Direct Selling: Testing 101
Six common testing mistakes made by direct marketers
November 2006 By Jack Schmid
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The truth is that testing in catalog, Internet and e-mail campaigns is difficult and expensive. Compare multichannel testing to a solo mailing test and you become green with envy. In a solo, you can test price, offer, copy platform, outer envelope teaser, reply envelope color or even product by simply replacing one insert, letter, brochure or envelope with another.
How do you test catalog pricing without doing a black plate change? Or copy style? Because of the nature of a bound, multipage catalog and multiple product Web sites, testing typically is confined to offers, sequential or seasonal timing, covers, order forms or catalog wrap-arounds. Maybe it’s due to the difficulty of testing that many direct marketers simply give up or refuse to think about testing in a statistical manner. Sure, list testing goes on all the time. And new product testing is central to growing a catalog and Web business. But what about testing offers, format or number of pages—things that can make a major difference in catalog results?
With this in mind, here are six common testing mistakes marketers make. Grade yourself and see how your company stacks up.
Mistake #1: Not Testing
While direct marketers mailing solo direct mail packages are pretty good at establishing a control and testing against it, many catalogers and Internet marketers are not. Each catalog ore-mail promotion is like producing a new control. In effect, every catalog is the control for the next mailing.
Merchandise is a mix of new and old items picked up from previous promotions. Covers, landing pages and layouts are new. Photography is a blend of old and new, and copy also is new or revised from a previous campaign or catalog.
Your catalog has a control format, size, shape, number of pages, copy style, not to mention a brand you’ve nutured. Your Web site and e-mail campaigns also reflect the creative brand you’ve established in the mail. Offers that reflect your brand (e.g., free shipping, gift with purchase, discount or special pricing) should be consistent from mailing to mailing.
However, within this somewhat limited scope, successful multichannel marketers must take every opportunity to improve performance through testing. Success at the bank is the most important criterion for your direct mail, catalog and e-mail campaigns. The answer is not to give up on testing, but to think of ways to improve your results through testing with each customer or new contact.
Mistake #2: Not Testing the Big Things That Make a Difference
Smart marketers prioritize their testing to zero in on those things that will improve response rates and average order value, and ultimately that can change sales, profitability and even the business model. Here are the big things that should top your testing priority list:
• offers;
• new formats;
• mix of customer contacts, e.g., catalogs, direct mail, “push” e-mails;
• the optimal number and timing of customer contacts by all media; and
• new products and new product categories.
Putting on your statistical hat, remember that to be pure a test needs to be mailed:
• to exactly the same audience segment, e.g., last 12 month, two-time, $150-plus lifetime sales buyers, or to prospects from the same list;
• at exactly the same time as the control;
• with no other variables except the test to impact the results; and
• testing one variable at a time.
Think about what will make the biggest difference in your next promotion and find ways to test the variables.
Mistake #3: Not Testing Creative
Smart direct marketers use personalization, new covers, wraps and even dot whacks to test creative variations. Here are two ways you can use these techniques to test new creative.
1. To test an offer, highlight the special deals on the homepage or catalog front cover. This type of test requires only a change to your order form, which is easy to make. It’s even economical to test two, three or four offer versions.
2. Reactivate inactive buyers or inquiries through special e-mail campaigns, catalog cover changes or special wraps that bear a message like, “We miss you,” or “Don’t let this be your last mailing.” The key to testing such a reactivation message, however, is to test a special copy versus no copy, and measure the difference. You might even test offering a premium for reactivation.
Mistake #4: Not Testing Catalog Front Covers
It’s amazing how often I hear, “I’m too small to worry about cover testing. That’s something reserved for the big catalogers.” Would you consider testing covers if you saw a 10 percent difference in overall response? How about 20 percent? I’ve seen cover testing that has produced as much as a 35 percent difference in sales. On a side note, many larger multichannel companies also produce a separate prospecting catalog that has fewer pages and concentrates on winning items. The customer version is larger and offers considerably more product, especially new items.
Mistake #5: Not Testing Alternative Media To Grow Your Customer List
While list rentals historically have played a huge part in building the direct marketing industry, today’s successful marketers are looking at a wide variety of alternatives to help build customer lists. The Internet has created a complete paradigm shift in new customer acquisition as well as in finding new direct buyers who heretofore have not been attracted by direct mail or cataloging. List rental response rates are falling, and this historic media is becoming less and less productive. The cost of mailing is up again this year with postal and paper increases. But there is help. It’s in testing new or alternative media that doesn’t require postage or at least shares it. Consider the following list of alternative ways to build your buyer list without renting names:
• search engine marketing, both paid and free
• viral marketing campaigns
• affinity marketing efforts
• newspaper and magazine space ads (test a direct sale of a winning product in the ad versus generating an inquiry)
• best customer referrals
• insert media (package inserts, statement stuffers, ride-alongs, etc.)
• co-op mailings
• trade shows (especially for B-to-B mailers)
• broadcast media (television and radio)
Mistake #6: Testing Quantities That Are Too Small
To determine the correct quantity for test mailings, consult your statistical textbook and determine the correct level of confidence to assure statistical significance. A quick basic rule to help determine test quantities is the Rule of 100: For each test cell, you should have a minimum of 100 responses for any level of statistical reliability and validity. It’s the percent response that determines how many to test. For example: If you expect a 2 percent response, you need 5,000 names to get 100 responses. If you expect a 1 percent response, you need 10,000 names to get 100 responses.
You see the logic. Business mailers who traditionally get small responses like .3 percent have a problem when it comes to testing. Ideally, to end up with 100 responses each test cell would need to be 33,333, which can be prohibitively expensive. Many times, there aren’t enough names available either from housefile or outside, rented lists. In this case, test quantities that give you a result with which you’re comfortable.
Testing can benefit direct marketers, especially if they prioritize testing those things that will produce the greatest dividends. Offers, lists and formats are biggies that can change results. Good testing.
Jack Schmid is president of J. Schmid & Associates Inc., Mission, Kan. He can be reached at (913) 236-8988 or jacks@jschmid.com.
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