You need to be the best business-to-business client you can be. Here’s why.
First, the programs you develop will perform better. Second, you’ll be able to develop programs faster, with fewer false starts and rework. And third, you will be able to control budgets and drive down cost. You’ll also get more done in less time and suffer less pain in the process. Here’s how to get there:
1. Great clients control BTB programs with written plans. They get formal approval of the plan inside their companies first. Then they use that approved plan to start the project with their agency or vendor. A well-developed plan keeps the agency on track and reduces the chance of a false start.
The other major cause of rework is the client’s internal review process. Without a written plan, review is subject to whim and personal opinion. A written plan that has been approved produces more common understanding of the mission and less second-guessing.
2. Great clients know that most BTB marketing communication plans are not enough. These plans typically are created for the development of advertising and collateral, and they don’t have all of the information required to do great direct. They know that for each campaign, they must: define the direct marketing mission – how many inquiries, qualified leads and sales are required to hit target; keep the DM mission clear and focused; control output with input; and manage expectations.
3. Great clients control programs with “allowables” – allowable cost-per-sale, cost-per-lead, cost-per-inquiry, cost-per-something. Setting the allowable for any campaign is the best way to control expectations and put continuous pressure on cost reduction. Let’s look at how that might work.
· The wrong way: Assume a mail campaign with a budget of $100,000 and a response target of 2 percent. As you see in the first chart, by setting the 2 percent target, you don’t know what your cost-per-inquiry might be and you have no idea how many inquiries you’ll receive. If the package mailed for $1, you would generate 2,000 inquiries at $50 each. When costs increase, cost-per-inquiry increases at the same rate, so a $2.50 package would generate a cost-per-inquiry of $125 and the quantity would fall to 800. The agency would consider this to be successful, but sales would be crying for leads.
· The right way: When you set an allowable cost-per-inquiry, there’s no place to hide. Now assume a budget of $100,000 and an allowable cost-per-inquiry of $80. To succeed, the campaign must generate 1,250 or more inquiries. The response rate required to hit target is determined by the cost-per-package. If the agency comes up with a $1 solution, they only need to hit a 1.25 percent rate to succeed. If they come back with a $3.50 solution, they must hit 4.38 percent to make plan.
Setting the allowable puts pressure on them two ways. First, there is constant pressure to improve response performance and, second, there is constant pressure to reduce cost. Do they really think a #1 stock is necessary when response rates must rise 75 percent to justify the expense? Or will #3 stock do?
4. Great clients rationalize the plan. In this era of cut and paste and multifunctional teams, you often get information and direction from many people with very different agendas. You must ensure the information in your plan is correct and non-conflicting before you submit.
One client I worked with set a target of 2,000 new customers for the year. Its target market was established as the Fortune 500. You can’t get 2,000 new customers from a target group of 500. (Here’s what happened: Sales set the list targeting, finance set the sales targets and nobody rationalized the conflict.) When you don’t rationalize the plan, you look stupid.
5. Great clients manage the back end very tightly. When campaigns fail, it’s not front-end performance that’s to blame, it’s usually poor integration with back-end lead management, fulfillment and selling systems. Great clients put primary responsibility on their agencies or vendors to hit the allowable. They then spend more of their time managing back-end processes to ensure nothing breaks. The agency can’t do it – other than Web lead trapping they don’t have access – and frankly, it’s not their strong suit. Only the client can do this well, so do it well they must.
6. Great clients test aggressively. They know it’s the only way to drive down the allowable. Remember, in the DM world, the customer is always right. Research can’t predict future performance. The only way you’ll know what’s right is to ask them for money, time or consideration in the real world.
7. Great clients keep detailed performance records. Detailed performance records are how you manage to an acceptable allowable. You’ll also find that the programs everybody “loves” are often poor performers or that your best performers often are hated by one and all.
Detailed performance records are the only way you’ll get permission to run high-performance programs and drive down the allowable.
For charts, click below:
http://www.dmnews.com/pdffiles/hackerchart.pdf
