Premiums - Add Oomph to Your Offer
The most obvious way to increase response to your offer is to improve upon it. Premiums are one way to sweeten the deal by giving the prospect or customer an extra incentive for accepting the main deal.
Bill Baird, a direct marketing consultant and the creator of a customized training seminar called the Direct Marketing University, has found that you will get the biggest lift when a premium is added to a "plain vanilla" hard offer with no other bells and whistles. But the opposite situation also is possible, where a "high octane" offer that features a free trial, deep price discount and a sweepstakes gets next to no lift from a premium.
Also at issue is the relationship of the premium to the product or service being sold. Consultant Dick Benson was known to espouse that the best-performing premiums were those that had a high-perceived value for the audience, and not necessarily a connection to the product. For example, a desk calculator for ordering flower bulbs. But that could be a measurement of response only.
Freelance copywriter Dick Armstrong wonders if such "greed" premiums back marketers into a corner of always having to offer a goody just to get an order. For example, many publications use a soft, comp-issue offer to generate first-year subscribers. If they add a premium to the offer, and most do, it takes the focus off the "free" aspect when the premium is contingent on payment.
While he doesn't have any hard-and-fast numbers, this dissonance in the offer set-up can depress response.
Armstrong also points out that many marketers take a loss to acquire customers; break-even and profit comes on the second, third and fourth sales. By offering a premium, marketers could be making it more difficult to cost-effectively convert these "leads" to "customers," when the focus is on the product or cause.
He remembers back when Time and Newsweek magazines found themselves in a premium battle to get subscribers. If one offered a windbreaker, then the other offered a novelty telephone. He thinks they finally ended up calling a truce!
One rule of thumb for merchandise premiums is to choose them based on desirability to the audience, but also to guard the premium-to-product value closely. The premium should be viewed as an incentive, but not the only reason to respond to the offer.
Baird adds that, "Marketers will argue over this issue 'til the cows come home, but generally I've seen that the less the premium is related to the product, the less interested the customers are in the product itself. Nevertheless, because premiums can double gross response, the net result, even with reduced retention rates, is still usually highereven over several years.
"This is why it is so important to track retention by original source code over time. Otherwise you could be boosting short-term results at the expense of hurting long-term results."