Strategy Session: Tales of Tails Wagging Dogs
Many of you will remember "Wag the Dog," that prescient 1997 film with Dustin Hoffman and Robert De Niro. The plot revolves around diverting attention from a presidential sex scandal by fabricating a war.
Direct marketing isn't as glamorous or funny as the movies. Sometimes we let the tail wag the dog, and the results can be sobering. In most cases, this tail wagging isn't planned; it simply results from lack of concentration on key strategic issues.
And now let's head to the tales.
1) A food company that sells home delivery of gourmet meals actually lets the tail wag the dog twice. First, it uses its customer catalog (a 32-page book) as a prospecting tool. The rationale is that a larger run of the catalog lowers unit costs. Otherwise, those unit costs for reselling to customers will be too high. Fine, this makes sense. The problem is that it doesn't seem to matter to the company that the catalog does not work as a prospecting tool on either a response or cost-per-new-customer basis.
And, in an attempt to break away from use of the catalog as a prospecting tool, it once tried to split attention in the mailing package between the dine-at-home concept that sells the overall product and an application for the company's branded credit card. The rationale here was that the firm makes more money if respondents use the branded credit card to pay for the service than if prospects use other credit cards in their wallets. Unlike the first tail wagging, costs weren't considered for this scenario. Because this was a preapproved offer, lists had to be scored, which made list costs astronomical for the campaign ... which made the poor responsebased on trying to get prospective customers to make two decisionseven more problematic.
2) A manufacturer that sells to small businesses has been pumping out mega-millions of direct mail pieces every year for decades. Because most of its products are sold to small businesses directly, rather than through a sales force, it has reams of statistics on what kinds of businesses are most responsive. Yet it continues to mail to everyone. Some rationales: Unit costs would increase if the manufacturer focused its mailings, and it would have to get a higher response rate to make its budgeted volume. To make matters worse, the manufacturer locks agencies and vendors into using just a few formats, making it difficult to achieve any real creative breakthroughs. One could better understand being limited to using certain formats to achieve economy of scale if the mailing quantities for tests and rollouts were relatively small.
3) A collectibles company specializes in commemorative stamps. It sends out a ton of mail. The company uses an indicia instead of a stamp to save what may amount to $2.50/M pieces. Even if the indicia pulls as well as the stamp, there's a branding consideration here due to a collectible stamp company favoring an indicia to a live stamp. And it would seem that the tail is again wagging the dog because the company uses a courtesy reply envelope instead of a BRE, and that's often a "penny-wise" mistake. But here the cost savings makes total sense because the acquisition offer is a total freebie, so requiring a stamp to respond qualifies the prospect.
The moral of these first three tales: Don't let obsession with the cost of direct mail effortsand particularly with unit costsdrive your direct mail strategy. With all the campaign management tools now available, you may be better off cutting the volume of the mailing by eliminating low-performing deciles and spending more per piece. You probably will increase response enough to actually lower the cost of leads, acquisitions or sales.
4) A few years ago, my firm worked with a business and investment information provider to develop a lead generation campaign. The target was CFOs, CIOs and information specialists at Fortune 2000 firms. We wanted campaign responses to flow into the marketer's internal sales department.
The manager knew enough to want to track by list and by creative execution. He set up 20 unique phone number extensions to cover the 10 lists we selected. One of the creative executions was the same oversized postcard format that B-to-B firms have been using regularly to drive prospects and customers to a particular site. A push to the Web wasn't the right strategy for this business and investment provider's lead generation campaign, so we imaged the unique extension numbers right under the name and address section on the address side of the postcards.
But we wanted to test a classic package to this audience, too; this effort comprised a closed-face #10 envelope with only a cornercard, one-page personalized letter and a simple brochure. Of course, we could laser the extension numbers on the letters. It was the brochures that raised a problem. As long as a brochure was being included, we wanted a toll-free phone number on that element. But it was impractical to do 10 different brochure versions. The client wanted the toll-free phone number left off altogether because he couldn't track particular lists via this general phone number. My firm's contention was "We'd rather have a response and not be able to track it than not have a response." We thought that we had won the battle, and that the tail would not wag the dog.
The campaign mailed. We called the generic 1-800 phone number to see what would happen. We could not get connected to a sales representative until we put in an ad job number or extension. Can you just see a Fortune 2000 executive spending five minutes looking for the right number to connect? We could not convince the client to change the phone system to allow someone without the right extension to get through. Scary!
The moral of Tale No. 4: Tracking, measuring and analyzing are important to the success of any direct marketing program. More important is providing prospects and customers with the easiest possible way of communicating with you.
"Tails wagging dogs" is another way of saying "strategy erosion." It's a problem normally spotted by the higher-ups in marketing departments and by C-level executives, but not always. If your answer to any of the following three questions is "Yes," watch your tail:
1. By merely cutting unit costs, are we taking the easy way out, and neglecting ways to build the profitability of our business long-term?
2. Does our campaign in any way interfere with getting our message to prospects and customers in a way that enhances their understanding of what we offer?
3. Have we done anything to hinder how easy it should be for prospects and customers to respond?
Lee Marc Stein is an internationally known direct marketing consultant and copywriter. He has extensive experience in circulation, insurance and financial services, high-tech, and B-to-B marketing. He works with direct response agencies in addition to having his own clients. Read more of Stein's articles at www.leemarcstein.com.