How Big Is Your Halo? 3 Ways to Measure the Branding Effect of Your Direct Promotions

Direct marketers take pride in accountability. But as I’ve said before, they can be their own worst enemies when it comes to measurement. They’re good at measuring things that are easy to count—clicks, page views, response rates, cost per lead, etc. But they struggle with measuring the long-term or cumulative effects that the branding in their promotions has on current and future sales—people who buy, but not as a result of a specific promotion, the so-called halo effect.

Direct marketers take pride in accountability. But as I’ve said before, they can be their own worst enemies when it comes to measurement. They’re good at measuring things that are easy to count—clicks, page views, response rates, cost per lead, etc.

But they struggle with measuring the long-term or cumulative effects that the branding in their promotions has on current and future sales—people who buy, but not as a result of a specific promotion, the so-called halo effect.

Consider big direct marketing brands like 1-800-Flowers.com or Omaha Steaks. These brand names have been built through direct marketing promotions over time and, as a result, people self-direct to their Web and phone sales channels.

But most direct marketers don’t know how to account for this halo effect, and when they work with response rates only, at best, they shortchange their results; and at worst, they get fooled by failing to account for those who buy without responding.

Case in point: A few years ago, I analyzed a data set from a multivariate direct mail matrix test that had 12 cells: four list segments, four offers and four creative executions.

Working off of response rates alone, we identified the winning list segment, offer and creative. But digging deeper by matching the solicitation file to the sales file, we discovered that from a revenue-per-prospect standpoint, these response rate winners were not the best revenue producers. Further analysis showed that from an ROI standpoint, they were actually the worst. In fact, the offer with the highest response rate (a free trial) produced a negative ROI when compared with a control cell: People in the control group who did not receive this offer actually spent more than the ones who responded to the offer for a free trial.

Here are three ways you can account for the halo effect:

1. Compare customer sales data to your promotion history. This is a good starting point. See who was exposed to your promotions and purchased without responding

2. Index brand awareness to sales over time. Take a look at this post for a methodology to measure this metric.

3. Create an engagement score that counts brand exposures and index it to sales over time. More on a methodology to measure this metric next time.

Use Market Research to Tie Brand Awareness and Purchase Intent to Sales

For years, I’ve been saying direct marketers are their own worst enemy when it comes to measurement. Direct marketers are good at measuring the things they’ve traditionally measured—response rates, cost per lead, cost per acquisition, etc.  But they’re not good at measuring the effect that their communications have on the non-responders; when, in fact, the effect of consistent branding in direct communications is what makes direct marketing powerhouses like Omaha Steaks and 1-800-flowers.com top of mind when consumers are ready to purchase (not to mention Amazon).

For years, I’ve been saying direct marketers are their own worst enemy when it comes to measurement.

Direct marketers are good at measuring the things they’ve traditionally measured—response rates, cost per lead, cost per acquisition, etc. But they’re not good at measuring the effect that their communications have on the non-responders; when, in fact, the effect of consistent branding in direct communications is what makes direct marketing powerhouses like Omaha Steaks and 1-800-flowers.com top of mind when consumers are ready to purchase (not to mention Amazon).

Even though consumers engage with brands on their own terms across multiple platforms, many marketers are stuck measuring the results of individual tactics rather than taking a holistic view of measurement. So when a single email or display ad fails to achieve the target level of attributable sales within a specific period of time, then they consider it a failure. Even though the communication has made an impact on those who didn’t respond, they can’t measure it, so they don’t count it.

And while many direct marketing practitioners now embrace the idea that their advertising has a cumulative effect of building a brand over time, most fall short of being able to quantify that ROI with meaningful metrics.

That’s where market research can help.

Consider the following word equations in light of how awareness contributes to sales for the top direct marketing companies:

Top of mind awareness + brand reputation + need = purchase intent
Top of mind awareness + brand reputation + immediate need = purchase

So it follows that if we can monitor awareness and reputation over time and index it to sales, then we can quantify the effects of those elements on sales revenue.

Start by surveying your prospects blindly—either through mail, email or search ads using relevant keywords. Offer an incentive that’s consistent with your product offering, e.g., “Save $$$ on cell phone accessories.” Ask respondents the following questions to determine the levels of unaided and aided awareness:

  • Which brands first come to mind when thinking of “category X”? (unaided awareness)
  • Which of the following brands (list) have you ever heard of? (aided awareness)

Get a better picture of the respondents’ product usage by asking:

  • Which brand(s) within category X do you “regularly” purchase?
  • Which brand is your favorite?
  • Which brand did you last purchase?
  • How often do you purchase this type of product?
    (Light, medium, heavy user?)
  • What percentage of “category X” purchases that you’ve made (within a certain timeframe) were “brand A”? (your share of customer)

For those who have used your brand, quantify purchase intent with the following question:

  • The next time you need this product, how likely are you to purchase “brand A”?

Next, index awareness levels to sales to sales revenues. Be sure account for category sales within the same time period. Your actual sales may have gone down, but the entire category may have gone down as well, and you may in fact have gotten more than your previous share of the category sales.

As you track these metrics over time, you will be able to quantify what a point of unaided awareness is worth in sales revenue. It’s one tool that will help you understand the effect that your communications have on sales beyond the responses that you can count directly.