How To Optimize Campaign Results and Ensure a High ROI

by Susan Allocco

To optimize campaign results you have to track and test results. Testing allows you to find errors on a small scale and make corrections before rolling out the entire campaign. If you're planning, for example, to mail a sales letter to 100,000 names, test it with a mailing to a smaller audience of perhaps 5,000.

According to Claude Hopkins, test results will closely mimic those that the campaign will generate. So, if a test mailing to 5,000 names generates new customers at a cost of $25 each, the same cost per new customer will hold true when you mail to all 100,000 names.

If your cost per new customer is too high, you have an opportunity to make changes and continue testing until results are optimized.

"The more test results you have, the more sound your decisions"

- Danny Hatch

The most important elements to test are the mailing list, offer, headline, envelope teaser, and guarantee.

Start with the mailing list. It's the most important variable to test. Why? Because if your package doesn't reach your target audience it will fail no matter how great the copy may be. If, for example, you sell anti-aging skin moisturizer for women over 40, and 75% of your list is 20 something females, the mailing will generate little to no sales.

According to Steve Roberts, CEO of Edith Roman Associates, when testing your list:

o Use the same quantity of names for every list you test. Often this means 5,000 names, since many list owners will not rent smaller quantities for testing.

o Use your own customer file to profile against prospecting lists. Segments that have the greatest match are most likely to produce the best response.

o Always test the hotline names, the most recent segments of any list, first. If they don't work, no segment will.

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"Make your offer so great that only a lunatic would refuse to buy"

-Claude Hopkins

The second most important variable is your offer. In fact, the offer is so important you should spend at least as much time on it as you spend on your headline.

Gary Bencivenga suggests trying free shipping, free sample, free trial, free information, free estimate, free consultation, free gift, and free "money" from coupons or discount certificates. The one constant is the word "free". Giving away something for "free" reduces your prospects' risk, making it easier for them to say yes.

Clayton Makepeace takes it one step further. He suggests you test at least one component of your offer in every mailing. You can test your premium titles, payment options, and guarantee (for example, should the guarantee copy be longer or should the guarantee itself be stronger).

80% of the Sale is Your Headline

The headline is responsible for bringing your prospects into the piece and can have a tremendous effect on the results. Its sole job is to grab the reader's attention and get them to read the body copy.

While most copywriters believe that the headline is 80% of the sale in direct mail, that's only true in space ads. In direct mail, according to David Ogilvy, your format is even more important than your headline.

"Tests have shown that varying the outer envelope can increase or depress response rates by 25% to 100%"

- Bob Bly, Copywriter

In addition to testing two different teasers, you can also test a teaser against a plain envelope. Also, don't forget the back of the envelope. That's expensive real estate that could also be used for copy.

Testing Methods

There are two types of testing. A/B split testing and the Taguchi Method.

Using direct mail as an example, A/B split testing is done by sending out two letters, sometimes simultaneously, to test one element of the letter.

Perhaps letter "A" is testing one headline and letter "B" is testing another. The letter with the headline that generates the most responses becomes the "control". Other elements of the letter, such as the offer, can also be tested against the control. The best pulling letter becomes the new control.

As you can see, A/B split testing can only test one element at a time. The Taguchi Method, on the other hand, tests multiple elements simultaneously. It finds which combination of the different elements will have the strongest probability of pulling the most responses. According to Forbes, Dell, Inc. used The Taguchi Method for an e-mail campaign with 11 different ad elements and 10,365 possible combinations. The Taguchi algorithm selected 18 of the combinations.

Randomly selected e-mails were then sent to 18 test groups consisting of 2,000 people each. The response rate was analyzed and the most compelling features were used to create an e-mail that was sent to 150,000 customers. ¹

Unfortunately, The Taguchi Method is expensive, costing up to $150,000 per project.

Analyzing Results

The following are the basic formulas you can use to analyze your campaign results:

Cost per Lead

How much did each lead cost.

Formula: Total cost of the campaign divided by the number of leads generated.

Conversion Rate

Determine how many leads converted into sales.

Formula: Number of sales divided by the number of leads.

Cost per Sale

How much did each sale cost.

Formula: Total cost of campaign divided by number of sales.

ROI (Return on Investment)

How profitable was the campaign.

Formula: ((Total number of pieces * response rate * conversion rate * average sale amount) - total campaign cost) / total campaign cost.

The importance of tracking and testing results can not be overstated. Once the guesswork is eliminated you can optimize the results from every marketing dollar you spend, justify your budget -or a budget increase - and become your CFO's best friend.

References

¹Kellner, Thomas, "Reengineer That Ad ", Forbes, 23 May 2005, 89-90

Susan Allocco is an independent copywriter with over 20 years of experience helping companies succeed through direct response marketing programs. She can be reached at 212-986-6961, Susan@MarketingRenaissance.com, or visit her website at www.MarketingRenaissance.com