Power Direct Marketing: The Book
Testing and Measuring:
Some Questions to Consider
Testing is the backbone of direct response marketing. Many times you will hear the 3 rules of direct response are:
- Test.
- Test.
- Test.
Almost any question can be answered by testing. Quickly, inexpensively, and finally. This is usually the better way to get an answer—conduct a test.
By testing you get a much better "feel" of what is really happening in the marketplace. Certainly better than personal prejudices or arguments around the conference table.
Testing is a means of getting information from the marketplace about the marketplace. Sometimes surveys, in-depth research, and focus groups can be helpful in direct response. But I firmly believe you learn the most about what is happening in the marketplace by going to it and testing.
By letting your audience tell you what they’ll really do—not what they intend to do, or hope to do, or might do. What you want (and need!) in direct response is direct, physical action. And you can only get that by being there—not asking a few folks to answer several questions and then making a decision on direction and focus of your campaign. Only by being in the marketplace can you really know what to expect.
Measurement is an activity that has many options—you have a host of choices on what to offer, who to offer it to, when, in what geographic region. You have a multitude of possibilities. Sometimes too many. How do you decide what to measure—how do you decide what’s important to you—what’s important to know? By asking questions and testing.
Testing will help you:
- Design your total campaign and every project within it
- Choose between copy themes and graphic ideas
- Zero in on your most likely prospects
- Decide your greatest potential market
- Decide your best offer
- Determine what time of the year is best for your offer
- Decide if you should expand geographically
- Avoid unnecessary risks with your program
- Gather helpful information to improve your total program
Yet testing is not for everyone. Certainly not all the time. In business-to-business marketing often your potential audience is too small to justify testing. You are either in that particular marketplace or you are not. The rule of thumb here is you need a universe of about 20,000 names minimum to conduct an effective direct mail test that you can do anything with.
Sometimes the timing prevents thorough testing. It is hard to test a special offer for Mother’s Day. You either do it or you don’t. And because the market changes so rapidly, what you did last year may not be "in" this year.
If a high portion of your total budget will be required to test an idea, an offer, even a list—maybe you shouldn’t do the test.
Here are some questions to consider about what you might test and measure:
- Who is our customer? What are their demographics?
- How does our customer buy—by what method?
- What does our customer consider "value"?
- What products/services satisfy the needs of our best customers best?
- Who is our best prospect to become our customer?
- Who are these prospects buying from now? Why?
- Does our current marketing program reach our preferred marketplace?
- Does our current marketing program reach the right individual in that marketplace?
- Which creative offer and format produces the most positive quality action from our marketplace?
- What if response is higher—or lower—than expected, than needed?
For those in mail order, you might also measure these factors:
- How long has this customer been a customer?
- When was the most recent purchase?
- What is the frequency of purchase?
- What is the average and median value of the purchases?
- What specifically was bought—what products?
- How did we get this customer in the first place—by what means?
- How do they pay? Credit cards or check/purchase order or bill-me? On time?
- Are they active or inactive by my definition?
- What did it cost me to get this customer?
- What is the lifetime value of this customer?
If quality lead generation is your objective, here are some test and measure elements to consider:
- How many responses were generated?
- What is the percent response rate?
- What is the response by media? How many by mail, how many by space, at the trade show?
- Which direct mail lists, magazine publications, broadcast produced the highest quality response? Which produced the most response?
- How many leads were qualified?
- How many qualified leads converted to an order?
- What is the cost per conversion per media?
- What is the average size order? What is the median?
- What products/services were purchased?
- How many calls/contacts were needed before the first order?
- How many new customers were obtained? Compared to the total marketplace?
- Which market segments offer the highest potential? In business, which SIC codes?
- Why did this new customer become a new customer?
- What will their buying frequency be?
- If the prospect did not become a customer, why not?
- What did it cost to get a new customer?
- What is the lifetime value of this customer?
No company need answer all these questions. Every marketing manager, director, or vice president needs to consider each question and the thought it brings.