We’re very excited to share this new blog interview with you featuring direct marketing strategist Ted Grigg from DMCG. Ted shares an enormous wealth of knowledge in his answers below — and he also blogs regularly here. Enjoy!
1. Quick bio — who are you and what do you do?
As an independent direct marketing strategist, I bring deep and broad direct marketing experience to my clients.
In the last twenty-five years, I have spent several hundred million dollars on direct response advertising using all available channels including direct mail, telesales, broadcast, print, online marketing and permission email.
My successful campaigns run the gamut in many industries including managed care, insurance, finance, technology, telecommunications, fundraising, transportation and retail.
My clients get turnkey support starting with the test plan, the creative strategies, the offers, the actual creative development and concluding with project management to launch the campaign. Our clients get full analytics support to improve targeting and ROI.
I look forward to hearing from you either by phone at 972-459-6868 or by email at firstname.lastname@example.org to discuss any direct response or other marketing consulting opportunity without obligation on your part.
2. What is the secret to successfully planning a multichannel marketing strategy?
Well, I’m not so sure that it’s a secret. As with most things it takes experience, discipline, patience and no small amount of work.
To be more specific, I think success requires a focus on the important things.
For example, the offer impacts the response rate far more than creative execution, regardless of the channel. So when my clients test, I emphasize major issues such as offer testing as opposed to creative executions tests.
Direct mail formats do make a difference in response, but the offer and the lists carry far more weight.
Beating controls in DRTV, direct mail or any other channel also requires a thorough understanding of the customer’s motivations for responding or ignoring an offering. For reverse mortgages, as an example, are most respondents in a financial bind that forces such a financial arrangement, or are the clients’ best customers wanting to invest their house value in better investment opportunities?
Knowing the answer to that question dramatically impacts the offer development and the creative strategy as a whole.
I would conclude by saying that all channels require similar disciplines to win in the market place. Test the big things and direct you message to your target markets.
There is another important element to remember when targeting the same target markets with various channels simultaneously. Keep the messaging and offers consistent. This means that the client’s website supports the direct mail response and DRTV makes the same offer. Realize that many prospects today rely on several channels before responding.
There are some indications that the synergy between multiple channels generate better returns or lower costs per sale than single channels alone. Other analyses sometimes show that this is not the case.
When evaluating response, be aware of the cannibalization that occurs between channels. For example, direct mail often prompts a web search so the respondent calls the website phone number rather than the direct mail number. In this case, it is important to set up tracking that allows you to assign channel attribution accurately when evaluating channel effectiveness.
3. What metrics should marketers focus on when evaluating the backend analytics of a direct mail campaign?
The classic backend analysis looks at two numbers. The first is the cost per sale and the other is the cost per lead.
These are shortened to CPS and CPL (or CPI for Cost Per Inquiry). The CPS drives the CPL.
For example, if the CPL is $10 and the sales force converts those leads at a 10% conversion rate, then the CPS ends up costing $100 for each sale.
The first thing I do with my new clients is to agree on an allowable CPS. The way we word this is: “How much (and NOT how little) can you afford to spend per sale?” Some clients know that already, the less experienced say “As low as possible.”
The reality is that the client needs to make that number as high as possible to maximize circulation.
In other words, is the client really interested in making 10,000 sales a year with an allowable of $50 per sale for a 10X ROI, or would he prefer to make 100,000 sales a year at a $100 CPS for a 5X ROI? The answer is obvious. The second scenario yields a much larger over all profit and a more valuable business than the first scenario. Bottom line AND profits are both important
4. What do you consider to be the most effective approach to testing new direct mail formats?
In my opinion, the best way to approach formats is to begin with the understanding that there are essentially three formats with multiple variations.
1. The postcard or self-mailer that can be a single flat piece or one larger page folded over several times to form a self-mailer. The benefit: low cost and effective in retail, couponing, seminars and some lead-generation.
2. The classic envelope package includes at least a letter, a Business Reply Form or Business Reply Envelope (BRE) and possibly a brochure and other elements such as a lift-note or some type of involvement device such as a coin or something the recipient can feel when he holds the envelope. The benefit: usually the control format that beats 75-90% of postcards containing the same offer.
3. The catalog with multiple pages. The benefit: with abundant space the advertiser can sell multiple or complex items. Products are sold “off-the-page” in one step as opposed to two-step lead generation. Catalogs are becoming less common due to escalating postage and production costs. The Internet’s relative lower costs and speed to market have bitten into catalog volumes.
Rarely will format alone beat an existing control by 25% or more as sometimes seen with offer and product testing. There are exceptions, of course. But as mentioned earlier, focus on the offer and the lists for breakthroughs. Avoid self-mailers unless you’ve proven their worth through previous testing against the strong classic envelope package.
Another point to bear in mind. Production costs are now less than 35-40% of the total package costs. Postage and list rental costs have increased at a faster pace than printing, database preparation and lettershop charges. So it pays to add costs to production that you suspect will increase response rates. I often find that adding useful elements and personalizing the direct mail package increase overall response rates.
5. What do you think is the future of direct mail marketing?
I think it depends on what direct marketing means. To me, direct marketing is a specific strategy that requires a response on a one-to-one basis to qualify as direct marketing.
This means that direct mail may or may not be a direct response piece if it’s not evaluated based on a CPS or CPL basis. In fact, any channel that elicits a direct response is direct marketing.
In my opinion, direct marketing is the future as defined above.
The Internet is at least 70% direct marketing. The Internet channel has been a boon to direct marketers because we know what gets response, how to test and have a better grasp of customer management (CRM) and database marketing than most Internet marketers.
But getting back to direct mail, I see a real future there. Email marketing is now useless as an acquisition tool for most clients (though critical in CRM) as it gets overrun by spam and is overused by lazy marketers.
Direct mail, on the other hand, has become the Cadillac of marketing because weak and fly-by-night companies cannot afford direct mail. In a real sense, direct mail remains a strong response channel but now supports a company’s brand better than ever before.