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National Mail Order Association (NMOA)
Direct Marketing
and Mail Order

The Direct Marketing Audit: A Review Of Our Direct Marketing Efforts
By Alan Rosenspan

In most businesses, an independent accounting group comes in at least once every year. They review your books and procedures and makes recommendations for the following year.

Yet how often do we sit down and have an objective review of our direct marketing efforts, to discover what worked, what didn't work and why, and try to identify our best opportunities going forward?

The answer is -- most companies don't.

That is why I would like to recommend a way for you evaluate your direct marketing program, analyze it's strengths and weaknesses, and help extend and improve your future efforts.

I call this The Direct Marketing Audit, and I have been doing them with many different kinds of companies for the past few years, including one that may surprise you.

What Should The Audit Include?

Typically, the Direct Marketing Audit begins like an IRS audit -- we look at the books.

We examine quantities mailed, response rates, conversion rates, cost per leads, cost per sales, cost per package -- any hard data on the direct marketing programs.

And you would be surprised at what you can discover. One company, a resort that I worked with, discovered that their "control" wasn't really their best-performing package. It only looked that way based on the number of pieces mailed.

Luckily, the Audit was done before they rolled out.

Once the data has been reviewed, we then proceed to go over the direct marketing program in three core areas: Strategy, Offers and Creative.

What I'd like to do for this article is address each area, take you through some of the questions I ask, and the rational behind them.

Of course, the answer to one question may lead you into other questions, in entirely new areas, or uncover an idea that could transform your business.

And by the way, the Direct Marketing Audit should not only reveal what areas that could be improved, but also identify what your company is doing right and should be doing more often.

Let me give you an example. A company called Quad Tech approached me and asked for a lead-generation campaign. The company made measuring instruments, and had been generating leads among scientists and engineers.

I looked over their work and decided that I liked it. They were mailing to good lists, they had strong offers, and the creative was solid if not spectacular. As far as I could see, they were doing everything right.

However, during the course of our meeting, I discovered that they had generated 11,000 "leads" over the past three years, which had led to less than 90 sales.

I flat out refused to do a lead-generation mailing for them.

"The last thing you need is more leads," I said, "In fact, until you find out why so few are converting -- you're probably hurting yourself instead of helping."

Fortunately, the president of the company agreed and months later called me in to do a lead-conversion mailing, which worked extremely well.

What's Your Strategy?

The first set of questions in the Direct Marketing Audit deal with strategy, because I believe this area offers you the biggest leverage.

Who are we trying to reach? This question helps identify your prospects, and also determine who are the most valuable ones and the easiest to win over. List selection is also part of this discussion.

Here, knowledge of your existing customers is critical since "your next customer will probably look a lot like your last customer." Even if you are trying to attract new kinds of customers, we'll need to know how and why they're different from your existing customers.

The answer to this often uncovers additional opportunities. I did a project for a weight-loss company where we discovered that most of their customers dropped out within six months of the program and gained their weight back.

This huge market (no pun intended) became an ideal prospect list to "welcome back."

What do we want our prospect to do? Well, obviously to become a customer. But what do we want them to do immediately after they receive our direct mail package?

I was involved with a major ski resort company who was introducing a "Frequent Ski" card. They obviously wanted people to use their cards -- however, the mailing had to go out before ski season started. So the answer was to make prospects activate the card before the first snowfall.

Why aren't prospects doing it now? You'd smile at the answers I sometimes get to this one.

Of course, this question leads to other ones like "What are they doing instead?" which helps us understand the competitive environment and the potential opportunities.

Borland, the makers of Quattro Pro, scored an early success over Lotus. Quattro Pro was spreadsheet software that had a number of minor advantages over Lotus 1-2-3.

Borland knew the great majority of prospects already had Lotus 1-2-3. So what they did was they offer people Quattro Pro as an upgrade to Lotus 1-2-3 at a greatly reduced price.

Who is in charge of making the decision? Ken Wax, President of Total Quality Selling uses this example to demonstrate a point. He asks, "Why aren't dog food commercials directed at dogs? Why doesn't Lassie bark out testimonials?

"Because we've learned that while dogs consume dog food, and may even enjoy dog food, they don't buy dog food."

Answering this question is particularly important in business-to-business direct marketing where it is sometimes unclear who you should be talking to. The engineer? The purchasing manager? The CFO? The CIO?

Now that's not to say you can't be creative. I did a campaign for Kibbles & Bits dog food that was directed right at the dogs.

Before we began working on the program, we found there were three distinct types of dog owners.

If you own a dog, see which category you fit into:

Category one were people who say, "The dog's a dog." This group feed their dog dry dog food, and the dog sleeps in the yard or the basement.

The second group was made up of people who said, "The dog's a member of the family." This group feed their dogs canned dog food, and the dog sleeps in the bedroom.

Then there was the third group. We called them "doters" because they positively dote on their dogs. These were the people who say, "I don't understand. I cooked him liver and onions just the way he always likes it. But he only ate half..."

"Maybe he's mad at me!"

Here the dog wasn't only a member of the family -- but the most important member. So that's who we directed our program to.

We started a newsletter written just for dogs. We had a letters to the editor column, entitled "Speak!" We featured a recipe column, not by the Frugal Gourmet, but rather The Frugal Sharpei.

The program was uncommonly successful, and we received hundreds of letters -- not from owners, but "from" the dogs!

Direct mail about dog food -- how dull! -- became something our prospects looked forward to.

Where are the pressure points? There was an excellent business book written a couple of years ago, called The Goal. It was primarily about manufacturing, but the lessons also apply to direct marketing.

The author believes that there are key activities in any business that affect the through-put (or productivity) of the entire process.

And if you could identify those activities and improve them, the entire process moves along faster and better.

Suppose we laid out a direct marketing program in the same way. You send out a mailing. How many people respond? How many people then buy? How many buy again? Where are the pressure points that can be improved?

Think back to my Quad Tech example. They were getting large number of leads. That wasn't the problem. However, few were converting. And that's the problem that the direct marketing program had to solve.

Do You Have The Strongest Offer?

In other articles, I've given examples of how one offer can outpull another one by a factor of 7 to 1. I suspect I'm still underestimating it's importance.

The best offers are not only desirable to prospects, but they help overcome the prospect's main barrier or hesitation.

A great example is Tweeter, the electronics store chain. Tweeter's offer is as follows: if you buy any item from them, and it's advertised at a lower price anywhere else in the next 30 days, you will automatically be sent a check for the difference.

You don't have to bring in the ad. You don't have to call up the store. You do nothing -- except shop with the confidence that you will never open a newspaper right after you've bought something and found out you could have paid less.

What are you offering now? Is it really the best you can do? Is it working? Is it getting tired?

What could you offer? An industry white paper? Useful information? A kit? Something free?

If you haven't yet picked up a copy of Profitable Direct Marketing, by Jim Kobs, you're missing out on an excellent list of 99 proven direct marketing offers. It's well worth going down his list and see which ones make sense for your company or your market.

How much is a new customer worth? This question should probably be in the Strategy section -- however I put it here because I believe the value of the offer should be in direct proportion to the value of the prospective customer.

I'm not talking about discounts either. I much prefer value-added offers.

Is Your Creative Working As Hard As It Can For You?

I think creativity is the single most important element of any direct marketing program.

Unfortunately, it's also the rarest element.

This part of the audit deals with the actual direct mail piece or advertisement. I've put together 7 checklists, which include specific questions to ask about your letter, your reply card, your brochure and other creative elements.

However, on a macro level -- here are the three main questions to ask about any creative execution:

1. Is it absolutely clear? I have seen many direct marketing programs fail because the creative actually obfuscates the message instead of bringing it to life.

And the funny part is -- when I read the brief -- the points are sometimes very clear.

The reason that this happens is that the creative work is shown to the client -- who already knows about the product, the benefits, the offer, etc. So if the direct marketing package is not clear, the client and the agency, will never know.

Plus the agency often starts with the most obvious solution to the problem, and then goes deeper and deeper. The prospect is often left behind.

2. Is it new, exciting and different? Does the creative stand out and demand to be opened and read? Does it promise big benefits? Is it based on a big idea? Is it the right big idea? Can we get excited about it?

Always remember that the biggest barrier in direct mail isn't the competition -- it's boredom and inertia.

3. Is it believable? Credibility is key to the success of any direct marketing program. It's one reason why the Wall Street Journal letter has been so successful for so long.

Your product can deliver the most amazing benefits, but if the reader doesn't quite I believe them -- you're sunk. That's why the tone and manner of the letter is so important. And why testimonials work so well.

Would A Direct Marketing Audit Work For Your Company?

By now, you should have an idea of what a good Direct Marketing Audit can accomplish and why it's so important.

To summarize the benefits to your company:

1. The Direct Marketing Audit provides an independent, unbiased evaluation of your program -- including your strategy, your offer, and your creative.

2. It should identify any areas that need improvement, and provide specific suggestions and ideas on how to improve them.

3. It should include several ways to improve your response -- possibly many times over.

4. The Direct Marketing Audit should also give you new ideas, new techniques and new directions for the future.

In fact, you can use the Direct Marketing Audit as a foundation for brainstorming your next year's direct marketing programs.

The questions included in this article are just a start. The process will lead to other, more targeted questions. Your mission, should you accept it, is to ask and answer them honestly.

And in that spirit, I'll let you in on a secret.

The last company that called me in wasn't a client. It was a direct marketing agency who was in danger of losing their biggest client.

The Direct Marketing Audit not only saved the account -- it gave them enough ideas to mine for the next three years.

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