Basic Testing Creates Clear Winner
IBM's new business division had a mandate to find quality leads for its business partners who sell integrated information solutions to the manufacturing sector. The Preferred Business Partners program was an important
element in IBM's hardware and consultation sales strategy. Providing a source of quality leads was a critical step toward ensuring its success in the marketplace.
IBM needed a package to generate as many high-quality leads as possible for its many manufacturing business partners. It was getting only about 0.5-percent response rates on its efforts in this heavily targeted market of
senior-level executives in the small- to medium-size discrete manufacturing space. The goal was set at 2 percent, with a 25-percent qualified lead rate, so a breakthrough was required.
IBM had at its disposal a very effective needs assessment tool to help it find a solution that best met its customers' needs. The tool was a survey that came packaged on a CD as part of the control mailingthe effort was very expensive. However, the analytical tool was long and cumbersome; it read like a mortgage application, and was difficult for the prospect to navigate.
We knew that this audience was inundated with mail, so we wanted a very different look in the mailbox. We also
decided the best approach was to distill the needs assessment tool into a shorter, simpler format, without compromising its effectiveness.
The First Test Packages
We created three test packages based on the same solution-centric platform. The focus was, "give us some basic information, so we can provide you with custom solutions."
Here's what we tested:
Survey package: Our first package used the needs assessment tool as the basis for a survey consisting of nine questions. Respondents received a value-added offeran audiotape by motivational author Steven Coveyas a thank-you for taking the time to reply. The effort included a 6" x 9" outer envelope, two-page letter, premium insert, four-color brochure, reply card with survey attached and a BRE.
Consultation package: This package used the same design and elements, but offered a "free consultation with an IBM Information Technology Specialist." When respondents called, the operator walked them through our short version of the needs assessment tool; thus, the survey panel was eliminated from the reply card. Recipients of this package also were enticed with the Covey audiotape.
Self-mailer: In addition, we tested a low-cost self-mailer, which included a perfed-out business card with a direct phone number for the respondent's customer service representative. The offer remained the same as that presented in the other two test packages.
Round One Results
The initial numbers did not look good. The response rate for the survey package was 1 percenttwice that of IBM's control, but not up to the goal of 2 percent. The consultation package did only 0.5 percent, and the self-mailer was even worse.
The good news came in the qualification rate. Both the consultation and self-mailer efforts brought in the needed 25 percent. But the survey package was delivering qualified leads at more than 50 percentdouble the goal and meeting the quantity and quality goals, despite lower than targeted response rates.
The Second Test Packages
Our new goal was to beat the response rate on the survey package, while holding its excellent qualification rates.
The survey package was re-mailed as the control.
The idea for the new test package was simple: billboard the offer in an exciting way. We used the same lists and the same value-added offer, but now we emphasized offer over everything else in the package. Plus, we used a high-quality translucent envelope which was an unusual look compared to the efforts that traditionally target this marketit almost asked to be opened.
Round Two Results
The response rate for the translucent envelope package quadrupled the control. And, even better, the qualified lead rate held. So with a target of 2 percent, this package received 4 percent. With a goal of 25-percent qualified, this one hit 50 percent.
IBM realized a 1,600-percent increase over previous efforts (an 800-percent increase in response, plus double the qualification rate) by sticking with its strategy through a rough testing period. By adding value to its offer through both related and unrelated incentives as well as attention-getting creative, it gave its established strategy a shot in the arm.
Most importantly, it achieved incredible results because it adhered to the basic principles of direct marketing: Test early and test often.
Spyro Kourtis is president of The Hacker Group, a subsidiary of FCB Worldwide LLC, located in Bellevue, WA. The Hacker Group specializes in high-performance direct marketing program development and management services to clients concentrated in high technology, financial services, travel, real estate and telecommunications. Kourtis can be reached at (425) 454-8556.