If you're trying to get the biggest bang out of your direct marketing campaigns, guest columnist Michael Paladini has some home run ideas that will achieve major league results.
Toward the end of the baseball film Bull Durham, "Crash" Davis tries to teach his protege, Nuke Laloosh, one last lesson about the game, asking "Do you know what the difference between batting.250 and.300 is?"
Batting.300, he responds, is the subtle edge that gets you to Yankee stadium - the major leagues - while batting.250 doesn't quite cut it.
There's a direct application to marketing. The difference between success and failure, between business mediocrity and game-winning profitability, is often just a tiny improvement in your marketing approach. Change your stance and grip, choke up on the bat a little and you're a force to be reckoned with.
Why is this the case? From a marketing perspective, it has to do with fine tuning your leverage and knowing where the turning points in your campaigns are. Once you do, exerting tiny pressure on one end of the equation can have a powerful affect on your ROI.
Here are three marketing examples of this strategy:
Lesson 1: Don't beat up on your creative team.
This is a simple scenario to digest. A direct mail package costs $100,000 to produce and $20,000 to create. It generates an incremental contribution of $126,000. The ROI is a ho-hum 5 percent, so you berate your creative team, demanding to know why it costs so much to get a few crummy words into a decent looking direct mail piece, right? Wrong!
Unfortunately this scene is all too common in marketing departments. Keep in mind that even if your creative team to cut its costs by 20 percent, the $4,000 saved would raise your ROI to only 8.6 percent.
Which is still not Yankee stadium.
If the creative team is good, leave them alone. They're worth the twenty-grand. Go after production expenses by:
- Choosing less expensive paper;
- Finding a region of the country where printing is cheaper (the Midwest is great for this);
- Asking your designer to work toward an efficient in-line design.
If you can reduce your production costs by 10 percent, the resulting ROI would be 14.5 percent, nearly triple your original 5 percent ROI.
Lesson 2: Boost the second step of your two-step.
Complex healthcare campaigns often require a two step direct marketing approach. Use direct mail package #1 to generate leads, then target those leads with a more information-rich direct mail package #2.
Over the years, I've repeatedly seen marketing professionals focus on the first step - generating more leads - only to neglect the second stage - converting leads into customers. It's the second step, however, that should pack the most powerful marketing punch because the ROI potential is higher.
It's easy to falsely conclude that whether you focus on the response rate or conversion rate doesn't matter since both can yield more customers. The critical question is, which costs more? Usually the second step does.
Generally then, it's more productive and less expensive in terms of customer acquisition to work on boosting the conversion rate.
Lesson 3: Don't market to the losers in your database.
You will inevitably find contacts in your database who will never purchase or use your services. Take the time and effort to screen them out of marketing efforts.
Here's a rule of thumb to consider: Assume you have a database of 100,000 purchasers. Divide the database into three tiers - top, middle and bottom - by purchase priority. Plug in a 10 percent error margin.
If you were expecting a 4 percent response rate from the undivided list of 100,000, then you'd have 4,000 re-purchasers. If you shed the bottom third of the file, still assuming the 10 percent margin of error, your response rate goes up to 5.4 percent because you're marketing only to those who are more likely to buy.
In fact, no matter what response rate you're expecting, this formula should always provide a 35 percent increase over estimates in which you don't eliminate those contacts who are least likely to purchase or use your services.
In direct marketing, the campaigns that execute well thought out strategic response strategies are the ones that will achieve Yankee Stadium results.
The difference between success and failure, between
business mediocrity and game-winning profitability, is often just a tiny improvement in your marketing approach. Change your stance and grip, choke up on the bat a little and you're a force to be reckoned with.
Michael Paladini is VP of marketing services at Berenson, Isham & Partners in Boston, a full-service direct marketing firm. He can be reached at 617/423-1120 or [email protected].