Creative Strategy Printing Knowledge

Creative Strategy

The basic strategy used for direct mail is different from the strategies used for other types of advertising in that it is not developing brand awareness or trying to entertain the prospect. Its primary goal is to persuade the recipient into acting on the offer being presented. When considering the use of direct mail to market your product or service, you should be aware of some of its advantages and disadvantage.

Advantages of Direct Mail:

Ability to target an audience
Ability to personalize a message to a recipient
Provides flexibility for conveying message and directing response
Provides the highest response rates
Provides the most effective return on investment by the use of previous buyers lists and other targeted lists.

Disadvantages of Direct Mail:

Expensive cost per thousand for advertising message
Increasing competition from other mailers
Takes time for preparing tests and running final project
Not always easy to find and maintain up to date mailing list

Marketing Campaign

Research | Testing | Results Analysis | Basic Product Offer | Back-end Promotions

The marketing campaign consists of all the planning and elements of the entire direct mail project. Some of the main elements of the campaign are research, testing, analyzing test results, selecting the basic product offer and the back-end promotions. The importance of each of the elements has been discussed below.

Research

Research has began to play an increasingly important role in direct marketing. Research and testing are often confused as being the same thing. However, they are different from each other. Testing tells you who will buy a product and what they respond to. Research tells you why they buy it. Research is an investment rather than an expense. You do not have to do research but it may be well worth it. You need to look at what the potential increase in response would be if proper research was used.

Research is used to acheive a better understanding of the prospects. It can tell us some of the following information about the prospects:

It explains why people interpret products differently than others.
Researchers learn information about the prospects, such as the type of work they do, their income, and education level.
They can learn about the prospect's interest, hobbies, and favorite sports.
Research can find out personal preferences, such as favorite foods, clothing styles, and favorite colors.

All of this information can be very beneficial in selecting the best mailing lists for the direct mail project. It helps us understand why some people will buy a certain product or service and others won't.

Research methods have been developed to assist in segmenting markets according to psychographics, demographic or geographic information. One of the research methods specifically developed for direct marketing is geo-demographics. This research method studies census data about geographic units, such as zip codes, census characteristics, or smaller units such as postal-carrier routes. It relates the geographic census data to demographic or lifestyle conditions to form clusters that separate our nation into similar groups.

Other methods of research used are focus panels, interviews and questionnaires. These research methods are ways that the advertiser can use to find out if their message is being understood and what type of objections the customer is expressing. Research can sometimes show that you are marketing your product to the wrong customers. It can provide a whole new understanding of your market and inspire new ideas that may result in a significant increase in your direct mail response.

Testing

Testing is an important part of the direct mail campaign. It helps to determine what works to get customers to respond to an offer and it tells you who is buying the product. Testing will also tell which mailing lists will produce the most responsive prospects at the least amount of cost. It is a common practice to send out several test cells before a rollout of the final project. Sending several test cells provides the advertisers with information to help them decide on the most cost effective and productive program to use for the entire project.

When evaluating the profitability of a project, you need to look at the rollout project separate from the testing. The test will be a smaller press run which will create a higher cost per item. The rollout will be a larger quantity which will result in a lower cost per item in printing and postage costs. All projected costs per response should be based on the projected rollout costs, not the cost of the test run. When requesting prices on the test runs, be sure to request pricing on the rollout quantities also. This will enable you to accurately evaluate your total projected costs.

Generally, when testing a product or service, a variety of tests cells will be sent. Each test cell will vary in some way. A different creative strategy may be used, the offer may change or a different mailing list may be tested. The variables between test cells should be kept to a minimum, otherwise it will be difficult to determine what the variable was that actually affected the difference in response.

Deciding what quantity your test runs should be, can sometimes be difficult. You don't want to send out too large a quantity because you can end up spending more than you need to gain reliable results. But if you send out too small a test, it may not be large enough to give you a true representation of what the response will be on the actual project mailing. Many direct mailers use a probability table to determine the appropriate test quantities. Statistical formulas are used to determine the data for the probability tables. Factors that the tables are based on are shown below:

Confidence Levels - How sure you are that your test results are valid.
Margin of Error - The range of variance your next results could have compared to the test results.
Sample Size - The quantity of the test run.
Anticipated Response - The number of expected responses.

The test quantity suggested on the probability table may not always be reasonable to stay within your budget but it is generally a good tool to determine a test quantity that will provide you with the response you anticipate.

When planning your test runs there are several areas that should be considered, such as production economies, list testing and strategies. Areas to consider are discussed below.

Production Economies

There are ways to gain some economies when planning variable changes in the different test cells. If you are just changing the mailing list, the actual printing of all the pieces would remain the same. The quantity of each test run could be combined, which would increase the production run quantity, resulting in a decrease in the cost per item. If the offer is the only thing that changes per test cell, then try to design the package so that the actual offer is only printed on one of the items. Then the rest of the package could all be printed the same for each test, again, resulting in a decrease in cost per item because of the increased run quantity. The only item in the test cells that would have to be produced as separate press runs would be the piece with the price offer.

The test runs shown above all have the same letter, reply envelope and delivery envelope, which all can be combined to gain efficiency in production. The reply cards for each test cell print with a different offer. They also have been designed so that only the black plate changes on each one, allowing the same colored plate to be used on all three reply cards.

When testing two cells against each other, one with an additional discount offer and one without, use an insert to state the additional discount. Using an insert to state the discount will gain efficiencies by keeping all the other pieces in both cells the same, giving you higher production run quantities for better per thousand pricing. Any time the same pieces can be used in the different test cells you will gain efficiency in the production costs.

List Testing

When testing a mailing list, you will want to be sure that you use a good representation of the entire list. Using the Nth-name samples is the most accurate way of getting a true representation of your list. To find the Nth-name samples you divide the number of names on the list by the number of of test samples being sent.

Example:

500,000 names divided by 20,000 samples = 25
The N is 25, meaning samples would be sent to
every 25th name on the list.

There are other factors that need to be considered when testing your list, such as active customers versus non-active, and hot-line buyers. For more details on list testing see Mailing Lists.

Test Strategies

When planning the test cells there are many factors to take into consideration. You need to decide how many versions you want to send, what the mailing size will be, your test objectives and what level of risk are you willing to take? When considering all of the factors, be sure to keep in mind what your budget will allow.

The biggest differences in lift factors of the test cells generally come from changes in product positioning, list changes, or changes in the product offer. Changes in the creative design do not usually produce a substantial difference in the response rate.

Results Analysis

Analyzing test results is an important part of your direct mail program. It will help you determine whether or not it will be profitable to proceed with your product rollout offer and what kind of response you can expect. The success of you direct mail project often depends on how quickly you obtain the results of your testing. It is important that the rollout take place as close to the testing time as possible to maintain testing circumstances. Waiting too long can affect the success of the entire direct mail project. Try to do your rollout within a year, otherwise it may be affected by a change in market trends, seasonal changes, or competition could step in and gain part of the market share.

Shown below is some information to keep in mind when analyzing the test results.

CPR Just looking at the number of responses received is not enough to tell you if you can roll out a successful campaign. The basis of analyzing the results is the Cost Per Response (CPR). The CPR is based on the following equation.
	Total Promotional Costs / Number of Responses = CPR
PPR The total promotional costs must include front-end and back-end costs. Some of these are costs of goods sold, mailing list rentals, creative design, printing, computer services, mailing, postage, fulfillment costs, shipping costs, credit and returns. To determine the Profit Per Response (PPR), use the following equation.
	Sell Price - CPR = PPR

Response Rate The response rate of a test cell also needs to be taken into consideration. Even though a test results in a high PPR, it may have a low response rate. You may have a more successful program by using a test package that had a lower PPR but a higher response rate. See the example below.
	Quantity	Sell Price	CPR	PPR	Repsonse Rate	Total Profit
Test A	10,000	29.95	14.00	15.95	2%	$3,190
Test B	10,000	29.95	21.00	8.95	5%	$4,475

When analyzing the test results to determine whether or not to go ahead with the product rollout, be sure to base your decision on the cost of the rollout. The test runs may not show the profit level that you were striving for but keep in mind that the rollout will be for a larger quantity which will make the cost per unit less than on the test run. Also, some of the design and production costs will already be covered in the cost of the test run so profitability from the rollout response will be higher than from the test run.

The Basic Product Offer

Generally, next to changing the product, changing the "offer" can make the biggest difference in response rates. Changing the offer by changing the price, changing the terms, offering a guarantee and changing the way the product is combined will have the most affect on the response. Some ways of changing the "offer" are discussed below.

Price

There are several ways in which the price can be offered that will affect the response. One way is to hide the price or do not state the price until the end of the message. If you have a product with a valuable new feature or service that is in high demand, you will want to emphasize all of the benefits first, before revealing the price. On the other hand, if your price is your biggest selling point, emphasize it as soon as possible. Make it very visible and one of the first points the recipient will see.

You can use comparison pricing if the price has gone down from a previous offer or if it is lower than the price of the same product sold as a retail item. The bigger the difference in price the more emphasis should be put on the comparison. Just be sure the price comparison you are stating is actually true. Using a percentage discount, such as 50% off or "Half Price" will generally drawn more attention than "Original Price - $10, now selling for $5. Also, consider showing it in terms of how much can be saved such as "Save $15.00" rather than "Now selling for $29".

When offering a new product or service, it works well to offer an introductory offer. This type of offer attracts attention and presents a form of immediacy to the offer.

Credit Sales

Offering credit is a very good way of stimulating sales but is also costly. You risk collection and bad debt problems, and the maintenance of processing, billing and postage are all added costs. Whether or not to offer credit is a decision that has to be made after evaluating how much it will potentially increase sales in comparison to how much additional cost would be incurred.

There are several ways in which credit can be offered.

"Free Trial Offer" - The product is shipped for a trial period and if not returned within a stated period of time, the customer is billed.
"Installment Plan" - The customer accepts the offer but chooses to be billed in 3 or 4 payments.
"Pre-Approved Credit" - The seller offers pre-approved credit on high priced items to people that generally have trouble getting credit. Potential prospects can be found on lists provided by local credit bureaus.
"Credit Cards" - One of the most popular credit payment options offered. It offers convenience to the customer which in return increases sales.
"Debit Cards" - As the use of debit cards increases, they will be an additional option offered to the customer.

C.O.D. (Cash On Delivery) is a form of credit in that the company will send out the product without payment but the responsibility of collection payment falls on the U.S. Postal Service, UPS or whatever carrier service delivers the package. It is another payment option for customers who do not have a credit card but is not offered by very many direct marketers because of the costs involved. It requires extensive paperwork and refusals of the product are generally numerous.

Guarantees

Offering a guarantee with your product or service is a must. You are asking them to trust you by ordering product they have never seen. You must return the trust by offering the best return or replacement policy possible. A guarantee is the best way of show your customer that you stand behind your product.

The guarantee can be unconditional, where if the customer is dissatisfied in any way, the product will be replaced or money returned to them. A conditional guarantee has some type of limit associated with it, such as one of the examples listed below.

Product must be return within a predetermined time period.
Will repair or replace item only, no cash or credit returns.
Not liable for any secondary damages. The seller would replace the product or refund the money for the faulty product but would not be responsible for any other damages that occurred as a result of it.
Not guaranteed against improper use or mishandling.

Continuity Offers

One of the most critical aspects of your offer should be continuity, but sometimes it is neglected. You should always be trying to encourage your customers to "come again" and continue to do business with you. Continuity is sometimes accomplished by offering a product as a series, such as books, tapes, videos or serialized collectible items. Another way to gain continuity is to sell product that will need replacement parts or uses consumable items that the customer would have to come back to order.

Other forms of continuity programs are:

Introductory subscription offers which lead to renewal subscriptions.
Automatic shipment plans where the customer agrees to have product sent to them monthly or at some predetermined intervals.
Club plans where a special offer initiates the membership and gets the customer to agree to buy more product in a predetermined time period.
Membership plans that entitle members to receive special discounts on products or services.

Sweepstakes

Sweepstakes can be used as part of the offer to help boost response. The sweepstakes must guarantee that all prizes will be awarded and that the customer does not have to order anything to enter. When using a sweepstakes, be sure the prize is large enough to attract attention. It takes a fairly large mailing, 500,000 to 1,000,000 pieces, to be able to offer an expensive enough prize, otherwise the potential profits may not justify the additional promotional costs. When using a sweepstake in your offer, you should consult with a contest management group because of all the legal restrictions associated with running a sweepstakes contest. Listed below are some firms that can assist you in planning your sweepstakes.

Ventura Associates, Inc.
1350 Ave. of the Americas
New York, NY 10019
212-586-9720

FAC Services Group
111 E. Wacker Drive
Chicago, IL 60601
315-938-8026

D.L. Blair
1051 Franklin Ave.
Garden City, NY 11771
516-746-3700

The product offer is a very important part of your direct mail project. It requires creative tactics to keep your offer fresh and current with the marketplace and your competition.

Back-End Promotions

The back-end promotion efforts involve the fulfillment and customer service part of your direct mail project. Your back-end marketing efforts are as equally important to your project as your front-end efforts (the direct mail efforts used to acquire the initial response). How you respond to your customer's initial response may determine whether or not they will be a continual customer.

A good fulfillment program is important to keep the returned goods rate down and to build customer satisfaction. Customer satisfaction is important because it is what builds a base of customers that will order again. Shown below are some of the steps in the fulfillment process.

Product Ordering

Product ordering would include the tools and processes set up for ordering. It would include setting up product numbers for easier fulfillment processing, designing an order form for the direct mail project that has all the necessary information needed to process the order, and complete ordering instructions that will be easy for the customer to understand.

Product Inserts

It is important to plan what type of inserts will be sent along with the product when it is shipped to the customer. The image that was used to persuade the customer to purchase the product in the first place should be followed through when the product is delivered, reinforcing the benefits of the product as stated in the original advertising. This is also a good time to do some additional selling. Include offers for accessory items or consumable supplies for the product being sent or special offers for other products. The inserts can also be used in other back-end processes, such as in invoicing and order acknowledgement.

Processing Orders

Determine what steps need to be followed for receiving, entering, filling and shipping orders. Processing of the order will be much smoother if everyone is aware of what the workflow is for order fulfillment.

Credit Checks

If the order is purchased on credit, it is a good idea to check credit before shipping the product. Procedures should be set up to accomplish credit checks and what will be the procedure to follow if bad credit is determined.

Inventory

It will be extremely important that you keep a sufficient inventory on hand to fill orders. Be sure there is a process in place to keep track of inventory levels at all times. Delayed shipments due to out of stock items will not result in a satisfied customer.

Delivery

Delivery of the product or service should be completed in a timely fashion. Decreased delivery time results in an increase in customer satisfaction. The FTC has guidelines set up that require the product to be shipped within 30 days. If not, you must notify the customer that it is not shipping within that time period and give them the opportunity to cancel the order. Even if the product is going to ship within the 30 days, sending an acknowledgement advising the customer that you received their order lets them know that their order is being processed.

Invoicing

Once the product or service has been delivered, an invoice will need to be issued to the customer. Invoicing procedures will need to be set up according to how the payments are to be made. The invoice may be for one single billing or several installment billings. In setting up invoicing procedures, be sure that they are planned so that the invoice will not be received by the customer before the product. If the process allows for a invoice to possibly be received before the product, be sure to include a message explaining that the order has been shipped and payment is not due until the product is received.

Returns and Cancellations

You need to set up procedures to handle product returns and cancellations. If it is a return, decide where they should be sent and the procedures for restocking and issuing credit. If it is a cancellation, set up the procedures to follow so that all the necessary departments are notified of the cancellation. It is also a good idea to send the customer an acknowledgement to advise them that the return was received or the cancellation was made. Inform them as to how long it may take for the credit on the return or cancellation to be processed.

Complaints

Procedures should be set up for handling complaints. How to handle different types of complaints should be made clear to everyone involved so that customer satisfaction is maintained. Customers want to feel that their problems have been handled graciously, fairly and in a timely fashion. Handling complaints properly is part of good customer service.

It will be important to plan the back-end processes with customer satisfaction in mind and to make each process as efficient as possible. Customer satisfaction is important for building return customers. The efficiency of your back-end processes will effect the overall profit of your direct mail project.

Creative Plan

Creative planning can begin once the marketing plan has been written, the product has been selected, the offer has been finalized, and the mailing audience has been determined. The first important decision that should be made is the positioning of the direct mail campaign.

Positioning is determining how you want your product to be perceived by the people. You need to decide how you want to portray the value of your product in terms of price and quality.

Is it a quality product, a good quality product or a top quality product?
Is it the lowest priced, comparable to competition, or more expensive but well worth the quality of the product?
Your product may not be the best but you want the people to think it is for the offer you are presenting.

Determining the image that you want your direct marketing campaign to portray is an important part of your planning. You should decide the basic image you want your product and company to reflect.

Some considerations that should be thought about in regard to self-image are listed below.

What type of self-image do you want the customer to have about themselves if they purchase the product or service?
Determine what needs the most emphasis. If the company is well known, then less emphasis about the company is needed. If it is a new product or improved features, then the product needs more emphasis.
If you are promoting an established product, you may want to emphasis self image, by asking "How will this make the buyer feel?" Will it boost their self esteem? Make them feel younger? Make them feel they are making a healthy choice or that they are helping others?

It will be important to get the right balance between product, company and self image to create the overall image you want to portray.

In addition to creating the right image, there are several other elements that should be considered when planning your creative strategies. Some elements that should be considered are shown in the chart below.

Elements of Creative Strategies
Target Audience	Look at who your audience is and determine the best way to get the attention of these people. Appeal to the needs of your audience by addressing their emotional and physical needs.
Product Presentation	Become familiar with all aspects of your product, such as physical, historical, scientific, emotional and psychological. Select the attributes that will appeal most to the particular audience you are targeting. Dramatize and sell the benefits of these attributes.
Attention Keepers	Once you have gotten the attention of the prospect, you need some creative strategies to keep their attention long enough for them to get the entire message. Hold their attention with entertaining copy, personalization and play devices, such as tokens, stamps, stickers and peel-off labels. Give the message value by adding a coupon, a coin or a free sample.
Convenient Response	Be sure to make it easy to respond or you will risk loosing their attention. Make sure all directions are easy to follow and any guarantees are easy to understand. Be sure the response piece has adequate room to fill in information. It should be easy to detach and easy to return. Using a business reply card is simpler than a reply envelope but if confidential data is requested, an envelope will provide protection for the customer's information.
Immediacy Techniques	Immediacy can be used to stimulate response time. Immediacy can be expressed by the use of urgency in the copy. Using command copy, such as "Order Today!" or "Order Special Offer Now!", will stimulate a quicker response. Another immediacy technique is to set a deadline for when the offer expires.
Immediate Delivery	If using immediacy as a part of your creative strategy, be sure that the product is sent out with the same urgency. Immediate delivery of your product is good customer service and will pay off in the long run.
Product Credibility	Prove credibility of your product or service. Indicate if your company is well known. If it is a new company, make a statement to show company dedication. Indicated if the product has been selling well and include endorsements by celebrities and corporations. Also include testimonials by previous users and product guarantees.

When you are determining the creative strategies that you want to use, a written plan should be made of all your decisions. A creative strategy plan should be written for each project. The plan can then be used to show to the customer so that they can determine if they agree on the strategies. Once the strategies are agreed upon by the customer, the written plan can be used by everyone involved in the creative process so the strategies are maintained through out the entire project.

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