Premiums - Freebies from the Financial Side (1,436 words)
You should determine upfront how much you can spend on premiums to make
your campaign successful—if you spend too little, you might not see a boost in response; if you spend too much, you might lose your bottom line. In offering a premium, you must walk a fine line.
In addition, make sure to check whether there are any regulations regarding the use of premiums in your industry. In banking, for example, there are rules that govern how much you can spend on premiums.
Furthermore, direct mail is not the only medium successfully employing premiums. By tailoring your script, a telemarketing effort can use premiums as an incentive to order, upsell or cross-sell. The "baby boom box," "big key calculator" and "world's smallest, most powerful travel alarm clock radio" translate well over the phone and can help boost telephone sales.
Credit Card Isssuers and Premiums
With the glut of credit card mailings going to each household, each offering more or less the same offer —a low introductory APR, no annual fee—how can you get your offer to stand out? By offering a premium, credit card issuers can entice consumers to choose and then use their cards.
But is it worth the extra expense to offer a premium? According to the May 1998 issue of Card Marketing, the total mail volume of credit card solicitations in 1997 numbered 3 billion pieces. Couple that with the lowest response level recorded (1.3 percent), and it's no wonder that credit card issuers are looking to premiums to boost response.
The premiums credit card marketers are offering run the gamut from calculators to a pound of Godiva chocolate. Does the premium have to relate to the product you are offering? It helps—a travel alarm clock premium is a good bet to entice a travel affinity card recipient—but it's not necessary. The most important aspect of this type of promotion is how desirable the premium is. "While a premium offer will almost always do better than no premium, a good premium will work better than a poor one," writes Jim Kobs in "Profitable Direct Marketing."