Testing Crucial for DM Worldwide
Recently, a multinational marketer tested payment options in Japan. All his previous mailings had a credit-card-only option, but on a new rollout he picked 10,000 names from each of three lists, offering an alternative payment method - the local postal payment transfer form.
Results were astonishing. For every four orders received on the credit-card-only offer, there were 10 orders on the credit card/postal payment transfer version.
The test drew 2.5 times as many orders - with a small value difference of less than 1 percent - and when given the option, only a small portion of the responders used a credit card.
Test results were not inconsistent with the experience of other mailers but ran counter to a broad survey commissioned by several Japanese DM firms that seemed to indicate there was no difference in performance based on payment methods.
Quick moral of the story: Testing payment methods was a good idea before the Internet, and it is still a good idea today. Second moral of the story: Just because a payment method works with a particular offer and package does not mean it will always work, even with the same product, on all packages and offers, or for the same marketer.
A fundraiser in Hong Kong generated spectacular increases in income simply by testing different appeals at different times of the year.
By making a separate appeal, which was different from the standard appeals that had worked over the summer, this direct marketer achieved a 23 percent increase in overall donors and a 53 percent increase in the average donation amount.
While everyone likes to think they remember the rules of frequency, offer variation to the same audience, etc., it is easy to get lulled to sleep when enjoying extraordinary response rates. Moral of the story: Even with a wildly successful program, testing can generate even better returns.
A third U.S. company tested the power of phone over mail in bringing in new orders in Japan, using methods developed in the United States over the past 20 years. The test goal was to determine whether orders could be driven to fax, Web site or mail.
There is about a $10 difference in order capture cost - in other words, getting someone to fax an order or e-mail instead of using a live operator has huge cost savings potential.
For the test, the only change in a six-component 6-inch-by-9-inch package was the elimination of the call-to-action section of the order form, eliminating the phone icon and the invitation to call the phone number 24/7 in three small lines, taking up a 2-inch-by-0.5-inch space.
The results were compelling. The overall response rate on the package with the small phone icon was 1.7 percent with an average order size of 12,176 yen. Without the phone icon, the response rate fell to 1.24 percent, with an average order size of 12,543 yen (approximately a 3 percent difference - about a $120 order vs. $124).
A further look at the response numbers was even more telling: In the A portion of the list, with the telephone icon, 560 respondents used the phone. In the same mailing, 121 people used the fax option, and 169 mailed their orders.
Simply by removing the phone icon, the number of phone respondents dropped to 239. The fax count increased to 208; and amazingly, the by-mail count was almost identical at 171. How often has a mailing gone out inadvertently leaving off the simple call-to-action of a telephone number?
While it can be problematic to keep track of various test cells, and it adds to the cost of a promotion, testing consistently holds out the best return on investment in direct marketing, everywhere in the world.
• Jonathan Lambert is president of Acton, Lincoln, NE, an international DM firm.