here are the answers to the three questions I hear most frequently:

Unknown peopleTraditional marketer clients and friends often seek my advice on direct response. Here are the answers to the three questions I hear most frequently:

Question No. 1: What Kind of Response Rate Should I Expect?

There are response rate benchmark studies published by the DMA and others, usually organized by industry and type of offer (lead generation, free information, cash with order, etc.). These reports can provide you with some guidance in setting your expectations, but they can just as easily lead you astray. How? If you’ve seen one campaign, you’ve seen just that: one. But some marketers fall into the trap of applying previous results to various campaigns.

Your response rate is driven by three factors, listed here in order or importance:

  • Media: If you don’t get your message in front of the right people, your response will suffer. It is the single most important driver of response, so choose wisely.
  • Offer: What’s your value proposition to the prospect? Simply stated, your offer says, “Here’s what I want you to do, and here’s what you’re going to get when you do it.” If your offer is not appealing or relevant to the prospect, the response — or lack thereof — will reflect that. Also, keep in mind that soft offers, which require little commitment on the part of the prospect (e.g., get free information, download a whitepaper, etc.), will generate a higher response than hard offers, which require a greater commitment (request a demo, make an appointment with a sales rep, payment with order, etc.).
  • Creative: It’s hard for traditional advertisers to believe that this element is lower in importance than the first two, but it is. And the biggest driver of response from a creative standpoint is a clearly stated prominent call to action.

Question No. 2: We Have a Strong Campaign Coming Out of Market Research. My Client/Management Wants to Get This Out As Quickly As Possible. Why Do I Have to Test?

Three reasons:

  • You may have a well-researched creative position but it can be executed in a variety of different ways (see the third bullet under Question No. 1, above). Furthermore, your market research couldn’t predict the response rates from different media. But knowing whether email lists, websites or social media fare best for your audience and offer will be crucial to generating the highest response rate.
  • You want to be able to optimize the three factors above to determine which combination gives you the most qualified leads at the lowest cost per lead.
  • Most importantly, you want to avoid a potentially catastrophic result if you’ve gotten one of the three key elements wrong. It’s better to do that with a small quantity rather than a full-scale effort. It’s always disconcerting to hear people say, “We tried direct. It didn’t work.” Keep in mind that if you’ve seen one, you’ve seen one. Previous successes and shortcomings won’t apply when you tweak the context.

Question No. 3. How Big Should My Test Be?

Your test should be large enough to produce statistically significant results. There are two parts to this: the confidence level of your results and the variation you’re willing to accept.

There are statistical formulas for calculating sample size, but a good rule of thumb to follow is that with 250 responses, you can be 90 percent confident that your results will vary no more than plus or minus 10 percent.

For example, if you test 25,000 emails and get a 1 percent response rate, that’s 250 responses. That means you can be 90 percent confident that (all things held equal) you will get between 0.9 percent and 1.1 percent in a rollout.

A smaller number of responses will result in a reduced confidence level or increased variance. For example, with a test size of 10,000 emails and a 1 percent response rate at a 90 percent confidence level, your variance would be 16 percent rather than 10 percent. That means you can be 90 percent confident that you’ll get between 0.84 percent and 1.16 percent response rate, with all things being held equal.

How Do You Decide What to Test in Direct Mail? 

Do you have three tested direct mail packages waiting in the wings to use when your control starts to fatigue? If you don’t, you should. It’s never a question of if a control will die, it’s when. So what is most important to test now to get to that breakthrough package? Here are some ideas.

Direct mail testDo you have three tested direct mail packages waiting in the wings to use when your control starts to fatigue? If you don’t, you should. It’s never a question of if a control will die, it’s when. So what is most important to test now to get to that breakthrough package? Here are some ideas.

Smart direct mail marketers are constantly testing. It may be the offer, positioning, format or anything else — but what variable gets you the biggest bang for the testing dollar? And which test delivers the most favorable cost per acquisition?

Traditional mail testing can be very expensive, time consuming and yield limited insight if not executed correctly.

After personally overseeing and writing multitudes of direct mail packages, it’s still tough to choose just one variable to test. The reality is that several variables should be tested all at the same time to get to a new control faster. These are the types of tests I’ve found most successful in revealing key attributes for a new control:

  • Your offer is highly influential in your response. If you’re testing price (most typical), you can test dollars off or percent off. I’ve found offering dollars off to be best, but every market is different.
  • Are you including a bonus or free gift?
  • Repositioning your product — or testing a new unique selling proposition — can reinvent your complete message and offer to produce sizeable increases in response rates.
  • A new production format can refresh an existing control. Perhaps you’ve used a #10 outer envelope for a long time. A simple switch to a #9 or #11 envelope can make a difference.
  • I like to include showstopper text and graphics on my envelopes, each worth about a half-second of time for the recipient to pause and study the OE. I’ve found elements such as faux bar codes, handstamps and seals yield favorable impact.
  • Evaluating data overlays from models or profiles will return tremendous information and insights. But if you don’t spend the time to interpret it and imagine the possibilities, you can overlook great new ideas.

So with all these test possibilities and data, what variables should you test?

In my last column, I shared a new Bayesian Analytics methodology that I think will upend direct mail testing as we know it today. Bayesian Analytics isn’t new, though its current applications are new and spreading to many fields, including weather forecasting, insurance risk management and health care policy. Later this month I’m moderating an online session on this topic (learn more at my website).

A/B testing is effective, but usually builds a new control quite slowly (how many times have you tested, only to find the test performed under your control?). Multivariate testing enables you to isolate variables and achieve a new control more quickly, but it still takes several packages to confidently identify the winner. But the use of Bayesian Analytics in direct mail gathers substantially more testing insight and produces more cost savings, while taking less than half the time of traditional testing.

I believe in taking out the guess-work of testing where it’s possible. Otherwise it is easy to incorporate our own personal emotional appeals and biases, like when we say “I’d never respond to that!” We’re probably not our own market. We’re often wrong, even as informed as we are about our products and audiences.

My point is this: You must keep testing. Test outside your comfort zone. Let your prospective customers tell you what variables they’d respond to by using Bayesian Analytics methodology to deliver the emotional insights that big data can’t deliver.

If you don’t have at least three tested packages, or knowledge of what variables form the magic combination necessary to increase response rates, Bayesian Analytics will save you a lot of time and resources.

Download my new report, “Predicting Direct Mail Results Before You Mail” to learn more about Bayesian Analytics.

Direct-Mail Testing Upended With Bayesian Analytics 

Direct-mail marketers have relied on either A/B testing or multivariate testing to evaluate winning campaigns for generations. Those evaluations, unfortunately, weren’t always based on statistics, but on educated guesses or office surveys. But a confluence of technology and something called Bayesian Analytics now enables direct mailers to pre-test and predict responses before mailing.

Direct-mail marketers have relied on either A/B testing or multivariate testing to evaluate winning campaigns for generations. Those evaluations, unfortunately, weren’t always based on statistics, but often on educated guesses or office surveys. But a confluence of technology and something called Bayesian Analytics now enables direct mailers to pre-test and predict responses accurately before mailing.

Bayesian Analytics may well upend how we test to identify the highest profit-producing control more quickly and at a fraction of the cost of traditional testing methods. Bayesian Analytics is already being used in astrophysics, weather forecasting, insurance risk management and health care policy. And now, a few cutting-edge mailers have successfully used this analytics approach, too.

Usually, direct-mail marketers test four categories of variables, such as price, headlines, imagery and formats.

Within each of those variables, direct marketers often want to test even more options. For example, you might want to test the relative effectiveness of discounts of $5 off, $10 off, 10 percent off or 15 percent off. And you want to test multiple headlines, images and formats.

The following matrix illustrates the complexity of testing multiple variables. Let’s say you want to test four different pricing offers, four headlines, four imagery graphics and four direct mail formats. Multiplying 4 x 4 x 4 x 4, you find there are a possible 256 test combinations.

GHBlog100516It’s impractical and costly to test 256 combinations. Even if your response rate dictated you only needed to mail 5,000 items per test for statistical reliability, you’d still have to mail over 1.2 million pieces of mail. If each piece costs $0.50, the total testing cost is $600,000.

Bayesian Analysis works with a fraction of the data required to power today’s machine learning and predictive analytics approaches. It delivers the same or better results in a fraction of the time. By applying Bayesian Analysis methodologies, direct mailers can make significant and statistically reliable conclusions from less data.

The International Society for Bayesian Analysis says:

“Bayesian inference remained extremely difficult to implement until the late 1980s and early 1990s when powerful computers became widely accessible and new computational methods were developed. The subsequent explosion of interest in Bayesian statistics has led not only to extensive research in Bayesian methodology but also to the use of Bayesian methods to address pressing questions in diverse application areas such as astrophysics, weather forecasting, health care policy, and criminal justice.”

Bayesian Analysis frequently produces results that are in stark contrast to our intuitive assumptions. How many times have you used your intuition to test a specific combination of variables thinking it would result in a successful direct-mail test, only to be disappointed in the results?

Bayesian Analytics methodology takes the guess-work out of what to test in a live-mailing scenario. Instead of testing and guessing (as the late Herschell Gordon Lewis wrote in his recent column, Rather Test or Guess?) you can now pre-test those 256 combinations of variables before the expense of a live mail test. The pre-test reveals which combination of variables will produce the highest response rate in the live test, resulting in substantial test savings.

But wait, there’s another benefit: You can learn what mix of variables will produce the best results for any tested demographic or psychographic group. It’s possible to learn that a certain set of variables work more successfully for people who are, for example, aged 60+, versus those aged 40-59. This means you may be able to open up new prospecting list selections that previously didn’t work for you.

Again, a handful of mailers have already pre-tested this new Bayesian Analysis methodology — it has accurately predicted the results in live testing at a 95 percent level of confidence. Now that beta testing has been completed and the methodology is proven to be reliable, look to hear more about it in the future.

There’s more about this methodology than can be shared in a single blog post. To learn more, download my report.

My new book, “Crack the Customer Mind Code” is available at the DirectMarketingIQ bookstore. Or download my free seven-step guide to help you align your messaging with how the primitive mind thinks. It’s titled “When You Need More Customers, This Is What You Do.” 

Rather Test or Guess?

“Make me a deal on a split run.” Of all the negotiating ploys we as marketers might consider, this simple sentence has more success-seeds than any of the fustian and fury we could force out of our bargaining-parleying fingertips. And a “Yes” answer from an understanding medium, which costs zilch, has to result in information far more profitable than even our top-of-the-line brainpower can match.

TM0810_searchglobe copy“Make me a deal on a split run.”

Of all the negotiating ploys we as marketers might consider, this simple sentence has more success-seeds than any of the fustian and fury we could force out of our bargaining-parleying fingertips. And a “Yes” answer from an understanding medium, which costs zilch, has to result in information far more profitable than even our top-of-the-line brainpower can match.

One assumption we certainly have enough professional knowledge to lean on: the circulation of the medium has at least a tenuous match with a logical buyer. Our prospects won’t think we’re approaching from the planet Mars.

For print media, a split run is easier to mount today than it ever has been since, some hundreds of years ago, we as marketers invaded the nooks and crannies of publishing. For direct mail, it’s a bonanza whose luster dimmed when direct radio and then direct television mussed up the turf. For online, it’s too natural and obvious to be regarded as an innovation.

The overriding interpretation of what we’re discussing is a single word: test.

If the notion of testing a direct appeal is foreign to you, call me or any of about fifty thousand other self-proclaimed marketing experts, and we’ll be glad to take advantage of your naiveté.

Or, if you’d rather, make one decision that has to be profitable: what to test.

The most common test element is price. What price represents the best addition to the bottom line? $19.99 may bring more orders, but $24.99 is more profitable. And in today’s wild marketplace, where 99 cents has almost universally replaced the venerable 95 cents, $24.99 just might bring in more responses than $19.99. What if we glamorize the offer? $29.99 versus $19.99? We can test to give us an answer.

(Sample example: a recent three-way test for a collectible priced the item at $15.49, $15.99, and $17.99. Which brought the highest total number of responses, not just dollars? Right. $17.99. I suspect because the product has a tie to tradition, $17.95 would have left $17.99 in the shade, but the testing impulse didn’t extend that far. Maybe next time.)

And easy? What test could be easier? Just be sure that each addressee gets just one distinct offer and the response code differs for each price.

“Seat of the pants” guesswork is old-fashioned and amateurish, and depending on the deal you can make with media or a lettershop, not an optimal investment in marketing.

Hmmm. Here’s a unisex jacket. Here’s a tablet computer. Here’s a DVD whose content dwarfs any approach to the business problem its content solves. Here’s an extraordinary assortment of dessert-goodies.

A true split is just one split-test: When an offer appears on our monitor, we can’t tell if it’s unique or part of a split run … that is, if the code doesn’t betray the technique.

What does that mean? Well, suppose you get an online offer from “Firearms.” Does that, emotionally and in your mind factually, differ from “Guns” or for that matter the singular, “Firearm”? What if the sender had split the subject line, sending to one group “Look out. This gun fires in both directions” and to a parallel group “Gigantic 75% discount, today only.” Even from this example, any of us can predict that response will be skewed by the difference in appeals. What we have is a message test, even though only the subject lines may differ.

3 Steps That Reveal Your Marketing Blind Spot

Your eyes each have a blind spot. It’s an area right in front of your eyeballs that the shape of the cornea prevents you from seeing. Your brain takes input from both eyes and fills in the blind spot with what should be there. As marketers, you have a marketing blind spot as well. Only your brain isn’t addressing that one, and it can lead to disaster.

The brain is an amazing piece of biotechnology. Your eyes each have a blind spot. It’s an area right in front of your eyeballs that the shape of the cornea prevents you from seeing. It’s not right in the middle, but it’s in an area you’d never guess you couldn’t see.

The reason you don’t realize you have a blind spot is because your brain addresses it. It takes input from both eyes, and fills in the blind spot with what should be there.

As marketers, you have a marketing blind spot as well. Only your brain isn’t addressing that one, and it can lead to disaster.

The Marketer's Blind Spot
“The Marketer’s Blind Spot” was MECLABS Founder Clint McGlaughlin’s keynote at Marketing Sherpa Summit 2016.

“It’s the greatest danger facing every single marketer in the room today,” said Flint McGlaughlin, founder and managing director of MECLABS Institute, during the opening keynote of the annual Marketing Sherpa Summit, held this week in Las Vegas.

I had the good fortune to attend this year’s show (It’s a great event!) and I think McGlaughlin found a good way to explain a way of thinking that’s been plaguing marketers for as long as I’ve been covering them.

The Marketers Blind Spot
It’s one thing to be told you have a blind spot. It’s quite another to see it in a room full of marketers. McGlaughlin showed creative treatment after creative treatment — emails, landing pages, shopping cart pages — and he asked the marketers in the room which one they thought would do better in a test.

I got half of them wrong.

In repeated testing that MECLABS has done in its case studies and research, “72 percent of the marketers chose the wrong treatment,” claimed McGlaughlin.

It’s a problem he’s been seeing for years, one of the key findings from the years of research MECLABS has done.

“The more expert we become as marketers, the less expert we become as consumers,” McGlaughlin says. “Something connected to that observation is at the heart of our problem.”

Direct Mail: Why A/B Test?

This is a very common question our clients ask, especially the smaller ones. They need to know if they should be A/B testing. The easy answer is “yes.”

This is a very common question that our clients ask, especially the smaller ones. They need to know if an A/B test is something they should do. The easy answer is “yes,” because it allows you to try out different offers to see which ones work best.

Stressed, anxious person biting finger nails.If you don’t know what is working, how can you increase your ROI? Not to mention that, when you are using only one offer, what if it’s a bad one? What money are you leaving on the table by not A/B testing? Usually, the main reason people don’t want to test is because they think it will be complicated. That really is not the issue. You can create a very simple test and still gather valuable insight to apply to future direct mail projects.

Here are some ways to test your next direct mail campaign:

  • Simple test: In this test, everything about the mail pieces are exactly the same except for one element, which is usually the offer, but really you can test anything you want. You then take your mail list and split it in half, so half your list goes to one version and the other half to the second version. After you get all your responses back, it should be easy to tell which version had a better response. If you don’t have the time to collect your responses, talk to your mail provider, they can help you.
  • Control Group test: In this test, you will use a piece that you have mailed before and one test piece. You can use entirely different pieces. Decide what it is you want to test — usually design, color and images are tested in a control setting. You will split your list in half and see which one gets the better response. This works great if you are considering a new format and want to see how well it is received.
  • Complex test: In this test, you will be testing at multiple levels. This takes a lot of planning and strategy. You can test so many things — such as breaking your list of people up into like groups based on purchase history or demographics, and then creating multiple versions for each group to see what works best with each one. You can also test types of response methods from mobile texts, phone numbers, URL’s, QR Codes, reply cards and more.

One of the great results with testing is what you learn each time. It is extremely important to add this information to your database so you have it available for future testing. The more you know about your prospects and customers, the better your direct mail offers will be. Basically, A/B testing is a waste of time if you are not tracking your results. So let’s look at ways to do that.

Here are some ways to track direct mail results:

  • Unique phone number: Create a special phone number for each campaign.
  • Unique URL: Create a special landing page URL for each campaign.
  • Unique coupon code: Create a special code for people to use at purchase for each campaign.
  • Unique short code: Create a special texting short code for each campaign.

Now that you have tracking information, you can analyze it to create reports. You want to know which version had the best response, the most spend, who responded to what, and so on. The most important thing to know is what your ROI was on each version. Some things we do cost more money than others, so knowing if spending more gets you more money is vital otherwise you could just be wasting your money.

Have you tried testing? What has worked best for you?

Top 3 Direct Mail Mistakes

Over the last 25 years, I have seen a lot of direct mail mistakes. Sometimes they have been really funny, like the time when a wrong phone number was put on the mail piece so when recipients called it they reached a sex hotline. That was pretty funny. Other times, the mistakes have just been sad.

Over the last 25 years, I have seen a lot of direct mail mistakes. Sometimes they have been really funny, like the time when a wrong phone number was put on the mail piece so when recipients called it they reached a sex hotline. That was pretty funny. Other times, the mistakes have just been sad, like when a nonprofit had the wrong return address on their courtesy reply envelopes, so they did not get the donation checks delivered to them. The worst mistakes are the ones that cost you the most money, so learning what to avoid can really help.

Top 3 Mistakes:

1. Missing or Unclear Call to Action
The purpose of direct mail is to get recipients to respond. When you are missing a call to action or it is unclear to recipients what you want them to do, you will not get the response you were planning on. If you get a response at all it would be surprising. Be sure to have a specific call to action that is easy to follow. Highlight the great things they will get when they respond. Remember that this is all about the recipient, what is in it for them. Engagement requires you to go beyond getting recipient attention and really getting them to interact with you. The deeper their engagement with you, the better the relationship and more money and referrals come to you.

2. Designed Without Postal Regulations in Mind
The USPS has many regulations on direct mail and if you do not follow them, it will cost you more in postage. Since postage is your biggest cost this can mean a lot of money. There are strict regulations on where an address can be placed and that will depend on which mail category you fall in. There are folding specifications as well as paper weight. Your best bet is to consult with your mail service provider during the design phase to make sure you are meeting all the requirements before you print. This can save you a lot of money.

3. Unorganized or Not Well Planned
Marketing in general is complicated. There are a lot of things to consider as well as keep track of. Direct mail is definitely one of the more complicated channels. Before you start a direct mail campaign you need to plan out all of it, from design through tracking. Set not only your goals and expectations but also your timelines with your mail date in mind. Many times, people run out of time to make their planned mail date. All the time get sucked up in design and printing without leaving enough time to get the mailing out on schedule. Whenever you rush through a step there are bound be to things that go wrong, so take the time upfront to address issues before they happen. Creating the follow up with tracking and reporting once the campaign is complete is vital to your success. You need to know what is working and what needs to be changed.

All three of these mistakes can cost you a lot of money. If you take the time to create a direct mail campaign, make sure to address the potential problems before it is too late. Don’t waste your money. Direct mail can be a great way to promote and grow your business when it is done correctly. With careful planning and tracking direct mail can increase your ROI. What mistakes have you done or seen in the past. I would love to hear about them!

SEO Audit Checklist: Why Aren’t You Ranking Number 1?

SEO (search engine optimization) is undergoing rapid changes as Google rolls out new updates, and it can be tough to stay ahead of the power curve. However, the basics remain the same as they always were. Before you start chasing the latest SEO tricks, take time out to audit your existing SEO. Tweaking the basics can have a dramatic impact on boosting your rankings. Follow this SEO audit checklist to find out what you need to change to rank first.

Website Content
The core of your SEO rankings is your website content. Ensuring that it is of high quality, properly tagged, and well integrated should form the basis of your SEO improvement plan.

  • Title Tags: A title tag is a short snippet of text that describes your webpage in search results. This is where you need to convince both Google and the human searcher that your page is relevant and useful, so every word needs to count. Make sure that each page has its own unique title tag that includes your target keyword phrase for that page.
  • Meta Descriptions: A meta description is the text that appears below the title tag in search results. Although it does not affect the Google algorithm directly, it is what entices a prospect to click on your page. The click through rate, in turn, does affect your Google rankings. Think of the meta description as a short ad of approximately 150 to 160 characters. It should be unique and descriptive, and include your target keyword.
  • H1 Tags: Think of the H1 tag as the webpage’s headline, or the title of a paper. It is usually the first piece of information a prospect sees when she visits that page. It should be clear and concise, and contain some variation of your keyword phrase. This will convince the reader that she has reached a useful page that is worth reading.
  • Webpage Copy: In the old days of SEO, keyword-stuffing was rampant. The idea was that it didn’t really matter what the copy looked like, because it would rank highly as long as the keyword was inserted all over the place. Naturally, this led to a lot of poor quality junk pages. Google revamped its algorithm to combat this practice, and today, high-quality copy is essential. Long-form content of at least 500 words, written in a natural way that is easy to read, is an absolute requirement. Polish your copy, ask others to read it and make comments, and then polish it again. Make sure it is the best it can be.
  • Duplicate Content: If a webpage is duplicated, Google will only rank one of the pages. That’s why it’s important to create unique, original copy for each page. To ensure you do not have duplicate pages on your site, use an online tool such as Siteliner or Copyscape.
  • Image ALT Tags: An ALT tag describes an image to a prospect who cannot view it. More importantly for SEO, it also allows Google to understand the image. Use 5 to 15 words, including one of your target keywords, to clearly state what is in the photo.
  • Blogging and Social Media: Increasingly, integrating a blog and social media into your webpage can improve your rankings. These items let Google know that your website is regularly maintained. They also improve your chances of receiving link-backs from other sites. To be effective, however, you need to stay on top of both the blog and the social media presence, creating frequent, high-quality new content. Make sure your webpages have links to your blog and your social media accounts, possibly in the header or footer, and provide a way for readers to share your blog articles on their social media.
  • Separate Webpages: A very common mistake that business owners make is trying to optimize one webpage for multiple keywords. Create a separate, well-optimized page for each core keyword, making sure that each page follows all of the best practices for SEO.

Local SEO
Local SEO, or optimizing your webpages for your local area, is absolutely essential for many types of businesses. If you provide a hands-on service or sell products of local interest, local SEO is essential to improving your rankings.

  • Claim and Complete a Google+ Local Page: This will get you ranked in the map-based results that appear in the upper right corner of the Google results page. Make sure your contact information is entirely accurate, and ask your current customers to write reviews.
  • Webpage Contact Information: Review your contact information on each webpage. Every instance should match precisely, and they should all match what you have listed on your Google+ Local Page. This gives Google confidence your information is accurate and up-to-date, and deserves to be listed in their results.
  • Citation Consistency and Schema Markup: Citations are mentions of your name, address and phone number on other websites like directories and blog posts.   Over time it is easy for outdated or erroneous information to appear, which can negatively impact your local rankings. Moz Local is a great tool to check if your citations are 100 percent consistent across the Web. Schema markup is a type of code, available at Schema.org, that helps search engines understand the data on a webpage. Using it on your contact information can help Google find important information to display in the search results.

Of course, this is only the tip of the iceberg when it comes to optimizing your website, but it all starts with the basics outlined above. Focus on making your website content and local SEO the best they can be, and you should see a dramatic jump in your rankings.

Would you like more SEO tips? I created a simple checklist that walks you through specific actions you can take to improve your rankings and traffic. Click here to get my SEO Checklist.