Is there a way to spend less and sell more? – Part II

Posted by Rick Rappe
November 30th, 2012

In Part I, I introduced the concept of spending less to make more sales with your direct marketing or direct mail program. So much for the 20,000-foot view: in Part II, I’m giving away more free ideas to make it happen.

Seek efficient production and fair prices.

Next take a look at what you’re sending out and determine if there are opportunities to cut costs in ways that won’t hurt your performance. Competitively bid out your programs to make sure you’re getting a competitive rate from your agency and suppliers. Have production experts review your package formats and make recommendations about how to tweak your packages for lower costs.

Increase performance, and decrease volume.

Assuming you’re paying competitive rates, the biggest driver of cost for direct marketing is volume. So to send out fewer pieces and increase your results you have to make informed decisions and change your approach. Some of your programs should be cut completely and some should be increased.

In almost every program I’ve reviewed there are opportunities to increase performance through better targeting or market segmentation, better offers and offer positioning, better formats, better creative, better timing, and faster implementation of key learning.

If you’re not sure how to find the opportunities for higher performance, give me a call. Based on hundreds of successful programs and thousands of tests we help our clients identify opportunities and develop a plan of action to identifying the BEST solutions.

Build a performance-driven system.

Once you have identified ideas about how to change your targeting or packages to improve performance test them against your current approach to make sure the changes accomplish the results you need.

Too many marketers try to rely on gut instinct and guesses about what the market will react to. Or they chase after the current hot marketing fad. These companies “spray and pray” marketing into the world. In some cases they get decent results, but more often than not they are leaving loads of money on the table.

Entrepreneurs test and learn how to create profit, and then they repeat the successful approach as much as possible. And the most successful direct marketers take this mentality as well.

So make sure you have a performance-driven, test and learn system. Why? Because optimization and improvement of direct marketing performance comes from testing and reading results.

To build a performance-driven system you have to be able to answer key marketing questions like:  Which offer works the best? Which list segments respond the best?

It starts with the ability to run experiments (aka testing). Through efficient testing practices and accurate measurement you will increase your direct marketing IQ and understand the BEST way to motivate your market to action.

Implementing a test and learn approach may increase costs initially. And the additional cost may be a hard thing to sell internally during budget season. But once your management team see’s the impact on ROI, they will become believers and testing and analysis will become one of the most important parts of your process.

Refine your testing strategy.

If you are using testing to improve your performance, good for you! Next take a closer look at your testing strategy. How much of your programs are devoted to testing? Are you testing too much, or too little to achieve what you really need to accomplish in the year? Are you testing whispers? Are you testing enough big ideas in all areas of your program to make meaningful improvements, and to find breakthrough performance?

So, YES, there a way to spend less and sell more.

Keep your team focused on the right key metrics – cost per sale, ROI and profit. Watch your costs, but focus on testing big ideas to increasing performance so you can make informed decisions about how to reallocate your total budget to more effective tactics. And make sure to test and learn. Move away from guessing and build a performance-driven approach to truly optimize your results.

I’d love to hear your ideas on this topic. What’s your approach? What else do you think about when you’re faced with cutting costs and increasing performance?

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