Direct Mail: Hidden Profits
2. The tracking system. Closely allied to the master file quality and back-end analytics is the tracking system.
One insurance marketer, for example, tracked leads from all channels but had no way of tracking those individuals who did not pass underwriting and were turned down, those who passed underwriting but decided not to buy, and those who bought. So the cost per lead was there, but not the critical cost per sale.
Immediately, it was clear that the underwriting department and lead system needed to link together to allow the evaluation of the marketing program’s effectiveness.
This tracking deficiency made it nearly impossible to test anything beyond a cost per lead. Clearly, the cost per lead alone is no way to manage any direct program without some ability to look at the conversion rate to sales.
Another marketer had not set up official business rules for the inbound telemarketing program, so orders were made without readily available tracking codes, phone numbers or e-mail addresses. The CRM software did not “force” entries of critical data for back-end evaluation or ongoing promotions to qualified inquiry names. This database was not set up for marketing, only for product fulfillment—a big missed opportunity.
3. The testing program. After performing many such audits, this is the one area where I think most marketers miss the boat. There is a tendency to major in the minors instead of the majors when it comes to the creative work.
It’s as if inexperienced direct marketers were planning the direct mail tests because they test small, often insignificant tweaks to the control. They look at attaching the response piece to the letter or creating a separate response device. They will test a package with a two-color vs. a four-color flyer or delete a publisher’s letter to see if this decreases response.
These are minor tweaks rather than breakthrough tests.
Remember this rule: You really don’t need to know, nor can you know, why something works or doesn’t. Research has nothing to do with testing. By the time you think you’ve got your package perfected, all of a sudden response rates drop for no known reason.
Large marketers test for breakthroughs that reduce the cost per sale by at least 15 percent to 25 percent. It is highly unlikely that tweaks will beat your control at that level.
Many companies have limited management and financial resources
for testing. So forget the small stuff, and concentrate on testing dramatic new package formats, offers, purchase prices and main selling propositions.