Try This, Try That

AT A RECENT MARKETING conference, a case study was presented on the use of digital printing for a prominent nonprofit.

The nonprofit experienced unbelievable success, right?

Not exactly. Its program performed fairly well, but not much better than traditional direct mail. It was a lot more work, and the return didn't justify the extra time invested.

What went wrong? Too many conversations.

Imagine the response Santa would get if he walked into a stadium filled with children and asked them to answer, all at once, “What's your favorite toy?” The noise would be deafening and incomprehensible.

Direct marketers are always searching for that magic spell, the latest fad or combination of strategies that will let them skip the basics, pass go, collect $200 and increase their ROI.

Once, long ago, it was “integrated marketing” — combining a telephone campaign with a direct mail program. Then it was Web sites, followed by e-mail and search engine optimization. Today, digital printing is the thing that has marketers believing they're close to a riches-filled promised land.

One-on-one conversations are achievable with digital printing technology, and database techniques are converging and becoming more economical. But it doesn't always come easy.

Test, test again and then test some more is one of the basics of direct mail success.

That's where the true digital printing dilemma emerges: understanding purposeful testing.

PREDICT YOUR FIRM'S OWN FUTURE

Among the challenges marketers face is making accountability a reality in their organizations. But without a comprehensive marketing plan and companywide agreement on its contents — including objectives, target markets, strategies, key messages, and tracking/measuring tactics — any hope of determining ROI lands on the back burner.

Today's marketing plans must contain testing, ROI scenarios and details of how each and every campaign will be measured. It must address relevancy and segments. Testing allows us to determine, in a real-world setting, what works, what doesn't work and why. Like direct marketing itself, testing is about numbers, ROI and data.

We test not only to boost our ROI, but to learn. The more we learn, the better we can market to segments that emerge as we move our marketing programs forward. As the late direct marketing guru Dick Benson said, “You've got to determine if the information you can reasonably expect to gain is really worth the expenditure.”

Test planning typically involves setting up a matrix that allows you to identify key variables and ensure you learn from the results. The concept is based on the DMer's ability to test and track several lists, creative approaches and offers at once.

Three common types of testing options include:

• Lists and media

  If you go to the wrong audience, your marketing won't work. Period.

• Offers and messaging

  Test a variety of offers and/or message platforms to increase response and sales conversions.

• Creative and formats

  It's imperative to test different layouts, formats and creative approaches to gauge their impact on your target audiences.

With the right list and offer, new creative can have a dramatic, positive effect on your marketing results, lifting response by 50% or more. A test matrix will help illustrate the best techniques, allowing your company to learn while it enhances the effectiveness of its campaigns in the most economical way.

KNOW YOUR LUCKY NUMBER

You've got your action plan on paper…so now it's time to crunch some numbers.

Answer these two questions:

1. How much better must your test package's results be to beat the control (or stated objective)?

2. Is this a reasonable goal?

To determine what is reasonable (and what is not), it's necessary to understand what direct mail components affect results the most.

• More than 40% of DM success is determined by the lists and media used, and about 25% by the offer. Most marketers spend a disproportionate amount of time on creative and formats. While design is important, it's only responsible for about 20% of any productive effort. As much as 15% is based on other factors, including timing and ease of response.

• When clients seek a big lift in results, guide them in building a plan that tests one or more of the most influential components — list(s), offer(s) and package/creative.

• A test plan is all the more powerful if it incorporates a database of relevant information about the target audience. Digital imaging allows testing of influential components and integrates variable information that will be much more meaningful to your company's recipients.

Beyond Personalization Sample ROI Comparison

	Quantity	Responses	Cost per piece	Cost per lead
Generic	1 million	20,000	25 cents	$22.50
Digital	1 million	300,000	$1	$33.33

A personalized direct mail piece typically will outperform a generic one. However, digital imaging can dramatically improve a campaign's return on investment. Studies show that the average response to a generic mailing is about 2%. A targeted, variable-imaged effort can drive response as high as 30%.
Source: Johnson Direct

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GRANT A. JOHNSON (grantj@johnsondirect.com) is CEO of Johnson Direct in Brookfield, WI.

Testing Simplified

A nonprofit had been mailing a fundraising appeal to the same 220,000-name house file for almost 15 years. Some 80,000 of those listed continually donated to the cause; the remaining 140,000 were unresponsive. However, year after year the same package was sent to the entire database.

Complicating the situation was the absence of a donor profile and an insufficient budget for renting overlay information.

To address this, the organization tried a four-cell test matrix: two different letters, the addition of a buckslip and an alternative piece to the standard brochure. Testing generated more than 4,500 new donors whose average gift was $35. So the test investment more than paid for itself. (Approximately 80,000 pieces were tested for a total of $75,000. ROI was $82,500, excluding lifetime value.)

But the program didn't stop there. The information learned was used to enhance the donor file with overlays. The nonprofit made a commitment to future tests using variable printing.

Testing doesn't have to be complicated. On the contrary, it involves simple techniques for collecting and using data. Data in turn becomes knowledge, which any company needs to move forward and grow.

Testing is a progressive art. It can help make marginal efforts more successful and solid campaigns more profitable.
— Grant A. Johnson