Direct Marketing - Beyond 2%
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When It All Began
The terms 'Direct Marketing' and 'Direct Mail' were coined to distinguish such marketing communications from the far less focused broadcast marketing communications options that include the five major media (press, TV, radio, cinema and poster / outdoor). Apart from anything else this distinction was important to creatives from the line that divides those above it from those below it (more meaningless jargon, but, if you are unfamiliar with the terms, suffice to say that above the line refers to the major media and below the line to disciplines that include direct marketing).
For the above the line lot (the toffs!) this distance was vital to preserve the integrity of their lofty insights from those grubby little direct marketing people. For the below the line lot (the workers!) it was vital to make a distinction between campaigns that actually achieved tangible results and those that were 'self indulgent excursions into the creative ego'.
The Great 2%
Well perhaps all that is an exaggeration (though, believe me, I have heard creative directors who should know better use more pejorative terms than these to describe each other). However it does make an important point. It recognises that direct marketing, and, in particular, direct mail campaigns, were all about response, purchases, and orders. Not for the direct marketers the anxious anticipation of increases in awareness metrics , the waiting and praying for the national campaign to be reflected in the sales and share figures. No, you could judge their creative by the actual number of calls, coupons clipped or RPCs (reply paid cards) received. They would happily work out the cost per response or even per sale and, in fact, in some cases they would even have a stab at forecasting the likely return you will get before the campaign was even developed.
But even if they were unwilling to calculate your personal forecast they could quote the accepted success threshold for direct mail marketing as a discipline. That used to be a staggering 2%. So excited were hard pressed marketing executives in these early days of this discipline that they would immediately focus on the upside and forget the downside. They would calculate the return and try to find the biggest affordable number of addresses for the mailpacks to be sent to in order to make this 2% work for them. What they forgot was that 2% success means 98% failure.
It Doesn't Get Any Better Than That
Fast forward a few decades to the early 21st century and now adjust that universal success threshold. Yes, you would think in this age of digital enlightenment that it would be an upward revision, but you would be wrong. Any marketer that gets a 2% response nowadays would be popping champagne corks and preparing the shopping list for their bonuses. Most are happy with 1.75%, 1.5% or even, in many cases as little as 1% response. Or, to use my measure, a 99% failure rate. There are not many professional disciplines that can feel good about themselves for getting it right just 1% of the time. I mean, you don't hear of that many surgeons who count it a good day in operating room when they manage to kill only 9 out of 10 of their patients! Or the commercial airline pilot whose passengers are able to walk away from 1 in 10 of their landings!
The Big Question
So, what is going wrong and how can we put it right?
Well, first of all let me whet your appetite. Here at Coussins Associates I was once responsible for a mailing that achieved 40% success - and that wasn't 40% success because we were giving away £5 notes. It was 2,400 cheques for £39.99 received in response to the mailing. How did we do it and what is the secret of our success? Well before we come to that let's look at some of the common mistakes that people make in direct marketing and then the answers might just suggest themselves.
Sorry, Wrong Numbers
Talking as a true believer in the power of direct marketing (and being much more of a sceptic about above the line advertising),one of the strangest things that I find about direct marketers is that they are completely obsessed with statistics. They painstakingly measure everything in the mistaken belief that if they can measure it then they can manage it. By reducing it all to a measurable science and measuring every element of it, they must therefore be able to develop algorithms that allow them to repeat it all.
They will analyse their response against a control pack and against an infinite number of test frames that include creative, list, incentive, price and offer tests. Given half the chance, they will back test, shadow test and probably sideways test too. I know one serious direct marketer that takes consumer lists of over half a million and divides them up into test cells of 10 individuals to ascertain the success of that particular aspect of the campaign.
Well forgive me for being circumspect, but I am not convinced by any statistical number I cannot divide by at least 20 and get a whole number as a result.
And of course there is one major variable in every single test cell that they never take into account. The individual addressee is never the same. So what real use is an infinite number of test cells if the person reading it is reacting as an individual rather than an aggregated segment?
Stop Driving Looking Backwards
Most marketers working in the field of direct marketing seem to think that this is all perfectly reasonable. Not only do they have a bunch of suspect numbers in the first place, they are then happy to adjust their future campaigns based on these results.
It is driving looking backwards through a distorting lens. Don't get me wrong, I am all in favour of regularly glancing in the rear view mirror to see what is going on and where I came from, but I wouldn't want to drive at 70 m.p.h. down the M1 that way. And particularly if the mirror I am looking in is a shard from the mad mirror maze.
Of course it is good to learn from our experience, but not to be completely ruled by it. And not if that experience is distorted by analysis that is suspect in itself.
So let's get some data that is of real use. Then let's also give ourselves permission to depart from the constrictions of the test cell straight jackets and use some of our intuition, imagination and commercial insight to help inform the statistical analysis. We can then measure the success of all this and see if we were as clever as we thought we were.
Turn Down The Volume
There is also the in-built contradiction in direct mail that has been there for years and it hasn't got any better in the last decade. The original idea was to produce a campaign that would be delivered directly into the hands of the intended recipient. A certain percentage of them would be sufficiently attracted by what was an offer for whatever reason. They would open the envelope, read the communications enclosed, and feel seamlessly impelled to respond.
But when marketers learned to work to a 2% success rate they would up the volume mailed to gain the required numerical response; 2% of 1,000 letters is only 20 responders, enquirers or cheques in the post, but 2% of 100,000 is 2,000. A lot more cash in the bank even if the ratios for success have not changed. But what if they started from the premise that there were only 1,000 responders in the world who would react to their message? What then?
My first recommendation is to use a mix of some realistic metrics and business intelligence in the list selection and mailing execution. My next recommendation would be to stop looking at the ratios and equations and work out who from the big number would be most likely to find your proposition appealing.
In other words 'turn down the volume'. If you can identify the 5,000 recipients who would be the most likely to respond you may find all 2,000 or 1,000 of them from this segment. If direct marketing is about being direct, shouldn't it better identify its most responsive segments and put its proposition only in front of them?
Use the medium as it was intended.
Think 'Context'
Another probable explanation is the environmental context of the modern direct mailing. I learnt some years ago that the Tesco Clubcard (a marketing initiative for which I have the utmost admiration and respect) involves regular mailings to over 6 million members. When they mail the members the mailing has more than 100,000 variations. That means that, if every segment were of an equal size, then each would contain no more than 60 individuals. Now that's what I call direct marketing. Nor do they stop there. You may be entitled to expect that a magazine would be generic. The same publication for all of its readers. Not for Tesco's Clubcard members. There are six versions of the Clubcard magazine matched to each key lifestage group. You get the magazine and content best matched to you.
Then again there is the web. Although disappointing in so many respects, the web does enable many of the organisations using the medium properly to tailor and adapt the messages to the individual browser. Don't believe me? Try shopping Amazon.com. When you buy products through Amazon they analyse your areas of interest and make suggestions about what you may want to buy next based on your specific purchase profiles. Now that is specific and pertinent.
With that kind of individualisation going on, you can see why 99% of prospective respondents now bin most of the mailers that come through their letter box before even reading them. They are being mailed by cynical or bemused marketers who care little about the pertinence of their offer to the recipient, and less about its relevance. They select names based on the broadest of profiles, and then select more to make the numbers work.
They do not understand the context in which they are working and the changing expectations of their audiences. In a digital age where Tesco can adapt a mailing to 60 individuals out of 6 million, or Amazon can construct a whole web site built around my individual interests, is it any wonder that those shoddy, lazy inappropriate mailings on credit cards draw such a disinterested reaction? If you can't be bothered to work out if I am interested, why should I be interested? Reliance on numbers is no longer enough. This is another reason why response rates keep dropping.
What's In A Name? Only Everything
In fact the key to good direct marketing is not the creative, the pricing or the offer. Important though it is to get those ingredients right, the make or break element in every case is the list.
Putting your offer in front of the right people will draw the right response every time. True, the timing needs to be right, but if you have the best list (best in that it has the strongest possible propensity to react positively to your offer) then everything else will follow.
So what constitutes the best list? Well you can take a leaf out of Tesco's books and call a good list a community of interest. Those people who want to hear from you, have given their consent to you contacting them on a regular basis, and welcome your offer because they know that it will be relevant, carefully matched to their areas of need and interest.
You can work with the Amazon model and let your list identify itself to you, giving you permission to market to them and pre-qualifying themselves by implication, having shown interest in specific products in your portfolio. All you then have to do is match their areas of interest and make offers appropriate to their browsing or purchasing habits.
Or you can simply exercise your judgement. That's all we did to get our 40% cheques in the post. Sure, the product was good and priced attractively. Certainly the creative put its point across persuasively. But the real clincher came from the list of 6,000 magazine subscribers, who, by the very fact that they had subscribed, had already identified themselves as key prospective customers. And key customers they proved themselves to be. All 2,400 of them.
Of course this still left a 60% failure rate. But hell, if the passengers can walk away from 1 out of every 2.5 landings, or we only lose 1 out of every 2.5 patients, that's got to be an improvement hasn't it?
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