7 Rules to Testing in a Down Economy
During rough economic times, it's easy for those who control the budget to say that if response rates are down, they don't want to invest in testing—"You can't spend money if you're not making money." To certain executives, this actually makes sense. But others, the wise ones, know that the time to spend more marketing dollars is when sales are down.
It's true that there is a risk involved in testing new ideas in an effort to "beat the control" and increase response rates. Testing takes an investment in time and resources, often including additional funds. However, the outcome is often worth the risk.
You want to test, not only to increase your ROI, but also to learn. The more you know about what works the best, the better you can market to segments that emerge as your marketing programs evolve.
1. Start With the Basics
It's imperative to go back to the basics. Think about your business and marketing objectives and what you need to learn to improve. What variables will make the most difference in your results? Create a plan for your testing that will lead to methodical improvements.
Test only one element at a time, and use appropriate quantities to provide statistical significance. Or, if you are testing multiple elements, add separate test cells to your testing matrix. While this seems obvious to direct mail veterans, time and again we have clients who are confused about this. For example, if you test lists and offers at the same time within the same test cells, you will never know which element provided a lift.
Recognize the importance of your lists, offers/positioning, creative and the timing of your touches, in that order. No matter what the current economic conditions are like, lists still make up the majority of your marketing success—40 percent to 50 percent. Understanding this, along with the power of relevant offers (30 percent to 35 percent of your success) is critical to jump-start your response rates and lift your ROI.
Don't be lured into testing a new format or design unless you have done a better than average job of testing lists (both house and prospect files), offers and message positioning/copy platform. Then, it will be prudent to develop some new creative tests to try to move the sales needle north.
2. House Databases Need Top Priority
In an economic downturn, data and its hygiene become even more critical to your ROI success. Understanding key segments and relying on your best customers will get you further ahead than almost anything else. Know who the buyer is and who the decision makers are. If you have a great understanding of your segments, test a referral program to your top customers and watch the results pour in. Combining segments with offers is also a wise idea.
Focus on customer service and retention FIRST in economic downturns. To create raving fans, you need to prove that you care about your customers. If you do that, when you go to them and ask for additional business, referrals and testimonials, they will be more than happy to help. Far too many companies, even in this economy, assume that their customers will stick with them. Don't assume. Actions speak volumes over words. Customer service and retention are areas that are quite testable, yet few firms test enough here.
Segment and rank your customers in importance. All customers are NOT created equal. Considering channel preferences, offer motivators, RFM and other key factors like geography and the aforementioned timing will help your testing efforts. When you hone in on a specific market or audience, you can specialize your offer, messaging and tactics to specifically appeal to its wants and needs. You just may find your loyal regulars ready to spend extra for the something more you suddenly have to offer them.
3. Go Prospecting!
An old database adage seems to be oft-forgotten these days: Garbage in equals garbage out. Now, more than ever, analytics need to be employed to better parse your data into silos, so you can market smarter. Start by learning as much as you can about your current customers by profiling and modeling, and then using that data to find like prospects and, of course, test.
"No, we can't afford to make that offer!" (Or, worse yet, "We can't make any offers.")
When testing offers, think creatively. An innovative, affordable offer can substantially contribute to growth. For example, in gourmet food—an area where you'd think spending would be coming to a grinding halt—testing discovered how simple offers earned generous orders. Looking back at 12 months of email promotions for a gourmet client uncovered the fact that the top 10 campaigns featured free available product or savings that could be offered without slicing into profits on specific, popular products. The response rates for these campaigns were double or triple compared to the typical tightfisted campaigns.
4. Sell Value and Change Positioning
People are looking for deals today. The way you position them will have a major impact on results. You need to sell VALUE to succeed in these tough times. Complement your emotional appeal with facts—more of them—and watch what happens to results.
While emotion typically outsells logic in marketing, that's not the case in a downturn. With increased economic pressure comes anxiety. People feel the need to justify and examine their choices, now more than ever. So, rely less on emotional creative/copy approaches and more on facts and figures. Use more numbers, data and the like to appeal to the left brain.
A copy test NOW, or better yet, several copy tests now would be money wisely invested. Remember, what changes the offer/messaging is positioning. That's redefined through compelling, direct response prose.
5. What's the Big Idea?
When it comes to creative concepts, look for ways to test big ideas. Is there a way to reposition the product or service so people think about its value differently? You might glean ideas from how your competitors are marketing, or even better yet, look at other industries to see how folks are marketing.
In addition to the creative concept, format also can make a big difference—from both an impact and cost perspective. While letter packages continue to be top performers for many programs, we devised a self-mailer for an insurance client that beat the control and saved the company thousands of dollars in production and mailing costs. You'll be a hero if you devise a more streamlined approach that beats the control.
Also consider testing the look and feel. Will a promotional approach or more official approach work better?
6. Timing Could Be Everything
An often overlooked element is timing. Be flexible, and stay on top of current events, trends, seasonal issues, etc., and how they affect your target audience.
For example, if you are trying to reach landscape professionals and offer them a demonstration, it's better not to mail to them during their peak spring/summer work period—or after a disaster or other surprising current event. Instead, be flexible enough to change your strategy or postpone your mailing.
7. Test, Test and Test Some More
Testing will get you to relevancy faster than anything else. In bad economic times, focus more heavily on your current customers, and test smart upsell/cross-sell tactics in direct mail. But now is when you can truly gain market share, good will and sales.
It's no mistake that two of the companies who are doing well now test a ton: Amazon and Netflix. This should be a lesson to all who think that testing is too expensive, don't have the time or think that their marketing is doing fine without it. Testing is an investment in your future success.
Grant A. Johnson is a 25-year marketing maverick and founder and CEO of Brookfield, WI-based Johnson Direct. Grant is passionate about measurability and messaging relevance in an over-communicated, multi-channel marketing world. He can be reached at firstname.lastname@example.org