RedFrog Communications has expanded its investor-sponsored direct marketing programs to include door hanger campaigns that cost more but bring in double the response of the co-op mailers the company has used in the past.
The Oklahoma City company, which asks investors to cover half the cost of marketing “dial-around” long-distance service to telephone service regions, tested its door hangers in two regions and is preparing to roll out nationally. In the tests, the door hangers produced response rates of about 4 percent.
Co-op mail inserts through Val-Pak and other providers drew response rates of 2 percent. RedFrog measures response by counting the number of households that use its 101-21-21 dial-around number to bypass their primary long-distance telephone provider.
The door hangers feature a peel-off sticker that consumers can place near their phone to remind them of the dial-around number. In the future, the peel-off section will be enlarged and offer a chance to win $5, $10 and $20 calling cards to those who peel off the sticker to see additional information underneath.
RedFrog founder Kurt Spindle said he was inspired to try door hangers when he received a door hanger offer for pizza at his home.
“It's right there at their door,” he said of the hangers. “Yeah, people can throw it away. But with a mail piece, you've only got a 50-50 chance that they're going to open it.”
Tests have been run to 66,000 households each in Oklahoma City and parts of Minnesota. RedFrog will bring its door hanger campaigns to Dade County, FL, and Orange County, FL, next.
RedFrog funds its direct marketing by recruiting investors to sponsor campaigns to geographic regions based on telephone service. Investors get 70 percent of the profit from their regions until they recoup their initial investment, after which they split profit evenly with RedFrog.
However, whereas co-op mailers cost an initial investment of $4,800, the door hanger tests required a $6,000 upfront expense. RedFrog plans to increase that price by $600 to $1,000 in future campaigns to better cover distribution costs.
Investors who have private businesses can use the back of the door hanger to advertise their own companies. In the Oklahoma City test, a mortgage broker closed three sales for about $11,000 total, Spindle said.
