Keep an eye on the side effects

In direct marketing, offers generally include a premium, a time limit to urge response, or an incentive like a free product examination, an invitation or a charter subscription free issue.The better the offer, the better the response.But one must be careful.Tests...

In direct marketing, offers generally include a premium, a time limit to urge response, or an incentive like a free product examination, an invitation or a charter subscription free issue.

The better the offer, the better the response.

But one must be careful.

Tests have shown that each type of offer elicits a different response along with a different purchasing behavior as a side effect.

During planning stages, it is important to be aware of these side effects.

One major side effect, feared by marketers, is that premiums and incentives may harm brand image.

This does not have to be the case.

The proper premium and incentive campaign should help sustain brand image and long-term loyalty.

The ingredients of a direct marketing offer (premium, incentive, terms, conditions and creative) must be blended in an optimal mix so that it becomes a natural extension of the product sold.

There are two types of offers.

The soft offer, with its free gifts, discounted prices, easy terms and few conditions, will produce more customers of lesser quality.

The hard offer, which concentrates on the quality, the service and the advantages of the product being sold, will produce fewer customers of better quality.

Combination

The alternative is a combination of a soft offer followed by a hard offer.

Which is best? Unless there is another objective, the offer with the highest profits-per-thousand is the right one to choose.

The promotional technique should relate to the product, be relevant to the prospect and fit the short- and medium-term marketing objectives.

Rebate coupons enhance trial, repeat purchases and increase brand loyalty.

Rank third

As an incentive, they rank third behind cash rebates and real or simulated cheque refunds.

Showing the savings in dollars and cents rather than as a percentage will generate better results.

Where gift items are concerned, traditionally, branded items do better than non-branded.

They should be ‘worth it’ when compared to the value of the product or service being promoted.

The premium should pull added response above its cost so that the profit-per-thousand remains equal or superior to the no-premium version.

To find the best premium, it is essential to pre-test, not through consumer panels, but live A/B splits.

Assumption has no room in direct marketing. Suppose anything, but assume nothing where money is involved.

Years ago, an airline offered its frequent flyers a business-related gift as an alternative to a travel reward.

The company quickly discovered that a trip down south would out-pull any business-related gift.

It is important to build a direct marketing promotion congruent with the whole story of the brand.

List the objectives – the dos and don’ts. This approach will create a good promotion in total harmony with the brand.

Within the seasonal selling cycle of the product, there is not a ‘wrong’ time to offer a premium or incentive. However, a product launch might benefit more from a promotion which enhances trial or purchase.

Positioning is vital. When Pro, the official publication of the NFL was launched by direct mail, positioning was tested with one of two offers on the envelope: ‘An offer from the NFL…’ and ‘For an inside look at professional football…’.

The latter outpulled the former by more than 20%.

Although it may be a surprise to some, pennies still work.

The offer for the launch of the parents’ magazine Next was a free issue. The penny payments were just as good as a hard offer, with a much better response.

The reason was the terms and conditions, which read: ‘This penny is worth $2. Just return it and it becomes a $2 bill’ (the price of the free issue).

As a rule, if you do a sweepstakes, do it big. They have no negative effect on renewals or repeat purchase.

Creatively, a sweepstakes is a happy event. If you are afraid that the ‘circus aura’ that surrounds a sweepstakes will affect your image, then it might be wise not to hold one, rather than do one that does not look like a sweepstakes.

As a copywriter at Reader’s Digest once said, ‘sweepstake promotions ain’t for pusillanimous pussycats’.

One final point.

A direct marketing promotion is a way to say thank you to your new and existing customers.

If you organize one, make the offer clear. Don’t hide it or make it so difficult to understand that the respondent needs a Ph.D. to figure it out.

Max Roujean is vice-president of Montreal-based direct marketing agency Promodirect.