What Happened to the 40-40-20 Rule?

You don’t hear much about the 40-40-20 rule anymore. Did I miss a memo? Did someone decide the 40-40-20 was no longer important or relevant, or that perhaps it is “old school”? Do you think it’s because so many people are specialists now with little interest in the big picture? Or maybe the rule just goes under a different name these days?

I don’t know but whenever I mention the rule at workshops or new client meetings, I get a lot of blank stares. When I was a newcomer to the industry in the early 1980s, I found the 40-40-20 rule to be a great introduction to direct marketing. It gave me real insight into how DM works and the process for developing a campaign. More than anything else, it helped me fully appreciate that direct marketing is ruled by science and logic rather than blind creativity.

The rule was an eye-opener, especially in understanding the testing process. I suspect others could benefit from this as well. The rule: 40 percent of the success of your campaign depends on your list; 40 percent depends on your offer; and 20 percent depends on the message and creative. Not everyone agrees with the percentages, but most accept the premise: that the list and the offer are the most important elements in determining response.

The list. We all know that reaching the right people is the key to any marketing campaign, but who are the right people? What do they look like (demographics), and what do they do (psychographics)? The first step in finding the right people isn’t selecting the lists, it is creating an audience profile.

Tens of thousands of lists are at your disposal, so finding the right one may not be as difficult as figuring out who your best prospects are. Developing an audience profile is much overlooked and more complicated than people realize. We all think we have a handle on who our prospects are – until we are asked to write it all down on paper using demographic and psychographic parameters. Then it’s not so easy.

Let’s say you are a financial planner seeking affluent people who will let you manage their money. What minimum net worth are you looking for? Can we assume that certain professions, like doctors and lawyers, automatically qualify? Maybe it’s the neighborhood in which they live or the type of cars they drive? If they subscribe to investment publications, does that make them better prospects or worse?

Or you’re selling a technology product to a business audience. Do you want to reach IT/MIS managers, or are you better off reaching the departmental managers who will benefit from the product? Will this purchase require senior management sign-off? Does your product’s price dictate the size of the companies you need to reach?

Creating an audience profile(s) can be much tougher than finding lists. And if you can’t develop a detailed profile, how can you begin to find lists that match that profile?

The offer. You see these offers everywhere:

· Save 25 percent if you order before …

· Buy one, get one free.

· Get free shipping on all orders over $100.

But is this what we mean by the offer? Not completely. I see these phrases more as the attention-grabbing presentation of the offer rather than the offer itself.

The direct response offer is one of the most powerful tools available to us. It not only has a great effect on the response rate, it’s also very predictable because the response is a direct relationship to the level of commitment you require of your prospect. The higher the commitment (higher price, less-flexible terms), the lower the response rate. However, the commitment level is determined not by the attention-grabbing headline, but by the actual terms of the offer: pricing, discounts, payment options, shipping, guarantees, premiums, everything. All of this needs to be outlined in your mail package.

This is not to discount the importance of the offer presentation. You have to get your audience’s attention, and the presentation does that. You need to decide which elements of the offer are most appealing to your audience (save 25 percent; free shipping; etc.). You also need to decide where this presentation will appear: on the envelope, the letter, the brochure, the reply form?

The success of your offer depends on both parts. No matter how appealing the offer presentation is (e.g., buy one, get one free), if the terms are unattractive (e.g., if the price is too high), response will be disappointing.

If you are using direct mail for lead generation, the principles are the same. The first part of the offer (the terms) might be a free white paper in exchange for answers to some qualifying questions. But the second part (the presentation) can vary greatly. You could bury the white paper at the bottom of your letter (for minimal response), or you could highlight it by placing it on the envelope, at the top of the letter and in the P.S. (to maximize response). Perhaps even show a picture of the white paper. One strategy we use to get our highest response rates is to make the offer the centerpiece of the mail package. Once again, both parts will determine response.

Creative. It’s what everyone wants to talk about. It’s the most visible part of the campaign, the show and tell, the part that gets you noticed at awards shows. But winning an award doesn’t necessarily translate into better response rates, lower customer acquisition costs or improved return on investment. Top-notch creative may get you a pat on the back, but it doesn’t have the effect of the list and the offer, and it never will.

“Creative,” meaning copy and design, doesn’t fully describe what is involved. This part of the 40-40-20 rule is really about finding the right message and the right format. Creative plays a role in both the message and the format, but it’s only part of the process.

Finding the right message means identifying the most important and most relevant sales message(s) for a given audience segment. This is a vital, but a very difficult, decision-making process that may or may not include your creative team.

Once you find the right message, the creative takes over as you find ways to communicate that message through teaser copy, headlines, subheads, illustrations and copy approaches. Then you need to substantiate your message through demonstrations, examples, testimonials and endorsements.

Finding the right format means choosing from an assortment of direct mail formats: a letter package, self-mailer, postcard or maybe even a three-dimensional piece.

In selecting a format, consider whether it provides enough space or enough components to make your case effectively. Order generation packages need more space than lead generation. Your format also needs to fit your image and audience expectation of you. Is it more appropriate to send a serious, personalized sales letter or a flashy, four-color self-mailer? And your format needs to make sense financially.

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