Category Archives: Direct Response

Improving the response rates in every direct marketing medium: Print, Online, Direct Mail and Broadcast

Scrutinizing the long tail of Halloween

Jon Krouse is in a perfect position to help me test a hypothesis about long tail behavior. A co-founder of (a rare success story among regional online communities), Jon recently joined This is the world’s largest online retailer of costumes. As you can imagine, the month of October is major crunch-time for him.

Nonetheless, when I instant messaged him the other day to see if I could test an assertion from Chris Anderson, Jon was willing to help. Anderson is a Wired editor and most notably the author of The Long Tail. He contends that for companies with virtual inventories, just about any item they post for sale — no matter how obscure — will sell (i.e., be downloaded for a price) at least once every three months or so. Using sales statistics from, he made it sound like this was nothing short of an immutable law.

That’s for virtual inventories. Anderson admits it’s a little trickier for companies with real ones. That’s the case with BuyCostumes. I’ve visited their warehouse, which stores over 13,000 very real SKUs. Yow!.

Companies like this must mark down some items teetering at the tip of the tail before they finally sell. Carrying costs are a constraint that virtual inventory merchants simply don’t have. But the fact is, even real inventory items sell with some price manipulation. Or so Chris Anderson contends. I wanted to know for sure, and asked Jon.

He reported that minor adjustments to price do indeed make the most obscure costumes and accessories sell. Sure, there are the rare dogs, but priced properly, nearly all SKUs generate profits. This is huge, because the number of items offered is a precedent for the industry.

Imagine how many items a bricks-and-mortar costume shop can physically stock. Now consider that at one time quite recently, conventional wisdom was that no one wanted more selection than could be held on a really well-stocked costume shop’s shelves. Or, for that matter, in music store’s bins, or along a bookstore’s stacks.

The web, with its power to categorize, search and suggest, has exploded that myth. Which would mean little to a company like Jon’s if the demand for these products wasn’t so large.

How many sales are anticipated in the next couple of weeks for this humble little online costume shop?

“At our busiest, we’ll be doing 20,000 orders a day*,” Jon reports. Tune in November 1 to see a photo featuring the costumes that my wife and I chose and wore at Jon’s Halloween party, the first in his and Peggy’s new home. 

*It never hurts to advertise. BuyCostumes has major private label deals with major retailers, plus an effective search engine optimization and pay-per-click advertising strategy in place.

Commerce sites ignore branding at their peril

Real estate on a web site is precious. That’s one reason why many e-commerce sites cram as much merchandise as possible into the home page. You can’t blame them. Shoehorn one more offer onto the page and you see sales of that item go up. But does this practice erode overall sales?

The research of Kevin Hillstrom looked at overall sales from pure selling sites (example) vs branding sites (example) vs hybrids that split the difference (example). The sites evaluated were those taken from the largest businesses represented in the Internet Top 500 retail sites.

I was most interested in how hybrid sites would fare in the study. Although these hybrid sites featured home page offers, they also used much of its real estate to reinforce the brand. White space was more common, and often these hybrid sites didn’t even require you to scroll down to take in the entire home page.

A business that regards its e-commerce site as nothing more than efficient catalog would argue that the hybrid site approach is misguided, since it is not focusing enough on specific offers. But do the numbers bear this out?

The conclusion from this study says no, although it does find weakness in a pure branding approach to the home page:

It appears likely that a hybrid strategy is most likely to maximize the net sales of each visitor to the website. Selling sites may overwhelm visitors, while branding sites may not present enough merchandise to entice consumers.

Many have preached this hybrid approach, but it’s nice to see this validation. It only stands to reason that consumers need to know two things before they buy:

  1. What are you selling?
  2. Are you to be trusted?

Raising levels of trust, through your site’s branding, is the best way to maximize sales in an environment where competitors are only a mouse click away.

How does your email performance stack up to others in your industry?, an email service provider (ESP) owned by Harte-Hanks, has released a benchmarking tool for consumer and business-to-business emailers. One of the more useful findings is the comparative click-through rates by industry, ranked best to worst:

  • Restaurants: 57.5%
  • Publishing: 55.6%
  • Pharmaceutical: 23.8%
  • Travel and hospitality: 23.4%
  • Conference events: 14.2%
  • Financial services: 11.0%
  • Technology: 10.9%
  • Government: 9.5%
  • Insurance: 9.5%
  • Consumer packaged goods: 8.6%
  • Entertainment: 8.1%
  • Retail: 6.0%
  • Automotive: 5.7%

As you look this list over, it shouldn’t be a surprise that all of the business-to-business (b2b) emails are at the top. Business people are paid to, among other things, keep abreast of news and opportunities. The emails they opt-in to receive help them fulfill this duty.

On the other hand, consumers will be less willing to open a typical email and dig deeper with a click. Overall, emails in the b2b sector had clickthrough rates and open rates of 19.9% and 78.9% respectively, while those sent to consumers generated 11.2% clicks and 67.7% opens.

This is all according to Harte-Hanks, mind you.

As with any secondary research, you’ll want to use the figures cautiously. For instance, I suspect that the company excluded many unsuccessful campaigns from their findings, in order to sweeten the report. It is, after all, a report card of sorts.

What if this ESP was instead selling weight loss programs? I imagine we’d be seeing their customers, of all stripes, dropping the pounds to a degree that might make you concerned for their collective health. (Note: Melinda Krueger thought these figures seemed high as well. Her Comment below explains what she learned when she followed up with them).

But for the sake of comparison, these figures can help. Tempered with a degree of skepticism and your own email track record, they can show you how your enterprise compares with others in your industry, and with the medium of email marketing in general.

Email newsletters still excel at customer retention and cross-sales

With all the recent noise about new online communication tools such as user-generated content and pushing content through RSS, we shouldn’t forget that some tried-and-true tactics aren’t going away any time soon. Take the the opt-in newsletter, particularly one that is customized to a recipient’s specific interests and tastes.

I challenge you to name an online tactic as powerful as a well-done opt-in email newsletter to draw visitors back to a web site or drive sales across a company’s complementary product offerings. This technique truly has legs.

Sure, it’s easy to see where email newsletters work in categories such as online fashion apparel and leisure travel. After all, is there anyone who hasn’t opted-in at one time or another to a travel site’s “hot deals” email?

But a truly enduring marketing tactic has the ability to surprise us — to show up and shine where we’re least expecting it. The email newsletter certainly has done this for me.

To my knowledge, one of the most effective opt-in newsletters around is in a category of services that no one ever wants to use. That category is healthcare.

Private Health News provides private labeled emails that a hospital or other care provider can use as a way to deliver news about its own offerings. What makes this newsletter so effective is the the fact that consumers truly appreciate receiving it. That’s due to theses two factors:

  • The content is customized
  • The content is trustworthy

Consumers sign up for it by visiting the site of the provider (let’s say it’s “General Hospital”), and then selecting topics of interest. This customization makes the newsletter unique to each households’ needs, with a selection of over 25 health topics from Blood Pressure to Breast Cancer, Sleep Disorders to Stroke Rehabilitation.

When the newsletter arrives, it reports the latest research, originally seen in articles from over 350 prestigious healthcare publications. The publications include the Journal of the American Medical Association and Lancet. Interspersed with the news — which, mind you, is tailored exactly to a recipient’s current health concerns and interests — are brief bulletins and ads about General Hospital events and offerings relevant to that topic.

For instance, along with a Men’s Health article there might be a notice of a free prostate cancer screening held at the hospital in three weeks, along with a link to the place on the General Hospital site where you can sign up or get more information.

I first met Dan Ansel, the president of Private Health News, six years ago at a healthcare marketing conference in San Diego. When he described his fledgling product to me, I immediately saw how this was the part of the puzzle I was struggling to deliver to my healthcare clients.

Dan’s product was a way to ensure that the valuable minority of consumers who visit my clients’ sites — and care enough about their families’ health to be proactive — can receive, every month, several excellent reasons to come back for more information. In other words, it was a way to retain prospects and patients, and to cross-sell to them wherever appropriate.

Has it worked? My experience and those of my clients says it has. What’s more, Dan has made sure to periodically survey newsletter readers, to get the user’s perspective on its effectiveness. Here are a few of the results of his latest survey, which had a sample size of 10,157 newsletter subscribers:

  • 99% consider the health information in their newsletter valuable, with 25% saying it was “very valuable”
  • 75.6% have the health issues to which they subscribe or are making decisions for loved ones with those health issues
  • Respondents are making healthcare decisions for an average of 3.3 people
  • 67% indicate a new awareness of the provider’s services as a result of receiving their newsletter
  • Over 13% have used these services because of that awareness

That last metric is the one that always blows me away. Every time the survey is conducted, more that one out of every ten people surveyed said they used a hospital’s services because of awareness they gleaned from the newsletter.

If only half of those people are telling the truth, that means over 600 individuals in this relatively small sample went to the provider of the newsletter for a possibly very profitable high ticket item, all thanks to an email newsletter.

I’ll be returning to the wonderful marketing double whammy of customization and credibility in future examples of online marketing excellence. But I’m not sure any other online technique I’ve encountered has the same high level of ROI as this surprising opt-in newsletter that sells people services they would prefer to never think about getting in the first place.

Is there a future in reaching professionals through their PDAs?

I could have called this entry “Why I own two Tungsten C Palm Pilots.” The short answer is marketing to physicians.

By the way, the answer to the inevitable question “Why two?” is I use one of this pair of identical PDAs as a sort of software tester and back-up, and the other to manage my life (or attempt to).

Physicians are a market that I frequently help my clients reach. They are a difficult market, since they are extremely pressed for time and suspicious of anyone who they perceive is “selling something.” And who can blame them?

I had always been curious about whether technology can help attract this group’s attention and ultimately win their trust long enough to decide on a trial of what we were selling. Three years ago, what we were selling was a respected but underutilized Heart Center in Southern California. We knew that once referring physicians (mostly primary care specialists) sent a patient or two our way, they would likely be pleased with the results and become loyal advocates of this center.

The biggest barrier to trial was perceived distance. Although the center was not located far from our targeted physicians, it wasn’t one of the closest to them. This drive time objection was exacerbated by the major rush hours of the day.

Research at that time told us that the PDA (led, then, by the higher-level Palm OS devices) had high adoption rates among our physicians. They used their PDAs daily, to prescribe, research, review diagnostics and in other ways accelerate care. (The trend continues, with publications such as MedPage Today offering education and CME credits via the three major PDA platforms).

That led to us developing a small Palm application and corresponding Excel macro, both delivered in a direct mailing that these physicians could not ignore. The program allowed these physicians to tap in a patient’s home or work ZIP code and see the actual drive time to our heart center, shown in minutes. To more accurately simulate reality, a sliding bar could adjust for mild, medium or heavy traffic conditions.

Sadly, we never got to launch this application and test its effectiveness. But it illustrates a valuable lesson: The only hope of marketing to the professional (of any stripe) through her PDA is to help her do her job better.

To my knowledge, this is still completely uncharted territory. But with PDA adoption rates continuing to rise, the concept seems more appropriate than ever. 

Quad Graphics buys a cool company

Success begets success. So I was not surprised when I learned this week that Quad Graphics has purchased a controlling share of OpenFirst. The company provides direct mail and digital printing solutions, but what has impressed me about them, ever since they formed ten years ago (under the name EPS) is their slavish devotion to database integrity.

I met the company’s president and CEO, Robert Kraft, shortly after they opened their doors, and what wowed me were stories about how they convert, merge and scrub the databases they use … as well as other ways that they use data, which I’ll get to in a moment. It should be common sense, but the programming and safeguarding that Robert described to me was something so thorough and ironclad that one might think he was talking about a nuclear power plant instead of a digital printing company. The reason for that is their chief technical officer, Chuck Olszewski. He’s an engineer who came to OpenFirst from the nuclear power industry. The guy is trained to prevent meltdowns … Exactly what a pricey and time-sensitive direct marketing program needs.

Okay, I know I’m gushing a bit, so I’d better give you an example of what impressed me back then, and still blows me away today. OpenFirst uses something called dataglyphs for at least one of their direct mail clients. It’s a way to embed a great deal of data, encrypted in a photograph or other screened graphic. This data is invisible to any observer other than a properly tuned scanner. To you or me, the photo looks perfectly normal.

What’s more, if you tear, stain or otherwise damage the image, you can still retrieve the data. Check out this dataglyph demo from PARC Research. You’ll be invited to use Photoshop, Paint or some other program to compromise the graphic that you create, and then see how accurately it pulls out and reports that graphic’s hidden contents. Incredible!

This application, which was originally created for the whole cloak-and-dagger-cold-war-passing-of-secret-information thing, is used by OpenFirst for a client who needs to get back from consumers information about them that is only available for use once the consumer has responded to a mailing. It’s a long story about how mailing list companies only consider their client owners of their data once the people on the list respond the direct mail message, but suffice it to say that this clever and private passing of data saves mailers a boatload of money.

And hey, it’s really cool.

Congratulations to OpenFirst. You’ve earned this opportunity to make yourselves and Quad Graphics shine even more brightly!

Make email copy long enough to tell the story

Legend has it that President Lincoln was asked how long a soldier’s legs must be to qualify for his Union army. His answer: “Long enough to reach the ground.” Whether this is true or not is unclear, but the truth behind it can be applied to a subject of heated debate: The copy length of marketing emails.

Melinda Krueger’s latest column addresses the debate with an extremely well-reasoned approach. She writes:

Use as much copy as needed to give readers all the information they need without a preconceived notion of what the “right” amount is. In some cases, you will get fewer clicks but more conversions (sales, donations, leads) from more copy-intensive e-mails, as they deliver more pre-qualified buyers.

She goes on to provide great tips for breaking up longer email copy to make it seem less daunting. Her point is right on, though. Don’t fret over the length of your email copy. Instead, make sure it is optimized for clarity, brevity (to the extent possible) and excitement.

Finally, don’t forget to test, test, test!

A textbook offline / online marketing effort

I’m coming back into the swing of things after a week of vacation. During it, I was struck by the absolutely textbook example of driving folks to a web site from a print ad. The business is Angie’s List.

The uninitiated can read about them on their site, but what is impressive about this organization is that it is publicized by ubiquitous (and I’m sure quite pricey!) newspaper display ads. Featured in both local and national papers, they clearly are successful or they would never be continued.

My only critiques are that I would do a better job of tracing visits back to the source, so I could see exactly which papers pull the best. This would be accomplished with unique URLs. Also, I would test other ad sizes and approaches (they may be doing this already). Overall, this is an excellent campaign supporting an outstanding service.

The case for long vs short direct mail copy

I recently did some digging to help make a case to a client that the direct mail effort we were discussing should be a letter and not a postcard. It was an interesting exercise, because I’ve been having this conversation with clients for more than 20 years. Then and now, they distrust long copy. “I wouldn’t read something that long,” is a frequent refrain.

Little has changed since the last time I needed to gather evidence for the letter format, back when we all got a lot more direct mail. The reasons for this format’s success can be boiled down to:

Credibility: A letter, because of its “gravity,” stops people. They pay attention. Especially if it’s signed by someone they know, or by an authority figure they think they should respect.

Novelty: Then and now, a truly well written direct marketing letter is novel. People give it a chance.

Laziness: This one you need to think about for a moment. If you have a letter that is properly constructed, it is scannable. You don’t have to read every word. Usually, short copy is harder to scan, and easier to dismiss. Paradoxically, good letters can actually encourage the sort of grazing that we all do with our print media.

Drama: Nothing sells like telling a story. And you can’t do that with short copy.

Of course, if you’re selling something that isn’t truly a considered purchase, go with the postcard. Or if the offer is clear enough to spell out in a paragraph, do it. But even then, you may want to test a long-format package to run against it.

Because, believe me, the long-format letters have been tested against shorter packages again and again. It’s sheer economics. And yes, sometimes they lose. But it’s surprising how often they out-pull the postcard mailing by a mile!

What monkeys can teach us about offers and pricing

Earlier this month, research that I had come across a year ago, in The Economist, received additional attention in Seed. This study of the economic behavior of capuchin monkeys suggests that the human response to various pricing strategies has been in our DNA for a very long time.

When these monkeys were trained to use special shiny disks as money (which could be exchanged for pieces of their favorite fruit), they tended to behave with this cash in exactly the same ways as us humans. In fact, looking only at the data, you would be hard-pressed to differentiate a human consumer from one of these monkeys.

The research sheds light on behavior that marketers have puzzled over, and exploited, for generations. These include:

Why are “premium” test offers so much more likely to out-pull non-premium packages in direct response, even when the price of the offer covers the cost of the premium?
Answer: We all love getting a free “bonus” with our purchase.
Why are gambling games with some of the worst odds, such as lottery tickets and slot machines, also among the most popular?
Answer: They give the player small rewards more frequently, and keep our losses incrementally small.
Why are bonds more popular than stocks, in spite of the latter always performing better over the long haul?
Answer: We are loss-averse, and would rather guard what we have than take short term risks for long term gains.

What do I mean by loss-averse? Human experiments in game theory have repeatedly shown that in two scenarios — one where (for instance) we lose half of our transaction every third time we trade, and another where we double our transaction every third time we trade — we tend to choose the second set of trades more often.

Even when the equation is altered significantly to favor the first set of trades over the long run, we still favor the occasional free prize over the less likely loss. It’s simply human nature. Now we know the same rules apply to capuchin monkeys. Go figure.

Parenthetically, there is one other way that these monkeys seem to be behaving a lot like humans. Last year I read an account of this study in The New York Times. There I read that these researchers witnessed what was “probably the first observed exchange of money for sex in the history of monkeykind.” Keith Chen, the Yale economist behind this study, said that he noticed the exchange out of the corner of his eye. Although he wanted to think skeptically, that the trade was coincidental, he conceded that “The monkey who was paid for sex immediately traded the token in for a grape.”