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Making An Offer They Can't Refuse
Sonny: But they'll never go for it, pop... Godfather: I'll make them an offer they can't refuse -- From The Godfather, the greatest movie ever made about direct marketing One of the most creative and compelling offers that I've ever come across was the CIT Group. The CIT Group, which consistently does award-winning and highly successful direct mail, is a company that arranges for loans for large corporations. The typical loan can be anywhere from $5 to $50 million. A few years ago, they sent out a direct mail package to CEO's and CFO's with an incredibly compelling offer. The package included two baseballs, one signed by Mickey Mantle, the other by Willie Mays. The third ball -- signed by Hank Aaron -- was the offer, and in order to receive it, you had to presentation with the CIT Group. This was a very valuable offer, and an expensive mailing, but their prospects were worth it. But what made the offer irresistible was this: the CIT Group also included a stand for all three balls, with a little plaque under each one bearing the name of the signature. Yes, you could have simply kept the two balls they already sent you, and not called for the third. However, you could never display them on the stand without seeing that empty spot -- and having to explain it to everyone else. They won a Gold Echo. Why Do We Need Offers, Anyway? Direct marketing is, above all, the art and science of getting people to do things. Not feel things. Not believe things. Not understand things. Although these can certainly be important elements in your work. Our main focus is getting people to act -- and act immediately. Consider this: even the most powerful fund-raising letter, with the most heart-breaking story, would fail if it only made people feel something instead of doing something about it. And the single best way to get significant numbers of people to act is with the offer. How Important is the Offer? If you look at most direct mail pieces you receive -- it doesn't seem to be very important at all. Many either have no offer, a weak offer, or they hide the offer instead of making it the hero of the package. One of my chief complaints is that we spend so much time on the words and pictures, and not enough on the offer. But it is the offer that can influence response to a far greater degree than anything else, with the exception of the list. There's a rule that goes like this: If you change the creative, you can multiply response twice over. If you change the offer, you can multiply response four fold. If you change the list, you can multiply response ten fold. I believe this is still an understatement. I have been involved in direct marketing programs where changing the offer lifted response seven-fold and ten-fold. I will share these case-histories with you later in this chapter. What Makes a Good Offer? There are many variables to consider, and many questions to ask. It should be something of value, obviously. (And sometimes information can represent the greatest value). It should be something tangible -- a free scarf versus 20% off. Ideally, it should be something the prospect can't get anywhere else. However, what i've found is most important is this: if you can tie your offer to your main benefit, it can be exponentially more effective. Let me give you an example: One of the clients I work for is Brinks Home Security systems. Their key benefit is that they protect your home against break -ins, so you won't suffer a loss. The offer I came up with was the Brinks ArmorClad No-Loss Guarantee, and the way it works is as follows. In the unlikely event of a burglary or fire, Brinks will pay your insurance deductible up to a maximum of $1,000. The offer -- you're guaranteed not to lose money -- ties directly in with their key benefit. The Most Critical Part of the Offer You might think that the cost of the offer is the most critical element that will influence response. And that if you want to get more response, you simply increase the amount of money you spend on the offer. Not true. In most cases, the actual cost of the offer has almost nothing to do with response. There are two factors that are far more important. 1. Cost versus perceived value. It's not what your offer cost, it's what value it has to the recipient. In the software business, this is called "value pricing" and it allows them to charge $400 for a disk that costs only $3 to produce. Let me give you a direct marketing example. One of the offers we are testing for Brinks is a "Free Home Security Test." It's designed to let homeowners know whether or not their house is protected against intruders. The cost to Brinks is insignificant: all we're providing is information. However, that information can be priceless to the right homeowner. As our advertising says, "If it saves your life just once -- it's worth it." The perceived value of the offer can also be more subtle. In my previous agency, Bronner Slosberg Humphrey, we did a test to get people to activate their AT&T Calling Cards. The offer -- and the cost to AT&T -- are shown below: 1. 30 free minutes if you activate now (value: $5.75) 2. 60 free minutes if you activate now (value: $11.50) 3. 1 free long distance call, of any length, if you activate now (average value $2.95) Which offer do you think generated the most response? The third offer had, by far, the best response -- possibly because the value, "I can call anyone? Anywhere? Any time? And talk as much as I want?" was perceived as higher. However, the actual value of that offer was less than one-third of our most expensive offer (60 free minutes). So not only did we increase response, we lowered the cost per offer. This example also clearly demonstrates the power of testing. 2. Presentation is everything You should always present the offer as something of value and something of importance. By the way, if your offer doesn't have value and importance -- you should be looking for a new offer. • Free is key. Many people believe that "free" is the most important word in advertising and direct marketing. I'm not sure if I completely agree with that (please see Chapter 1, Thinking Like a Direct Marketer for my thinking on the word "you") However, when it comes to the offer -- free is critically important. INSIDE TRICK: If you are offering something free -- shout it. I will almost always start the headline on the reply card with the word "Free." It will almost always increase response. Plus, I'll use the word "free" as much as possible within the other elements of the direct mail package, or within the advertising copy. • Get specific. Are you offering a travel brochure... or a free 32-page special booklet with 18 color photographs, including everything you need to know before you book your trip? The more specific you get with your offer, the more people will respond to it. • Make it unique. Chances are, if you think creatively about it, your company can come up with an offer than no other company can duplicate. You may even be able to come up with an offer that "money can't buy." For example, when I worked on the Quaker Direct campaign, we ran a sweepstakes where the top prize was breakfast with the cast of the Cosby show. That was a prize that money couldn't buy. However, there is no better example of how to present the offer than the AT&T Winback Campaign. The Direct Marketing "Test Laboratory" When my agency first won the AT&T Winback account in 1989, "winning back" customers was a difficult proposition. This was the height of the "Phone Wars." MCI was offering discounts of 40-50% on long distance bills. Sprint was also discounting, but talking about improved quality (remember the pin drop?). And AT&T had the reputation of being an uncaring, expensive ex-monopoly that wasn't interesting in retaining customers. The first thing we did on this program, which later grew to one of the largest and most successful direct marketing programs in the world, was to implement a series of tests. We tested copy. We tested formats. We tested timing. And we tested offers. In fact, we did over 1000 tests in six years. In some respects, it was like working for a direct marketing laboratory. Because of this, I would like to take you through some of the offers we tested and what we learned. Offer Test #1. Money. Our first offer was $10 off your long distance bill if you switched back to AT&T. Our reasoning here was: the customer had left to save money. Here was money to come back. At this point, we couldn't (or didn't) version based on the value of the customer -- as we would later do with our check packages. Offer Test #2. Time. Here our offer was 75 free minutes of AT&T long distance service. This offer was based on a curious misunderstanding that came out of research -- people always overestimated how much a long distance call would cost. Our reasoning was that if we offered them 75 minutes, it would seem like more than $10. In fact, it costs us about the same. One interesting finding -- 60 minutes pulled better than 75 minutes. Why? In a focus group, one person remarked, "I don't want 75 minutes. I want a full hour!" The fact that people are always surprised to learn how little long distance really cost led us to another idea. What if we could persuade people to call AT&T to compare rates? The difference would always be so small, they might decide to stay with us. And AT&T might actually win in a few situations. So, in focus groups, we tested a live demonstration of 1-800-COMPARE. It was an idea ahead of it's time -- because every comparison went against AT&T. However, when all the long distance rates became more similar, 1-800 COMPARE was launched and became a highly successful campaign. Offer Test #3. Free flowers. The number one hobby in America is gardening. We created a powerful offer of 75 Spring bulbs for your garden -- just for switching back to AT&T. It failed, and I learned an important lesson about offers. Unless they are relevant to your product or service, they're probably not going to work. Offer Test #4. Free miles. The Wall Street Journal calls frequent flyer miles "America's second currency." We thought that discounts off USAir flights would be an outstanding and relevant offer. After all, if you're calling long distance, you might want to travel long distance. I'm not sure whether the value of the offer was too low, or it was just too big a leap from telephones to airlines, but it didn't work. Offer Test #5. Our environmental package. This was one of the most unusual packages we sent out to former customers. Once again, research showed that many people were concerned about the environment. Our offer was that we would plant a tree ion your name if you switched back to AT&T. I think we planted three trees. What I learned from this is that people may believe in higher causes like saving the environment and world piece -- but they tend to act in their own, immediate self-interest. The AT&T Check Package I would love to take a credit for this idea, but it actually came from the client, Andy Meisner, one of the best strategic thinkers I've ever worked with. This was a test, and we had absolutely no idea how successful it would be until after we had mailed the first package. The idea was to send people a real live check. It would be printed on micro-encoded paper that would pass through the Federal Reserve System. When they signed the check to cash it, they were also agreeing to switch to AT&T. So, in a sense, the check became our reply card. Except the person didn't send it back, it was sent back by the bank that cashed the check. This first package pulled roughly ten times as much as our average response rate. The program worked so well, we immediately abandoned all our other offers to concentrate on it. And by the time the check program came to an end -- eight years later -- we had mailed out over 200 million checks and won back over 10 million customers to AT&T. Why the check was so effective and what we learned about offers The check offer had six principles that can be adapted to other offers. 1. The check had universal appeal. If you can create an offer that is relevant to every single person you mail to -- your response will be excellent. 2. The check offered "instant gratification." All you had to do was cash it. It was that simple. Nothing to buy. 3. The check could be versioned by value. Former customers who spent $100 or more a month with AT&T received checks for $100, $75 and $50. Customers who spent under $50 received checks for $25, $20 and even $10. The idea that we could present an offer that was directly tied in to the value of the customer was a powerful one. And, even though AT&T occasionally increased the offer to generate greater numbers of winbacks, it was a very successful strategy. In addition, he check enabled us to create a compelling direct mail package. In fact, I was able to write what I consider to be the single most powerful and creative outer envelope headline in direct marketing history. It came to me in a dream -- and I'm very, very proud of it. It read, "Check enclosed." Three Offers That May Work For You But maybe sending live checks through the mail isn't for you. So here are three offers which have proven successful for many different kinds of companies. 1. The Kit. A "free 32-page color brochure" is certainly better than the generic "free information" but you can do even better. And that's by offering people a kit. What's a kit? Anything you want it to be. It can include a brochure, a case-history, a fact sheet, anything. But the idea of offering a kit is almost always more effective than offering a brochure. And if you can name your kit after your main benefit, you're even further ahead. For Putnam Mutual Funds, I put together a "Cut Your Taxes" Kit. The program was so successful, it won a Gold Echo from the Direct Marketing Association. 2. The White Paper. This is another technique for improving response. Basically, it is a position paper, rather than a brochure about your product or your company. Its goal is two-fold. First, to provide useful, thoughtful or valuable information to your prospect. Two, to position your company as the leaders, experts or innovators in your field. (After all, you wrote the white paper). It's called the white paper because it can be printed on plain white paper. It can include: • Information on the future of your industry • Information that you have collected that would be of general interest to your prospect, based on their background or industry. • Information on changes, trends, new ideas in your industry • Information on how to evaluate products or companies in your industry. 3. The Evaluation This is a particularly effective technique since you are establishing the ground rules under which your product will be evaluated. For example, if your company prides itself on strong after-sales service, then one of the criteria your white paper might include would be "Make sure the company you deal with has strong after-sales service." Plus the only prospects who would send away for a "Free Evaluation" are those who are actively involved in considering products like yours. The targeting alone makes this an excellent offer. Premiums, sweepstakes and a Free Couch Time magazine used to give a calculator away with each new subscription. In a very short time, Time became the largest distributor of calculators in the U.S. (They eventually had to stop offering them because too many people were letting their subscription lapse and then re-subscribe just to get one) There are virtually tens of thousands of ideas out there, from mousepads to calendars to flipbooks to puzzles to just about anything you can imagine. Premiums are often used in business-to-business direct marketing where your goal is to gain a "share of desk." In other words, you want your premium with your name and even your phone number on it to have a permanent place on your prospect's desk. Here are six ways to make it more effective: • View a wide selection. Don't settle for t-shirts because your printer can silk-screen. Make sure you talk to a large number of suppliers and get plenty of ideas. • Get something unique. How many paper clip holders do you want on your desk? Your premium has to be either the first or the best, if you want it to succeed. Be on the lookout for unusual or novel items you can use as premiums. Ask your vendors what new premiums they're offering. For example, the Post Office just started offering special "decoders" which you can use to spot the hidden messages on stamps. (They're were created primarily as anti-counterfeit measures). The first hidden message was on a 32-cent US Air Force stamp issued in September. Would this make a good offer for an envelope company? Or make it unique If you can't find something unique, try to make it unique. I send a t-shirt to my prospects that has a unique message for people in direct marketing. I buy them from a company that makes things for musicians and actors and it says, "What I really want to do is... direct." • Get a sample. In a way, the premium you send people becomes a small sample of your company. If it's poor quality, that may reflect on your product or service. • Photograph the premium. If you're offering a premium, make sure to show it in the most attractive way. Use high-quality photography, never illustration. • Can you personalize it? This almost always increases interest. The same people who will quickly discard that pocket calendar you're sending them will have second thoughts if it has their name on it. As Dale Carnegie said, "There's no sweeter music than the sound of your own name." It's also true in direct marketing. You May have Already Won! If they're done with creativity and imagination, sweepstakes can be one of the most effective offers in direct marketing. When I first started out in direct marketing, I did two or three sweepstakes a month for Edgar's stores, a large department store chain in South Africa. The prize was almost always the same. (with a few notable exceptions. Please see below). The winner received $10,000 in cash, which they could spend any way they want. And they typically spent it on their bills or to help pay off their house. However, my challenge was to add an element of fun and fantasy to the prize. Here are some of the ideas we used: The Edgar's $10,000 Great Adventure. There are only a few real adventures left in today's civilized world. Will you spend your $10,000 scuba-diving on the Great Barrier Reef...hiking through the wild Canadian Rockies...or fishing for shark off the Caribbean? The Edgar's $10,000 Follow The Sun Sweepstakes. Why waste winter? You can use your $10,000 prize to hire a beach house in Mauritius...take a sun-drenched Mediterranean cruise...or install a sun roof in your car and solar heating in your house. Open a Winning Door. This featured an involvement device that enabled prospects to "open" a flap on the flyer and see if they won. The copy said...you can use your $10,000 to open a palace door and take a trip to the U.K...or open the door to the White House and travel to America. You could even open the door of a bank vault and deposit the money. We did dozens of sweepstakes, all with the same $10,000 prize, and all were extremely successful. (I won three DMA Echo Awards for Edgar's in three years, including the first Gold Echo ever won by an office of Ogilvy & Mather Direct). The two exceptions that I'd like to share with you were as follows: • Wipe Your Account Clean. This is one sweepstakes that had tremendous perceived value, but actually cost us very little. 10 lucky people had their Edgar's account card wiped clean -- we paid off their entire balance. That meant that 10,000 people spent as much as they could on their Edgar's card, because if they won, they wanted to win big. The psychological appeal of this offer was enormous. We used it over and over again with great success. • You Tell Us. Edgar's had bought a beautiful Italian leather couch for one of their fashion shoots and wanted to offer it as a prize. I couldn't bring myself to write "Win a Couch!". So what I did was take an extremely close-up photograph of the couch and involve people. The headline asked "What's the grand prize in Edgar's new sweepstakes? You tell us...and you could be a winner!" It was extremely successful. Offers to avoid at all costs Over the years, I've learned a few mistakes to avoid -- which I'd like to share with you. And then I'll let you in on the real secret to offers. Offers with too short a deadline: Lotus ran a full-page advertisement in USA Today offering a special price on their software. The catch -- you to order before 6:00 p.m. that same day. Just for fun, I called their 800 number at 6:05. I got a recording that said "Sorry, you're too late" and they made no attempt to capture my name. I thought the goal was to sell more software. Offers with too long a deadline. Again, the offer is designed to get people to act now. Not later. Your offer time limit should not be longer than 4-6 weeks -- and that period is getting shorter all the time. Vague offers. When we started working on the Brinks Home Security System, the offer was "Save $100 on installation." Does that sound good? How do you know? In fact, our research showed that people believed that a home security system costs from $600 - $2000, so a $100 offer didn't sound very good at all. However, Brinks Home Security Systems cost only $199 to install, so that $100 was a very considerable discount. Simply by changing the wording of the offer to "Only $99 Installed" generated a huge boost in response. By the way, vague never works in direct marketing. The more precise you are, the better. For example, "free 32-page color brochure" works better than "free brochure" and "7 Ways to Cut Your Taxes" works better than "how to cut your taxes." Generic offers. Whenever I see an offer of "free information" I recognize the lazy copywriter or agency. There are so many better ways to position it. For example, a "16-page fact sheet that has everything you need to know before choosing data analysis software" or a "free kit that shows you how to invest in today's volatile market." Me-too offers. If everyone is your category is offering free delivery, chances are this won't galvanize people to act. Ask yourself -- what can you offer that is unique? What can you offer that's never been done in your category before? Offers that seem too good to be true. But wait -- there's more! may actually mean less response. The magazine Psychology Today did a study where their researchers stood on the street corners of American cities and offered to sell $20 bill for a dollar. They couldn't sell any. I did some work with a software company that specialized in document management. They came up with what they considered to be a great offer. Because they were a new company, and eager to prove themselves, they wanted to offer two free days of consulting to any potential company. I warned them against it. "Two free days sounds too good to be true. Plus, you're asking the prospect for too much of a commitment from them too early in the process. The two days of consulting you're offering is also going to cost them two days of their time." They changed their mind. Self-serving offers. Want to send away for free information on what makes Alan Rosenspan such a talented direct marketing writer? Probably not. Want to receive 101 Ways To Improve Your Response? The answer is probably yes. Readers will always ask "What's in it for me?" If your offer doesn't answer that question in a powerful way, chances are it won't be as successful as it should be. The Real Secret to Offers Offers are so important to success in direct marketing, that finding the right offer is critical. How do you know when you've found the right offer? I'll let you in on a secret. When we first tested the AT&T Check offer -- the one that's won back over 11 million customers -- I knew it wouldn't work. I knew you couldn't bribe people to change long distance companies. I knew that telephone service had more to do with emotions and connections and the people you love than it did with money. Of course, I was dead wrong. And so the real secret of offers is this: You need to test to find out what works best in your market. Back to First Page of Recent Publications
© Alan Rosenspan & Associates
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