Consultants Secrets: First Things First
In uncertain times, companies can't afford to waste money doing things the wrong way. Inefficiency, bad testing, simplistic segmentation and all-around sloppy application of direct mail principles can team up to make your black ink run red.
In theory, you should always strive to use best practices, but when the economy is booming, there's a lot more wiggle room in the bottom line. But spotting where your mailing can be tightened up isn't necessarily the easiest of tasks, especially from inside your own organization. To quote Jimmy Dugan (played by Tom Hanks) in "A League Of Their Own": "It's supposed to be hard! If it wasn't hard, everyone would do it. The hard ... is what makes it great!"
We're sure you're up to the challenge of being the best direct marketer you can be. But sometimes an outside perspective can help you see the forest for the trees.
We asked several consultants with track records for helping companies improve their mailing strategies, what their strategies are when first embarking on assignment with a mailer. We wanted to know where the low-hanging fruit is, the very first things they look for, flaws that had become part of the design and quick, first-things-first fixes. And once they tighten up the existing structure, how do they go about improving ROI from there?
As you can imagine, our consultants have strong opinions and were not too timid to share them with us.
Most of our consultants start at the very beginninga very good place to startby looking at what the company has done in the past and figuring out what exactly it is the direct marketer is trying to do going forward.
"The first thing we like to check is past mail resultsfull P&L including all test results," says Elaine Tyson, president of Tyson Associates. "Very often companies conduct 'tests' that aren't really tests. Restricting test panels to no more than one variable at a time sometimes confuses folks. We also like to check their math and the conclusions drawn from results analysis."
The fact of the matter is that often companies are trying to do things the right way, but perhaps just aren't sure what the right way is, exactly.
"Very often clients forget to factor in costs ... which can skew results," says Tyson. "We once found a 'losing' package that was actually the winner by a mile. Many don't actually understand analyzing testsdid they read results too soon? Not wait for net results? Were the test panels actually large enough to be projectable? Things like that."
According to the venerable Herschell Gordon Lewis of Lewis Enterprises, "For the company whose goals are murky and who really aren't certain why they called me, the key question is: What are you trying to accomplish?"
It may sound basic, but the basics, of course, are the building blocks for bigger things.
"Too often, the answer is either some sort of nonsense about 'brand' and 'image'probably detritus from another consultant," figures Lewis.
"We often hear, 'We tried it and it didn't work,'" says Jim Wheaton and Cynthia Baughan Wheaton, the principals at the Wheaton Group. "However, upon a closer look, we often see that the tests have not been ideally constructed. Samples sizes might be too low. Or the underlying experimental design might be flawed. Often a rigorous, statistically-oriented review of past performance can open up significant prospect universes to rejuvenate the business."
Susan K. Jones, professor of marketing at Ferris State University and partner in The Callahan Group, has worked with companies who aren't testing improperly; they'regasp!not testing at all. "They just take their best shot and don't have any basis of comparison on lists, creative or offers," she says.
Which leads us to wonder: Are you really direct marketing if you're not testing?
What's Your USP?
Often, companies don't have a grasp on what makes their product unique in the market place, and the failure to understand their unique selling proposition (USP) shows up in their offers and messaging.
Denny Hatch, of Denny Hatch Associates and a contributing editor for this publication, during his initial critique of a company's promotions, explains to a company where it is breaking the rules. "In every case," says Hatch, "it's obvious where the rules are being broken."
He cites Axel Andersson on bad offers, "If you want to dramatically increase your results, you must dramatically
improve your offer," and John J. Flieder on bad messaging, "When reason and emotion come into conflict, emotion wins every time." He adds that copy drivers, "fear, greed, guilt, anger, exclusivity, salvation and flattery," need to be
incorporated into direct marketing copy platforms.
Practically each of our consultants finds that companies often don't have a "you-centric" point of view. Many times, they're employing "ego-driven marketing materials centered on 'who we are' rather than 'what you want,'" says Lewis. "My initial process is to go through their sales literature and schedules, looking for failure to make and implement a coherent offer. Invariably, such a failure is apparent."
Jones has experienced the same thing. Often "they're talking too much about themselves and not about the prospect or customer," bemoans Jones. "My wonderful consumer behavior teacher in college, Dr. Steuart Henderson Britt, said 'Don't tell me how it came to be ... tell me what the damn thing does for me.' Many companies make this mistake."
Who Are You Selling To?
It's often instructive for a company and consultant to do some market research, even if it has been done before. Markets change, so it's never a bad idea to learn a little bit about who's using what you're selling.
"If this is a new client and a new product for me, I may want to research it further before crafting a strategy and a proposal," says George Duncan, president of Duncan Direct Associates. "One of the best ways to do this is to call a representative group of customers and ask a few questions."
Duncan suggests seeking the following information:
* Why they purchased the product and sometimes, who bought itit may not have been the customer on record.
* How often they use it.
* How they use it (lots of surprises here, he says).
* How they might improve it.
* What they don't like about it, and, if time permits, how they heard of you, what other media they use regularly, and what else they do that may be related.
Getting a little deeper into the mix, several of our consultants take a look at how their clients are segmenting their customers. "During tough times, marketers must focus on where they will receive the most sales," says Gary Hennerberg, president of The Hennerberg Group. "Most companies overlook ... specific, highly targeted segments of their own customers."
But before going out and sending mailings to all of its customers, Hennerberg recommends analysis of the
"Not all customers are created equal," says Hennerberg. "While I have yet to ever see that exactly 80 percent of
revenue comes from 20 percent of customers, I can tell you that every marketer has a revenue-to-customer database ratio they need to understand."
Hennerberg suggests sorting data according to sales dollar ranges.
"During a tough economy, marketers may choose to segment and contact much more frequently only certain high-return customers," he explains, "and either use a low-contact or even a 'no contact' strategy for lower-performing customers."
Identifying which customers will bring you the greatest returns, sort of a less-is-more type of approach, is certainly a good way to tighten up the proceedings.
"When we engage a client, we always start with the old axiom of 40/40/20," says Chris Dickey, director of customer insight management at Digital Evergreen. "It's easy for the client to understand the philosophy: Forty percent of the
success of a campaign is based on reaching the right customer/prospect, 40 percent is based on making a compelling offer that enables a behavior, and the final 20 percent is based on the relevancy of the message/channel."
Dickey says Digital Evergreen tackles targeting. "We look at how they've segmented their customers for communications," he says. "In many cases, segmentation is based on intuition, and uses easily accessible data points such as age, new-versus-repeat, inactive, single purchases, etc. Rarely have they done multidimensional segmentationusing weighted metrics such as recency, frequency, average order, product category usage, channel usage, etc."
Taking things a step further, the Wheatons suggest the possibility of replacing the recency/frequency/monetary-value cells in a database with a general statistics-based predictive model.
"A statistics-based predictive model is a mathematical equation that rank-orders individuals in terms of most to least attractive future predictive behavior, based on past behavior," they explain via e-mail.
The benefits of this include:
* allows the evaluation of individuals rather than groups;
* systematically evaluates "predictive factors";
* assigns proper weight to predictive factors;
* creates interactions between predictive factors;
* maintains the nuances of the predictive factors; and
* handles an increased number of predictive factors without being subject to cell proliferation within a database.
Granted, it's not important you know how a model does this, only that you know a relatively simple tool can, according to the Wheatons. "Identify 10 percent or 20 percent of direct mail that is being wasted" and "the savings can be invested in the development of high-ROI target marketing programs."
Draw a Map
These steps are all part of the larger task of understanding a company's current strategy, analyzing whether it's pointed in the right direction and, if it's not, what strategy will right the ship.
Creative consultant Malcolm Decker of Malcolm Decker Associates says: "A written, agreed-upon creative strategy is crucial: It's the yardstick for measuring creative work before it's tested. It transforms the evaluation of creative work into an objective procedure."
The process necessary to come up with this strategy helps get to the heart of what a company is trying to do. "This review is essential in giving us background and information," explains Decker, "and in giving us the opportunity to question long-held assumptions and interpretations: Fresh pairs of eyes sometimes see the same trees, but in a different forest."
If you feel your projects aren't performing as well as they could, it's important to know where you're coming from and where you're going. Hopefully these ideas will help you better understand, to paraphrase Joyce Carol Oates, where you're going, and where you've been.