Telemarketed Upsells Add to s DRTV Campaign's Profitability
"You shouldn't go on TV without thinking about back-end opportunities," said Andy Nelson, president of Real Marketing Services LLC, a 260-seat teleservices firm in San Diego. "You should be looking at membership plan offers, and continuity opportunities. A standalone front-end success is getting harder to find, but there's a lot of money in the back end."
One of the most popular, and potentially profitable, upsells for DRTV marketers these days is a buying-club membership. When viewers call to order a product they see on TV, they are offered membership in a club that provides them with discounts on goods and services that may be related to the TV product or match their demographic profile.
"Ninety percent of our inbound clients have a club offer," Nelson said. "It's a very popular up-sell because it can be extremely profitable."
For DRTV marketers, the best part of offering membership clubs is the extra money they can earn from those upsells. Membership companies pay marketers in the range of $2.40 to more than $5 for every time the upsell offer is read to a caller, Nelson said.
If the caller is converted into a customer, the membership company may pay $10 to $18 a conversion depending on the volume, he said.
The extra cash can be pocketed as profits or plowed back into more airings of a spot or infomercial. Membership marketing companies such as Cendant Corp., MemberWorks Inc., Nova Inc., The Signature Group and Triad Discount Buying Service Inc. all offer money to DRTV marketers who include a club membership in their menu of upsells.
"It's a excellent way to help partner in a new promotion," said Andy Siegel, senior vice president of business development at MemberWorks Inc., Stamford, CT. "It gives the marketer a whole new revenue stream."
Before joining MemberWorks this year, Siegel worked for the DRTV marketing division of Good Times Entertainment Inc., New York, whose most popular infomercial is one for Richard Simmons' exercise programs.
MemberWorks's net income grew 275 percent to $2.2 million on revenues of $56.4 million during the first quarter. Stock analysts expect the company to continue to grow its revenues at a 40-percent rate for the foreseeable future.
DRTV Callers Like Clubs
Siegel said membership marketing companies have been drawn to the DRTV industry because consumers who buy from television make good prospects for discount buying clubs.
"The DRTV community acquires customers that are very open to new products and new programs," he said. "Discount buying clubs fit that kind of buyer who is looking for new value, which is something the infomercial community tries to offer. The DRTV community creates a highly motivated customer - that's what makes them so attractive."
The company's various membership plans are geared for specific kinds of buyers. Callers who order a diet and exercise program or weight-loss equipment are offered membership in clubs that provide them with discounts at local retailers on clothing or related products.
"For female-oriented health and fitness customers we have a program called Essentials," Siegel said. "It's a discount buying club that addresses fashion, health and beauty. Members get 20 percent off at Dayton's, Marshall's and Nordstrom's, which are really strong identifiable brands."
There are also clubs for dental care, healthcare, entertainment, grocery rebates, travel and leisure, among others. Usually, a club membership costs a consumer $5 to $6 a month. Siegel declined to indicate the range it was willing for pay DRTV marketers for per-read and conversion fees.
He said the company is currently in negotiations with Internet retailers to develop clubs that would appeal to customers who may be interested in shopping online.
Nelson at Real Marketing Services works with several club companies both on inbound and outbound upsells. He said that club offerings can be a win-win situation for DRTV marketers, membership companies and consumers.
"Consumers get discounts on things they want, marketers get the chance to make extra profits on the back end and membership companies get members and advertising exposure that works better than if they were advertising on their own," Nelson said.