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If we should end up doing business together,
all the better. That is why I am doing this.
First, let me give you a little background so you will understand
why I believe so strongly in this Response Marketing technique -
and in measurable advertising in general.
The good, the bad and the ugly.
My first real advertising job was at KSTP-TV,
the ABC affiliate in Minneapolis. I produced promos and was responsible
for scheduling them. I loved this job and I learned a lot about
copywriting, production and effective commercial scheduling. Everybody
who worked at the station saw my work often. They did not hesitate
to comment on it when they saw me in the lunchroom or the hallway.
I heard the good, the bad and the ugly. I didn't realize how valuable
this instant daily feedback was until years later.
When the ratings for our local news were down,
we got called into the General Manager's office and chewed out.
When the ratings were up and the news team was #1, we got no credit.
In fact, they didn't even like associating with the promo department.
Trying to get an arrogant news anchor to record a promo was like
trying to get wine from water.
Nielson and Arbitron supplied me with hundreds
of pages of ratings and demographics information on a monthly basis.
I studied these reports diligently and became pretty good at commercial
scheduling and boosting the ratings of a show. However, it was not
an exact science. Sometimes I would pick out a certain show as a
pet project and promote it heavily. The ratings might improve or
stay the same. A couple of times they even went down. Shows that
I ignored and promoted very little would occasionally soar in the
ratings. It was frustrating. I wanted to see results that were more
predictable.
After a few years, I moved to California and
started working on a television show. I produced over 2300 promos
and they were distributed to over 150 stations nationwide. It was
impossible to track their effectiveness.
Hour Magazine was a daytime talk show targeted
to women. One particular show included a segment on boudoir photography
where everyday women dress in sexy lingerie for photo shoots. In
this five-minute segment, in a one-second shot, a photograph was
displayed on a mantle above the fireplace. In this photo, a woman's
breast was slightly exposed. That shot ended up in one of my promos.
Oh my God, nudity on television, and it's my
fault!
It was an honest mistake. You practically had
to still frame the video and look very closely to see anything.
Just the same, an engineer in our dubbing facility saw it and called
me directly.
Too late. The promos had already flown on the satellite out to 150
stations. I told my boss what happened. "Fix it." was
all he said. Too late. The promos and the show had already been
broadcast.
Remember the furor over the Janet Jackson boobgate
controversy at the Super Bowl?
I got one phone call from a small station somewhere
in the South. Millions of people must have seen this shot in the
promo and in the show. I was relieved that I did not get thousands
of angry calls or get fired. But it made me wonder if anyone was
paying attention to the advertising, and what would it take to get
someone to respond.
Think and Grow Rich
Then I discovered direct response. In the late
80's I worked in a direct response agency for several years where
all we focused on was results. I produced over 60 infomercials and
dozens of DR spots. I wrote and produced the very first infomercial
for Guthy-Renker "Think and Grow Rich," and supervised
production of the first Tony Robbins infomercial. There are many
success stories I could share with you but my favorite happened
about seven years later when I ran my own ad agency, Response Marketing.
My client JB Oxford started with 15 brokers in
a single office. Two years later, they had over $500-million in
assets under management, with 300 brokers in 5 U.S. offices and
a European office. They were named the 8th fastest growing public
company in California - in the midst of the Silicon Valley Internet
boom. All of this was accomplished through aggressive television
advertising.
One morning, I had a film crew at their offices
in Beverly Hills to shoot a new commercial. One of the old commercials
came on CNBC. My cameraman had never seen any of the finished spots.
"Wow Bob, that's a really good spot."
He said it like he was surprised that I had any talent. Of course
he meant it was good from an aesthetic and artistic point of view.
It was a quality spot shot on film and it looked like a network
prime time commercial, not some nasty cheesy DR spot.
"Oh yeah." I replied. "Watch
this."
A hundred phones were ringing and
ringing and ringing.
When the phone number appeared on the screen, the
telephones in this large bullpen with over 100 stockbrokers started
ringing and ringing and ringing. Every single broker was on the
phone, many of them with two phones, one to each ear. The overflow
calls spilled down the hall and every phone in the whole place was
ringing and ringing and ringing.
Marketing is not that complicated. The phone ringing
means it works. In fact, the concepts of marketing and growing your
business are really very simple. The difficult part of marketing
is in the creative thinking that it takes to develop a strategy
and a plan, and the discipline it takes to follow through and execute
it.
There are only three things you can do to increase
your business . . . any business. If your ad agency does not understand
this simple Response Marketing 1-2-3 concept, you need a different
ad agency.
Response Marketing 1-2-3 is the heart and soul of
direct marketing.
Without buying a company or merging with another
or some other business transaction like that, here are the only
three things you can do to increase your business.
1) Increase the Rate of Response.
2) Increase the Sales Closing Ratio.
3) Increase the Amount of Sale.
That's it.
Good marketing in a global sense also encompasses
customer service, customer retention, brand management and many
other things, but for the purposes of our discussion here, I am
going to focus on generating new business.
This is pretty straightforward. If you are doing
nothing now, you could stand on a street corner with a sign that
says "Widgets." The passing cars would now be made aware
of the products or services you offer and going from nothing to
something may generate a response.
Step one. You have to do something.
You have to commit dollars and resources and you
have to mean it. I'm not suggesting that standing on a corner is
an effective way to go about marketing. . The reason I bring this
up is a lot of companies do nothing, or worse yet - try everything.
If they have no strategy and no plan, they are usually
unwilling to take action and make the necessary investments in marketing.
A company spreading their resources thinly across a hundred projects
is another misfire that comes from poor planning. Most of them fail
so they cut back on marketing because nothing is working. Do you
know when you should cut back your marketing? In good times or bad?
Neither. You should never cut back on your marketing. Marketing
is not an expense. It's an investment that pays dividends.
Unfortunately, with marketing there are no guarantees
that what you do will work but the alternative is to do nothing.
Advertising, especially advertising on network television and in
the national publications like the New York Times is incredibly
expensive. So, many companies forego it and do nothing or do very
little. It gives them a false sense of security that they are saving
money. They are limiting their downside risk and almost assuring
themselves of failure. You can't get something for nothing.
Whatever happened to the bold businessperson's credo
"You have to spend money to make money?"
Here is an example to show you how Response Marketing
1-2-3 can increase your business 100%. Because I have worked with
so many financial clients over the years, I've chosen to use a stockbroker
as an example. This formula works on hotel rooms, hamburgers, insurance
policies or movie tickets. It doesn't matter what you are selling.
We use U.S. government statistics and data from the
Securities Industry Association to create our conservative assumption
that the average assets invested in a brokerage account is $25,000.
Our advertising program is going to reach 5000 people.
It doesn't matter if it's direct mail, TV or the internet at this
point. This is just a blue-sky assumption.
Our Rate of Response to the advertising is .5%, which
equals 25 prospects.
Our Sales Closing Ratio is 10%, which equals 2.5 new customers.
2.5 new customers x $25,000 = $62,500 in Assets.
If you do this every day for a month, 30 x 2.5 =
75 new customers x $25,000 =
$1,875,000 new assets per month.
If the assets are worth 1.5%, then you could afford
to spend $28,125 to gather 75 new customers and $1.8-million in
assets.
This would give you a cost-per-customer of $375.
No bargain, but not so bad either. Let's talk about the 1.5% for
a moment.
Security brokers and dealers nationwide spend about
1.8% of their margin on advertising. The maximum threshold in the
mutual fund industry is 3.9% and the ideal range is 1.5 - 2%. Our
clients in the insurance industry have spent 17% to 28% of their
total revenues on marketing. E-trade once spent 50% of their revenues
on marketing. The rate spent on marketing is all over the board,
but our base-line strategy is conservative.
Here is where we start the compounding effect of
Response Marketing 1-2-3 and why it is so important to understand.
If you could increase the Rate of Response by .5%, you double the
Rate of Response and the assets gathered and you cut your effective
cost by 50%.
This is amazing. Is it that hard to increase the
Rate of Response by .5%? This is where targeted media, powerful
offers and promotions (and expert consultants) become so critical.
You will have to test many things and you will not be right every
time, but look what happens when you are -- you have doubled your
income by increasing the response rate by only .5%.
This is a lot more important to understand than having
a Madison Avenue ad agency take six months and spend thousands of
dollars to research how consumers feel about the font type in your
logo. Many decent, honest and hard-working professionals are sincerely
trying to do a good job, they are just focusing on the wrong things.
Doubling the company's income gets my attention and it is my priority.
This gets even better.
Step Two. Increase the Sales Closing Ratio.
Let's use our adjusted figures now that include the
.5% bump-up in response rates. The conversion rate can also be improved.
10%, that's not bad. In our example here, what if we could increase
the Sales Closing Ratio from 10% to 11%?
Instead of 75 new accounts per month we would more
than double to 165 new accounts per month, our total assets would
increase to $4.1million and our cost-per customer would plunge to
$93.75.
If we can close 11 out of 100 people instead of 10,
our assets more than double. Easy to say and hard to do? Not really.
What happens to people who log onto your web site? Does anyone call
them? Is there any lead management-tracking system in place?
Aha, you say, all those things cost money. So what. I am suggesting
is this scenario that the actual marketing costs will be less as
the closing ratio goes up. What if they're not? What if they are
exactly the same, or even cost more? You still get more assets for
the same marketing dollar or a slight incremental increase. $4.1-million
instead of $3.7-million.
This is not art or magic. This is math.
Finally, step 3 in our 1-2-3. Increase the Amount
of Sale.
The average assets per account in the example are fairly conservative,
$25,000. What if you were able to increase the sale amount by only
10%. That's not much. You can do it by through better targeting.
Here is what happens.
Everything remains the same with the exception of
the assets. Instead of $4.1million, we are now at $4.5 million.
Here is the final comparison before and after.
This simple formula should guide all of your marketing
and advertising efforts.
1) We have increased the Rate of Response by .5%.
2) We have increased the Closing Sales Ratio by 1%.
3) We have increased the Amount of Sale by 10%.
AND WE HAVE INCREASED THE BUSINESS OVER 100%
I don't think these percentages are even ambitious
for this particular industry. This is so simple that you might assume
that everyone with an MBA in marketing is already doing it.
Don't count on it.
My company did a survey of 68 load mutual fund companies.
I was speaking at their annual meeting so we decided to conduct
a test in advance so that I could target my presentation to talk
about something that would be of interest to them. Here is what
we did. People from my company posed as investors and called the
800-numbers of the mutual fund companies requesting investor information.
22 out of 68 companies never sent any information. That is one-third.
Only two companies made a follow-up phone call. Not one single company
made two follow up phone calls. This is a total failure in basic
marketing techniques. Look at what they are leaving on the Response
Marketing 1-2-3 table.
Why would you spend $10-million dollars on television
if you can't send out information and make a phone call to a prospective
customer, WHO CALLS YOU! In the mutual fund business, if you answer
the phone in 3 rings, send out the package in two days, and make
a follow-up phone call, you are beating 90% of the competition.
Marketing is not a tough business; it's an easy business
. . . as simple as 1-2-3.
Well, that's it. I sincerely hope that you have found
this site interesting and useful.
Now it's time to take action. Do you know what to
do first?
Maybe you should consider:
The one question that can
determine the success or failure of your entire advertising campaign.
Do you know what it is?
You should. It is an easy one but it is so often
overlooked. I will tell you what it is, but first, a word from our
sponsor -- yours truly.
Twenty-five years experience in marketing and advertising.
My clients include:
·
ABC-TV
· AXA Advisors
· American Express
· The Australian Government
· Baseball Hall of Fame
· CBS-TV
· Countrywide
· Disney
· ESPN
· Fidelity
· Guthy-Renker
· Hilton Hotels
· H & R Block
· Merrill Lynch
· Mattel
· NBC-TV
· New York Stock Exchange
· Time-Life
· United Airlines
· And dozens of small businesses, start-ups and entrepreneurs.
The only thing I care about is sales.
You get your very own marketing guru to help you
develop and manage a marketing program that can increase your business
through:
· Consulting
· Marketing Plans
· Creative Services
· Copywriting
· Direct Mail
· Print Advertising
· Television Commercials
· Radio Advertising
· On-line Marketing
· Promotions and Events
· Public Relations
Are you ready to increase your business 100%?
Click on the contact button above and send me an
email. We will get started right away.
Now, about that question. The #1 Question, the one
question that can determine the success or failure of your entire
advertising campaign.
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