Tuesday Marketing Notes (Number 36—June 6th , 2006)

A B2B Marketing Newsletter for BMA Members
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B2B Market Testing Methods: Three Testing Scenarios
(Part 2)

by Eric Gagnon

Last week, we described the importance of testing, covered some of the elements of a marketing program you can test, and the “marketing media” typically used in your testing projects. This week, we’re going to cover the “how” of testing, and describe some typical testing scenarios.

The tests you can run for your marketing program can range from simple and cheap, to complex and expensive. This depends, of course, on your time schedule, budget, on the importance of your marketing objective that is the target of your test, and the downside risk associated with the marketing program. The greater (i.e., costlier) the downside risk, the greater need there is to test, and to spend more effort and money on the test.

Testing Reduces Marketing Risk

The most important benefit of testing is the fact that it helps you minimize risk and expense in your marketing plan, by helping you determine the best copy, deliverables, positioning, promotions, and media to use in your marketing program.

The other key benefit of testing is its flexibility: You can run small, cheap tests that can yield useful information on one critical element you need to test, such as sales benefit positioning, price, or a promotional offer. If you’re working with a larger budget, you can run more expensive and elaborate tests to gather better information across a wider range of testing elements and variables. With market testing, there is no better way to get solid, actionable response on the best copy, media, and marketing methods to use to sell your company’s products. 

Testing is what separates the professional marketing manager, agency pro, or consultant from the rest of the players in our field, who usually bet the company’s (or client’s) marketing budget on their latest creative brainstorm. Smart marketers test wherever possible; the rest think they can slide by on their next big marketing idea. 

This week, we’re going to cover some of the typical scenarios where testing can put you on course to developing and executing successful and effective business-to-business marketing programs.

I: New Product Launches and Start-ups

Market testing is especially useful and important for new venture start-ups and new product launches in existing companies. Depending on the time allowed, testing can be done in either an initial three-month launch period, or during the product launch, incorporated into the launch marketing plan.

Early stage, pre-product informal market testing: We have worked on some testing projects for early-stage start-ups where we have tested market response to the product even before the product was developed (see below). Typically, this involves mailing color xeroxed (or even laser-printed) “rough and ready” brochures featuring product mockups, to small numbers of potential prospects, followed up by phone calls to gather impressions from these recipients on product features and benefits. We may also present a number of options to these test recipients, such as sample ad layouts, promotional offers, and pricing options.

At this stage all we are looking for is to get anecdotal response on broad issues relating to the product, and how we’re planning to sell it. Respondents will often tell us if we’re not presenting the product in a way that would be understandable or effective to others like them in their market, or if our copy was unclear in some other way.

Most important, respondents will also usually let us know if they have some major issue with the proposed product that would prevent them from buying: A competitive offering in some other product category we didn’t know about which may impair the client’s product, a product price that’s too high, or failure on our part to effectively communicate the most compelling benefit to our targeted prospects. Above all, responses to this informal test answer the most important question that is fundamental to any start-up: “Do we have a business?”

You can sometimes test your product before you even have a product: I always tell a marketer in an early-stage start-up to create a quick mockup of their product brochure and sales kit, get it in front of their 20 most likely prospects for their reactions and response. This can even be done before the product is built, using mockups in photos and graphics.

In addition to receiving valuable marketing feedback, this activity forces the marketer to execute the process of deciding on/writing about their product for the first time, thinking about/targeting/selecting their best prospects and, as important—going through the steps required to get their brochure produced, out on the street and into the hands of their prospects.

By getting the marketer comfortable with writing about and presenting their product, running through these fundamental, essential steps of the marketing execution process during the product development stage makes it easier to develop and execute the ongoing marketing plan, when the start-up’s founding team is spending real money and can’t afford the usual first-time glitches that interfere with effective marketing execution.

Do You Have a Business?

If your 20 top prospects say they won’t buy your product from your crude, rough-and-ready sales kit, it’s a sure bet that the next 20,000 prospects aren’t going to buy it from your big-time product rollout mailing or ad campaign six months from now. Better to know this now, and make the necessary changes to your product, your market targeting, positioning, or presentation, than to find out after you’ve blown half your marketing budget three months after your product launch date.

This same basic testing procedure works just as well or better on a new product launch for an existing company. These projects are also easier to execute, because established companies already have customers and more identifiable prospects to contact.

II: For Established Companies and Products: Testing Sales Copy, Targeted Prospects, Pricing and Promotions

For established companies beyond the start-up stage, most market testing projects involve tests of one or more product attributes, or the methods being used to market the product (the marketing media). In order of their importance, these testing elements are:

1.) Prospect targeting: Will these prospects buy the product?
2.) Positioning: Major benefit statement or unique selling proposition (USP);
3.) Sales copy: Presentation of features and benefits;
4.) Pricing: Test one price vs. another

Direct mail is the most efficient way to test any of these attributes. First, through careful mailing list selection, you can sample individuals on a mailing list who reasonably reflect, by job title, profession, location, or purchasing profile, the kinds of prospects who you think would be most likely to buy your company’s product. Second, you can test different mailing pieces to segments of the same list, with each mailing piece reflecting a separate major benefit. Third, by using actionable promotions (information-based premiums or other promotions that give respondents a reason to contact you), you can track the sales response of each test to measure the elements you are testing.

Start Every Direct Mail Test With a Solid Mailing List

The mailing list is the most important part of your market test, or of any direct mail project. Unfortunately, most marketers don’t pay careful enough attention to mailing list selection. You must be sure that any mailing list you use not only accurately reflects the market you’re trying to cover, but the names on this list must be accurate and up to date.

For this reason, the best mailing lists to use for market tests are trade publication mailing lists, and preferably a list from the top trade publication in your industry. Compared to other types of lists, trade publications have a vested interest in keeping their subscriber lists up-to-date, which makes it far less likely you’ll be mailing to individuals who no longer work at these companies. Also, you can often select individuals from trade publication lists by their specific job title, industry, company size, location, or other attribute, to select and segment the prospects in your market—a critical aspect of any marketing test or ongoing marketing effort.

Test mailing pieces: When I am trying to establish effective messaging, positioning, or promotion to use for a client, I try to develop at least three different mailing pieces that reflect three distinctive positioning approaches for the client’s product: A “control” piece reflecting the client’s current marketing presentation, a piece featuring new or unique positioning obtained from de-briefing the company’s sales reps, and a “wild card” mailing piece presenting  bold and aggressive benefits and positioning.

The three mailing pieces usually follow these forms:

Mailing piece 1—sales rep’s de-briefing mailing piece: The first test mailing piece usually reflects sales copy and positioning aspects we have developed from de-briefing our client’s top sales reps, and the CEO, if he or she is not too out of touch with the hands-on aspects of selling their company’s product. This piece reflects a major sales benefit or unique positioning that seems to be effective when used by the company’s sales reps in their personal presentations, and which may also be a very effective approach to implement in the company’s marketing program;

Mailing piece 2—control, or conventional mailing piece: The second test mailing piece is usually either a “control” piece the company has already been mailing, or our best effort at a mailing piece that presents the company’s product clearly, effectively, and conventionally, using the same product sales benefits, features, and content the company uses in its current marketing program. If we are working with a client in a sales turnaround situation, then we abandon the company’s existing failed marketing deliverables and develop our own mailing piece as their “control” piece;

Mailing piece 3—the wild card: The third test mailing piece is usually a more radical “wild card” mailer to test very bold and aggressive presentation of sales benefits and positioning. Examples of this type of presentation might include direct comparison of the company’s product against those of a named competitor, or bold appeals highlighting the downside of not using the company’s product.

The sales rep and wild card mailing pieces are tested against the control piece and, using an actionable offer—a call-to-action offering the prospect a free premium, such as a white paper, free sample, or special product savings—the results from each mailing piece are tracked and measured.

Comments? Questions? Send them to me at: eric@realmarkets.net

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Eric Gagnon (eric@realmarkets.net), is president of GAA (www.realmarkets.net), a sales and business development consulting firm, and is the author of The Marketing Manager’s Handbook, the master study guide for the Business Marketing Association’s Marketing Skills Assessment, Skill Builder, and Certification (MSA/B/C) programs.

For more information on The Marketing Manager’s Handbook, available to BMA members at a special discount, link to:

http://www.businessmarketinginstitute.com/book.html

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