Alan Rosenspan's "Improve Your Response"
INSIDE THIS ISSUE:
I just got back from Spain, after doing seminars in Madrid and Barcelona for the Institute of Direct Marketing.
The language was a bit of a barrier (no hablo espanol) but the participants were very bright, enthusiastic and eager to learn plus they all wore head phones.
My next trip is to the Pan Pacific conference in Australia, but I wanted to share a few ideas with you before I go.
All the best, Alan
29 million enrollees in just over a year
"Extra Care" was launched 14 months ago, and quickly attracted over 29 million participants.
It includes an "Extra Care" card (and key chain tag) that provides three important benefits for customers.
First, they save money when they use the card. CVS often has special low prices that are only available to "Extra Care" customers.
These are delivered in three ways: (1) in the regular CVS circulars that are placed in the newspapers every week, (2) in-store, and (3) in direct mail packages, which are sent to the top tier of "Extra Care" customers.
Second, they earn money back with their purchases. CVS sends out modest amounts of "Extra Bucks" based on how much each customer spends with them.
Third, they qualify for free items, which are usually provided by CVS's suppliers.
But it's the direct mail that really sets them apart.
2.5 million different versions!
CVS doesn't make the mistake of sending out the same direct mail package to everyone enrolled in the "Extra Care" program.
They've divided their list into four different segments- young mothers, seniors, people with diabetes and general. So far, that's standard direct marketing, but CVS goes much, much deeper.
Every time they mail, CVS has a list of 200 offers to choose from. They then send each customer 8 different offers - which are personalized by their previous purchase history and behavior.
For example, if one of the offers is from Diet Coke, and you've bought Diet Coke at CVS, you'll get that offer. Your neighbor - who didn't buy Diet Coke - will not.
But wait -- there's more
They actually use the information
CVS doesn't just use purchase behavior to create personalized offers.
The "Extra Care" program has provided them with a wealth of information on what people buy, how they buy, and what they respond to. CVS uses this information to drive their merchandising, their marketing expenditures, and even where they locate new stores.
They even share the information with their suppliers. And they've discovered some fascinating things about their customers' behavior.
*50% of all photo-finishing customers have never purchased film from CVS.
*66% of all toothpaste purchasers have never bought a toothbrush (what are they using - their fingers?)
*57% of all diaper purchasers have never purchased wipes. (Don't even think about this one)
These all represent important cross-selling opportunities for CVS -- and all because they are tracking purchases with the "Extra Care" program.
Five lessons for direct marketers
CVS seems to have done everything right -- their customers win, their suppliers win, and they win with increased sales and priceless marketing intelligence. It's a textbook example of how to start and run a loyalty program.
But here are five lessons that I took from the "Extra Care" program that are valuable for any direct marketer.
Too many companies rush into loyalty programs without thinking them through. And because these programs are usually directed towards the most valuable customers - that can be extraordinarily dangerous.
CVS has been planning and testing the "Extra Care" program since 1997, so there were few unexpected surprises.
After a great deal of testing, CVS went to a very simple, very short application form for the "Extra Care" program.
There are two reasons: (1) As Bari Harlam put it, "We are a convenience store. We have to make the application process convenient too." (2) They don't need all that information.
CVS doesn't care how much money you make or what kind of car you drive - it's how often you come into CVS and how much you spend. (And by the way, they found that frequency of purchase is much more important than value.)
CVS mails only to the most valuable 20% of its "Extra Care" customers. They spend the most, so they represent the best return-on-investment.
CVS has found it's easier to get valuable customers to become even more valuable, than it is to motivate less valuable customers.
What happens when a customer forgets their "Extra care" card? Or when a non- "Extra Care" customer wants the special sale price?
CVS gives each employee a universal card at the register. So they can simply scan it in when a customer forgets their card, or requests the discount.
Another little thing, every time you make a purchase, your sales receipt shows you how far along you are with specific offers.
For example, if you buy 10 Hallmark cards, you get one free. So each time you buy a Hallmark card, it shows you how many more you have to go.
And when you do qualify for the benefit, the cash register beeps three times - and you get your coupon right on the spot!
Even though the "Extra Care" program has been wildly successful, CVS is still working to improve it.
They're testing everything from mailing formats to e-mail marketing to more refined targeting.
If you want to join or if you'd like more information, simply go to www.cvs.com And for more information about Loyalty Programs, please read my article "Delusions of Loyalty" in the articles section of my website at www.alanrosenspan.com.
The offer in each postcard is one that I'd like to extend to you. Wilde publishes a free e-mail newsletter called WildTips that includes valuable information, tips and suggestions on how to get more from your direct mail.
These include: How to save time and money with postal automation;
How to use the new PLANET codes; Overview of USPS rates, fees and classifications, and; How to improve the quality of your sales leads.
Just contact my client Michelle Jackman at 1-888-92-WILDE (94533)
ext. 784 or e-mail firstname.lastname@example.org. And of course, she'll also be happy to give you more information on what Wilde can do for you.
Even in this anthrax-tainted age, many companies have had a lot of success with "blind" envelopes.
These are envelopes with very little on them, sometimes just the logo of the company, sometimes not even that. The thinking is: the respondent has to open it because it's not obviously advertising.
Do they really work? Or is it better to put the offer on the outside?
A recent test from a high technology client of mine led to surprising results.
The inside of the package was exactly the same, and so was the offer -- a free business book. The only variable was the outside of the envelope.
Envelope A was blind. Envelope B read, "Free Book Enclosed. A $39.95 value." Which did you think did better?
Envelope B outpulled Envelope A by almost 40%!
So if you're "flying blind," maybe it's worth testing putting the offer on the envelope. And if you show a photograph of the offer - you might do even better.
Here are three other quick tips for envelopes that I just wrote for Folio magazine.
If a prospect can make a decision about your magazine without opening the envelope - it's a bad envelope. The best envelopes don't reveal everything - they tease and tantalize.
Use a quiz on the outside (answers revealed inside.)
Use stickers. Ask a provocative question (but not one that can be answered simply "yes" or "no"
The best way to get someone's attention is by using their name. Using a prospect's name in large type, or in more than one place, or in a creative way (like a cartoon) is a guaranteed "letter opener."
No, I don't critique websites. I'm inviting you to critique mine.
We just changed it - added more copy on the splash page; gave more detail about how we work; how we charge; and added a couple of new items.
I would love to have your opinion on whether or not it works, or any comments and suggestions. Please visit www.alanrosenspan.com when you have a moment.
Thanks, and have a wonderful summer.
© Alan Rosenspan & Associates