Strategy : Tested and Proven

* Offers. Most marketers conduct offer tests to determine what promotion or combination of promotions will increase response rates or average order values. Reading results for offer tests, though, often falls short as marketers fail to account for the full cost of the test (i.e., the offer cost in terms of discounts or markdowns, as well as the actual cost of the marketing piece) and base decisions solely on the response rates or average order values the tests yield, without understanding the impact the promotion strategy has on the profit-and-loss statement.

Still, offer tests are important to understanding the drivers of response (particularly among prospects and inactive customers) and are the most cost-efficient way to build the customer file.

* Timing. Another big question direct marketers are constantly trying to understand surrounds timing and frequency of contact. For new customer acquisition, timing of mailings or ad placement, or more aggressive pay-per-click bidding, is critical to get the most customers for the smallest investment. For existing customers, you should know the value of the incremental mailing or replacing a mail piece with an e-campaign.

Should you mail earlier to beat the rush of pieces in the mail or mail later to be in the mail when customers are actually ordering? Should you mail in advance of major holidays and events (i.e., Thanksgiving and elections) or after? Should you mail deeper into your file during summer months or focus contacts on the cream of the crop or even a modified segmentation strategy? Should you replace a direct mail campaign with an e-mail campaign? Or three e-mail campaigns? These and other marketing questions need answers, based on your business and your customers, to help you reach your goals. There's no magic answer as to the optimal contact strategy. You have to test it to know.

These long-term tests, or longitudinal tests, require extended time frames to fully execute and understand. If you're testing a three-contact strategy versus a six-contact strategy, for example, you may need several months' worth of data collection to read the result. In order to execute that type of test, maintaining tight control over customers in each test group during the life of the testing period is critical. This means no reshuffling the deck with respect to these test cells-if they're selected, they're selected for the life of the test.

* Lists. In acquiring new customers, list testing, next to offer testing, is among the most fundamental must-haves in the marketing plan. By presenting a variety of prospect lists with an assortment of cover treatments and promotions, you can develop the optimal combination for bringing in new buyers.