Leslie Goldstein Newsletter – ISSUE 84

Business Owners, Managers and Marketers say it all the time: “This advertising costs too much!” It is pretty easy to get “sticker shock” and practically go into cardiac arrest when you see how much the advertising for certain media in certain markets is going to cost your company.

Some people don’t realize that a 60-second radio spot on their local popular radio station could cost over $1,000 – each time it runs. Did you know that a newspaper ad in a small town could cost a couple of thousands dollars?  Or that a 10,000 piece direct mailing could cost $10,000 to reach its intended audience?  It’s easy to automatically think that’s a lot of money.

However, here’s the important question for you: Did it really cost too much?

The cost of the ad is not the issue; what’s important is the return that the ad will bring. If you were charged as much as $40,000 for a 60-second radio spot that generated enough sales to make you a profit of $50,000, then would the $40,000 be a lot? Of course not!  The same thing could be said about a direct mail piece.  If it cost you $25,000 to bring you a profit of $35,000 you’d be a fool not to beg, borrow or steal the $25,000 so you could make the $35,000! Try getting that kind of return in the stock market! Look at the successful marketers out there.  They know enough to make the return on investment that is good deal. (At least most of the time…)

So how do you figure out how much money an ad will make you before you draw a conclusion of whether or not it costs too much? It’s actually pretty easy. Here’s a simple process for determining the Return on Investment, or ROI.

1^st) You’ve got to know how much profit you make on each sale. For instance, if you buy it for $50 and sell it for $100, your gross profit is $50.

2^nd) Figure out what your closing ratio is. If, on average, you close one sale for every four people who inquire, that’s a 25% closing ratio. If 9 out of 10 end up buying, then your closing ratio would be 90%. That is simple math.

3^rd) Figure out what is your break even point. Do this by taking cost of the ad and divide it by the amount of gross profit per sale. Remember, we already figured out what your gross profit was a second ago. So how much do the ads cost? If the ads cost $1,000 and your average gross profit is $50, that means you’ve got to make 20 sales to make back the $1,000 – that’s your breakeven point – in this example, it’s 20 sales.

4^th and last) Figure out the number of leads you need to generate from the ad if you are to break even. To do this, you’ve got to know your closing ratio, which we just figured out. Let’s say it’s 25%, or in other words, you close one out of four people who inquire. So if you close 25%, and you need 20 sales to break even, that indicates that your $1,000 worth of advertising needs to generate 80 leads to break even.

Although that sounds kind of complicated, but it’s actually pretty simple. We just calculated in the example that if the $1,000 ads can generate 80 leads you would break even. That’s a return on investment of zero. There are other factors that you have to consider even if you don’t break even, but I’ll address them in a future issue.  (FYI, there are times when an initial NEGATIVE ROI isn’t all that bad.)

What we’re trying to do is calculate your return on investment for your advertising. Think about your numbers in your business/industry and let’s review the 4 steps again.

1. What’s your gross profit per sale?

2. What’s your closing ratio?

3. What’s your break even – in terms of number of sales needed? How many leads does your ad need to generate for enough sales to break even?

4. What’s your return on investment on any given number of leads that you generate?

The important thing to realize is to look at what you have done in this exercise:  figure out how many leads you need to generate to break even on the cost of the advertisement and then calculate the ROI for however many leads your ads end up generating.

The next step to pursue is known as the Lifetime Value of a Customer.  I’ll leave that for a future issue.

Remember this; when figuring your return on investment for advertising, always estimate your numbers on the low side; or conservatively. Always figure on getting a lower number of leads than you’re hoping for and expecting. Always count on a lower closing ratio than you’re used to. If you use conservative figures to calculate your numbers, then you’ll do fine if your results are actually lower than projections – and in the event that you do as well as you had initially hoped, you’ll just make more money than you expected. Try it and I think you’ll be pleasantly surprised.

Posted in Leslie Goldstein - Marketing Tips | No Comments »

Benefits of Ownership (BoO)
This is the art of persuading folks that they should buy/respond what you’re selling/asking. Notice though, I didn’t necessarily say that they should be buying/responding from you. This is the art of what will that product/service do for them. This really answers the question: Why would someone want to buy/respond to what you sell/ask in the first place? These are folks who may be looking for answer to questions or problems they didn’t even know they have.

Objections of Ownership (OoO)
These are people who have gone down a continuum and for one reason or another and aren’t willing to say yes. i.e. if I were to make this purchase or change the way I do business, I might lose my job, or there is NO WAY I’m ever going to have gastric by-pass surgery for fear of what may happen. These are fears (objections) that need to be overcome before you can proceed. FYI, one common OoO will always be price.

Vendor Selection (VS)
Simply put, VS answers the question why would someone want to buy what you’re selling from you instead of your competitor. These are people who are ready to make the purchase (that low hanging fruit so to speak). What do they do? They go the Internet and look for vendors. They go to the Yellow Pages and look for local company. Think about how you personally go about doing this. Purchased a car lately?

FINAL THOUGHT: Remember, with all of this in mind, you need to know who are your target prospects. They will fall throughout all three of the above areas. Because they don’t buy/respond now doesn’t mean they’re not going to buy/respond at all. After all, it’s not a matter of IF my computer fails, it’s only a matter of WHEN.

Proposed Rate Change in 2011
The Postal Service filed a proposal with the Postal Regulatory Commission (PRC) to change the prices of mailing services on Jan. 2, 2011.

Please remember, this is only a proposed change. The final version could be different. The filing, approved by the Postal Service Governors, seeks an average 5.6% price increase for its “market dominant” products, which include First-Class Mail, Standard Mail, Periodicals, Package Services and Special Services. The recommended changes would increase the price of a First-Class Mail stamp 2 cents to 46 cents and the price of a postcard would increase 2 cents to 30 cents. On October 4, 2010, the PRC will make a ruling on this proposal.

For more detailed numbers: http://pe.usps.gov/prices/Prices_Jan2011.xls

Posted in Leslie Goldstein - Marketing Tips | No Comments »

Don’t Confuse Your Marketing Vehicle with Your Marketing Message
The mistake that many businesses make is in confusing these marketing vehicles–the messengers–with their messages.
Whenever I hear statements like the following, I know instantly that the speaker is probably confusing the messenger with the message.
‘I tried newspaper ads once. They didn’t work for us.’  or ‘Direct Mail doesn’t work for our company.’

As long as you have selected a marketing vehicle that effectively and efficiently reaches your target prospects and they fail to respond, it is your ‘message’ that didn’t work, not the vehicle used to deliver that message.

If you try sending your prospects your marketing message via a direct mail post card and you get zero response, and you are certain that your postcards reached targeted prospects with a high potential for responding to your offer then the following is a more accurate response:

‘I tried using postcards as my Marketing Vehicle to deliver my ‘message’ to my targeted prospects, but got zero response.

‘Apparently, my ‘message’ wasn’t very effective. I will have to improve my message before using that marketing vehicle again.’

While it’s important that you select an effective marketing vehicle to deliver your message, it is even more important that you craft your message in a way that guarantees a successful response. That’s where your focus should be.

That is the critical area that far too many business owners neglect.

If you aren’t getting the kind of results you need from your marketing efforts, you need to focus on improving your marketing message. Then it’s a simple matter of selecting an effective and cost efficient marketing vehicle to deliver your message.

But if your marketing message is weak or otherwise ineffective, then it doesn’t matter which vehicle you choose — it will fail…every time.

What Your Customer Wants
All prospects and customers want the same things. They want to feel confident that their money has been well spent and that their buying decision was the wisest.  They want the best deal in terms of price and value. You’ll never hear anybody say, “I shopped around eight car dealerships, negotiated the best deals possible, and finally I decided to take the third best deal.” People instinctively want to make the best decision possible, without feeling buyer’s remorse or having to second-guess their choice.
So we have two sets of values. The business wants more customers and loyal customers and higher margins. And the customer wants to feel confident that he or she has gotten the best deal possible in terms of overall value.  The processes and principles that govern the matching of these two sets of values are exactly the same for every business.
All you have to do as the marketer is figure out what’s important to your prospects, educate them as to what constitutes the best deal in your industry, and then show them quantifiable proof that you actually provide the best deal in terms of price and value – and communicate all of that to the prospect in a way that they’ll pay attention, believe, and take action.  The result is the prospect gets from you what he wants – not just the best deal in terms of price and value, but also that quiet, firm, and confidence that he’s actually made the best decision possible.       Simple, right?
Whose Point of View?

No matter how mass-produced a direct mail program appears to you as the sender, it still arrives as a single letter to your recipient. Always look at it from their point of view.

Posted in Leslie Goldstein - Marketing Tips | No Comments »

Make the 800 Number BIGGER
Sounds simple, but nothing says “Call me” like a bold 800 number.  The smart catalogers put it on every single page.  Does your direct mail have it on every single element?  Why not?

A Special Touch
Two thirds of the customers you lost in the last year were underwhelmed by your lack of interest in them. To avoid this waste, reach out.  Always send a thank you for their order.  Add a special offer with the thank you.  And for those you haven’t heard from, write and ask why.  Sometimes we just need a kind word or look to become loyal customers for life.

Who Are Your Customers?
A periodic analysis of your housefile will indicate how your customer profile changes over time.    Despite your disciplined use of outside list rental formulas, new and different types of customers creep into your revenue mix over time.   That’s logical, because magazine readership, donor lists and response lists are dynamic too.   Invest in a demographic overlay to see these new markets as they emerge.   You will get your money back with better targeting and list suppression in the future.

Posted in Leslie Goldstein - Marketing Tips | No Comments »

Testing Thoughts

Test costs always look inordinately large, compared to normal roll-out costs, so sometimes we don’t test as much as we should. But if you combine test costs with normal production or roll-out costs, the incremental cost per order is relatively small.    As a percentage of your total production costs, testing may only be 5%-10%.    The purpose of testing is to find new break-throughs.    A 5%-10% lift in response rates will recover your test costs and is a do-able thing. Besides, you should never be satisfied with whatever results you obtain.  As my hero Will Rogers was responded to the question, “What’s considered enough money?”  He replied, “Just a little bit more.”

Don’t Overlook the Obvious
Sometimes in our zeal to deliver an impressive creative achievement, we forget our car keys.   After you have designed and written your trophy-bound format and copy, check this logical inventory for completeness:

(   ) a specific, close-ended, time-limited offer;
(   ) a call to action;
(   ) a practical means for replying.

While this may seem stunningly obvious, in practice there is still ample room for perfection.

What’s the Big Idea?
David Ogilvy said, “Unless your advertising is based on a big idea, it will pass like a ship in the night.”  In direct marketing, that ship will sink.  A big idea is something that will stop people – and get them to think.  It is sometimes about the product.  It is OFTEN about the prospect or customer.  Here’s an example;

There was a company that wanted to create awareness and generate leads (sound familiar so far?).  They targeted marketing directors with a box that read “We’d like to have a word with you.”  Inside the box was a dictionary with a yellow post-it note that said – “Look up ‘Visionary.’ “  When the prospect turned to that page, they found their name listed in the definition.

Before you send out your next direct package, ask yourself, “What’s the big idea?”  If it doesn’t come through immediately, you may want to re-think it.

Posted in Leslie Goldstein - Marketing Tips | No Comments »

10 Marketing Tips to Ponder

1. Know your audience. Successful campaigns get that way because marketers know their audience. They fully understand their needs, how to help meet those needs and how to create demand. Knowing and understanding your audience through proper market segmentation means a well targeted campaign that generates a profitable return.

2.Focus on the offer. A marketing offer is the driving force of marketing promotions that drive results. In fact, market testing has proven that the offer is the most significant criterion for conversion. Focus on your offer if you want to be successful.

3. Split test. Never ever run a campaign without testing something. One of the most common is a split test which allows you to simultaneously test two versions of something. It can be a web page, post card, or email. Split testing is essential for improving performance.

4. Never work alone. The most creative ideas come from working with other creative people. Don’t feel like you need to have all the answers or great ideas. You may start with an idea, but an open dialog with creative individuals will make it better.
5. Don’t sell on price. I’ve seen so many marketers fail because they sell on price alone. This leads to a discounting war, lower profitability, and often bankruptcy. Rather, focus on creating so much value that the perception of price becomes insignificant.

6. Consistent messaging. Consider the entire user experience before you launch a campaign. From mail to website to offer, is the prospect having a consistent user experience? If they are, your campaigns stand above 98% of others.

7. Create value after the sale. As marketers, it’s our job to understand our market segment and build relationships, not dump people off at the front door of our store and walk away. Focus as much of your energy on building relationships with customers as you do prospects.

8. Test. Test. Test. In addition to split testing, you should consider multiple forms of testing in each marketing discipline. For direct mail, test headlines, offers, copy, time of direct mail drop, etc. Consider testing a life long mission.
9.Integrated Marketing Works Best. You can’t rely on one form of marketing to carry you to success. It’s okay to generate most of your leads or sales through PPC marketing if you will but what happens when that dries us? Use multiple media sources to meet your goals.

10. Nothing can replace experience. You can run out and hire all of the best consultants in the world, but you still have to do the work. Nothing can replace actual experience. It will make you a stronger marketer and more successful in the long term.

Apply these helpful marketing tips if you want to be truly successful. These techniques and tips are applied by successful marketers on a daily basis. The result is an ever growing success rate of marketing success

Posted in Leslie Goldstein - Marketing Tips | No Comments »

The Green Green Grass of Home
Kudos to one of America’s neighborhood lawn care companies that reaches beyond the traditional “pay, spray, and pay” service offer.   Their envelope is sent by a local agent whose signed letter includes his card displaying his friendly portrait, phone and website.   In addition to the “deal”, the agent also includes a set of address labels adorned with verdant images of trees and flowers in full bloom.   25% of the sell sheet is devoted to environmental tips.   The special hook is the company’s promise to support the Arbor Day Foundation with a tree planted for every new customer signed.   Compared to two similar self mailers sent by competitive companies, this piece is hard to put down.

It’s Hockey Playoff Time
Timing is a significant factor in direct mail.    While you may calendar significant dates in the production cycle, get beyond your own agenda.   What’s happening out there with your reader?   Anticipate the effects of national holidays, election days and upcoming sports and media events.   Watch your mail plans as closely as you watch your investment plans. Did someone say Lord Stanley Cup will pay another visit to the Pittsburgh Penguins?

Don’t Go To The Well Too Often?
The Cygnus research found that over solicitation is the #1 donor complaint. It’s also one of the top three reasons donors stop giving. Ask your donors how often they want to be solicited. Many have set giving schedules. According to the survey, 23% make gifts once per year and another 21% make gifts on a regular schedule. That’s 45% of your donors.

Posted in Leslie Goldstein - Marketing Tips | No Comments »

Lust
Of course you crave more profits. But trying to appeal to everyone all the time isn’t the way to boost sales. You must target your efforts. Forget about all the people who aren’t interested. Focus instead on the 5 to 10 percent of your list who are. These are the leads you’ll convert into sales.

Pride
Your company mission statement may bring tears to your eyes. But all that proud, chest-thumping verbiage is just empty noise for your prospects. Face it. People don’t care about you, your company, or your product. They only want to know what you can do for them. So talk about benefits and save the corporate banter for your annual report or the golf course.

Problem, what problem?
Which sounds more appealing?    Winning money, or reducing debt?    Try to give meaning to your promotional offer by getting beyond the simple cash benefit.   Compare for example, “your savings is a thousand dollars.” with “we’ll pay your gasoline bill for the next 6 months”.   A local radio station is currently running a promotion where their current tagline is: “The station that pays your bills!”    Much more attractive than “you may win up to $500.”

Posted in Leslie Goldstein - Marketing Tips | No Comments »

Eight reasons why direct mail still works click here
by Lois Brayfield   MultiChannel Merchant
Feb. 1, 2010

Eight points that show why this old-school strategy still works.  Multichannel marketers today tend to get caught up in the frenzy of the next greatest trend. What about Web 3.0? What’s the hot social networking application? How do we make our e-mails more effective?

Sexy online strategies are and should be a big part of direct marketing. But that doesn’t mean you should ignore some of the old-school tactics, like direct mail.

That’s right, direct mail.

Sure, it may be true that mail pieces are much more expensive than e-mails, thanks to rising postal and paper costs. And many marketers and consumers alike often perceive direct mail to be old-fashioned and downscale.
But when used wisely and analyzed carefully, direct mail outperforms many tactics, particularly with prospects and certainly with many customer segments.
Newer technologies may excite and preoccupy the marketing team, but direct mail works.
Still not convinced direct mail should be a part of your overall contact strategy? Here are eight points that illustrate how and why direct mail remains alive and well in the 21st century.

Intrusive
Unlike your Website, direct mail is an “active” format. Customers may find their way to your site, but a catalog or a direct mail piece in their mailbox is an intrusive tap on the shoulder that online-only activities don’t allow.
While e-mail shares the intrusive nature of direct mail, e-mails can get overlooked in a crowded inbox. Plus, consumers are conditioned not to open e-mails from unknown senders for fear of viruses or other technical catastrophes. And direct mail won’t get caught in a spam filter.

When done properly, a good direct mail piece will stand out even in a crowded mailbox, grab customers’ attention and incite them to act. That’s the intrusive nature of direct mail that no other marketing tactic can emulate.

Tactile
There’s something to be said for appealing to the senses. Direct mail delivers a tactile sensation that online activity can’t.
You can feel a mail piece in your hands. You can hear an envelope or tab tear open. You can see the images and key messages on the printed page. You might even be able to smell it! Websites and e-mail cannot compare to this experience.
The physical nature of direct mail forces customers to take note. And if we do our jobs effectively, the piece will pique their interest and encourage them to spend more time with it.

In bricks-and-mortar retail, the ability to touch and experience the product increases the likelihood of a sale. It’s the same with direct: Even though it’s not the actual product in the recipient’s hands, a mail piece still activates the tactile senses.

Targeted
At its best, direct mail is targeted to the customers most likely to respond. Whether you are speaking to prospects or customers, the best way to reach a specific audience is through direct mail.

But many marketers do not take full advantage of print’s ability to target — not only with lists, but with customized messages. With simple black plate ink changes, you can tailor your direct mail creative to different lists — best customers, lapsed customers, even prospects. You can target customers based on specific activities and microsegment prospects.

The more targeted the message and the list, the better the response. In fact, if you’re not customizing your print products, you may be wasting your efforts and creating “junk mail” that won’t get noticed.

Varied
While the cost of some direct mail, particularly catalogs, continues to rise because of postal increases, direct mail offers a wealth of other format options. Depending on the segment and on what you are asking the recipient to do, a postcard, self-mailer or three-dimensional package can get results much like a catalog — sometimes even greater.
But few mailers think out of the box with format and function. Direct mail doesn’t have to be solely about getting a sale.
For instance, how are you thanking customers? One marketer sent a 3-D “thank you” mailing to its best customer segment, adding significant incremental sales without overtly promoting a sale.

Explore the direct mail formats available to you. Work with your creative team and printer to see how you can find an innovative yet effective format. The more distinctive the format, the more it will stand out in the mail.

Measurable
One of the key reasons direct mail remains a viable channel is that you can test hypotheses and measure results. While metrics are getting better for online efforts, direct mail still reigns supreme on testing, measurement and analytics.
Even for companies that have difficulty tracking source codes, the use of matchbacks can still help you gauge a mailing’s success and analyze overall results. But with the multiple online hits and touches added to the mix, how you measure must change. The question becomes, which of those online efforts are adding incremental sales to your direct efforts? You can’t measure your mail efforts in a void!

Personalized
There’s no question that online technology has made amazing advances in personalization that print can’t touch. But there is something magical about seeing your name in print.

And when a name is cleverly incorporated into a mail piece, the result can be increased sales. Personalization techniques can include working the recipient’s name into a headline, or calling attention to products he or she has previously purchased.

There was a time when personalization was so expensive that it could cripple your ROI. But today’s technology has made print personalization easier and more affordable.

Check with your printer to see what new options are available. Think of personalization not just in terms of “your name here,” but also in terms of relevant and variable data.

At a macro level you can “personalize” a cover of a catalog or an offer on an envelope, based on how a particular customer segment responds.

Even better, integrating the online and offline world can really boost overall response. Consider those marketers who include a personal URL (PURL) printed within the piece. Not only can it increase response, it can also facilitate tracking!

Integrated
Direct mail should not be the only piece of your contact strategy. You should build your mail plan with direct mail as a component, a cog in a larger machine.

Use e-mail to pre-announce mailings or to remind customers of an expiring offer. Push traffic to your Website for convenient ordering. Tie in social media, using your catalog to promote the online presence.

Get creative with integration by producing an offer requiring a tweet response or that asks recipients to sign up for an offer online — anything that pushes a response, not just a purchase. Don’t think of it as a “circulation” strategy but as a “contact” strategy.

Several channels working together is powerful, and there are remarkable advantages. One channel should never replace the other — all should work together to form a unified campaign.

Effective
Direct mail works — period. A recent ExactTarget study conducted by Ball State University revealed that while e-mail plays a vital role in marketing communications, direct mail is still a dominant, prominent purchase driver for different types of customers.

In some cases, 70% to 90% of survey respondents made a purchase based on receiving direct mail — for all age groups.
Direct mail may seem old timey, quaint or even irrelevant. But it’s still an effective way to tap customers on the shoulder and push them into an activity. And while it may eventually be replaced by some newfangled technological innovation, rest assured it’s not going away anytime soon.

But as the cost to produce and deliver mail increases, you can’t continue mailing as usual expecting the same results. That’s not going to work any more: You have to mail highly efficient, targeted and relevant messages that offer customers a true value.

Posted in Leslie Goldstein - Marketing Tips | No Comments »

Pure Play Sees Value of Direct Mail
Jan 25, 2010 4:42 PM, By Tim Parry – MultiChannel Merchant

XSportsProtective.com has been an online seller of action sports equipment since president Jim Bartlett founded the company in November 2005. But if the ROI on its two holiday season postcard mailing campaigns are as good as he thinks, Bartlett says he may go multichannel.

Bartlett says he can see spikes in site traffic activity, online orders and phone orders around the time the company dropped the two mailings. But at press time he was waiting for matchback results from consultant J. Schmid and Associates before determining if they were a success.

Both drops went to house file names, and crossed over buyer segments including seasonality and average order size. The names, segmented by recency, went to buyers who made two purchases within the past six months. In all, postcards went out to about one-third of XSportsProtective.com’s 33,000 names.

The first drop was mailed to 5,000 customers just before Thanksgiving, and offered 10% off a purchase of $50 or more with an expiration of Nov. 30. The second postcard went to 10,000 customers on Dec. 10, with a message that orders placed by Dec. 23 would arrive by Christmas.

“I can see from our analytics that the traffic to our site grew right after the postcards dropped, and that was our goal,” Bartlett says. “Our early indication is that the ROI was positive.”

If that is the verdict, Bartlett says the next step could be a test of slim-jim catalog or a pamphlet-size mailer, something that would show the diversity of action sports the company offers protective equipment for.
“My approach has been to just send e-mails to my house file, and we’ve done that forever,” Bartlett said. “Mailing postcards is more expensive, but if we achieved a positive ROI, maybe we can do a test mailing of a more robust catalog.”
XSportsProtective.com experimented in-house during holiday 2008 with two postcard drops of 2,000 each, and Bartlett said it was “not for a compelling offer.” But based on response and orders, Bartlett says he sought out J. Schmid.

Verified Facts
-The largest percentage of Gen X and Gen Y consumers responded to Direct Mail that features offers such as coupons, percent-off discounts, or other incentives (Vertis).

- Gen X and Gen Y may be the most wired, but they still prefer to receive promotional messages through mail than any other media channel (Exact Target).
- Hispanics, the largest minority group in the US – and the fastest-growing, use Direct Mail over other types of media to learn about new products (DMA).

- Direct Mail is consumers’ top preference for receiving promotional messages from companies which they have never interacted (Exact Target).

B2B Mailing Lists

Often in B2B mailings the available universe of prospects is relatively small.    When you are purchasing an outside list, don’t be concerned if the cost per record is high.    It is far better to reduce your expensive prospecting efforts to the most likely candidates.   Attempting to minimize your cost per thousand by expanding your reach into low potential categories is counter-productive.    In B2B, a well-targeted list is compensated with reduced selling costs, and higher average orders.

Posted in Leslie Goldstein - Marketing Tips | No Comments »