Tuesday Marketing Notes (Number 37—June 13th , 2006)

A B2B Marketing Newsletter for BMA Members
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Market Testing (Part 3): Direct Mail Testing Methods, and Achieving Measurability by Using an Actionable Offer

by Eric Gagnon

Last week, we discussed typical scenarios for market testing; this week and next week, we’ll cover the common marketing methodsused to run market tests in B2B companies, and the right and wrong ways to measure sales response from your tests.

You can test in virtually any marketing media used in your B2B marketing program—print advertising, direct mail, e-mail, or online pay-per-click—but direct mail and Internet-based methods allow you to control who receives your deliverable, and produces test results which can be more cleanly separated by your test of each deliverable, sales copy, price offer, or other variable used in your test.

Direct mail is the most common method of running market tests, because tests can be run at lower cost, and the results are “scalable,” in that response from larger mailings are reasonably predictable from the results of a relatively small mailing test. We’ll cover both direct mail testing, and testing by print advertising and online pay-per-click search keyword testing.

Branding is Dead. Long Live Measurability.

No matter which marketing method you use for testing, the best way to measure sales response from your test is to use clear presentation of compelling benefits, and an actionable offer to motivate potential prospects to act on your selling message. 

The only way for you to run a successful B2B marketing program is to generate steady and solid sales leads and opportunities for your company. The successful, sales-oriented B2B marketer creates advertising that generates measurable sales response—and in B2B marketing, measurability is the best technique for finding the right appeals to generate solid sales response for your company.

Getting Measurability with an Actionable Offer

You can put measurability into your marketing activities by giving your prospects a reason to contact your company, and you do this by using an actionable offer that is valuable to your targeted prospect. The best actionable offers give your potential prospect something that is seen as being valuable to them. Informational premiums are ideal: free white papers, reports, books or booklets, DVDs, or software. The more these premiums relate to the on-the-job needs of the prospects in your market, the more attractive they will be to your prospects.

For example, if you were targeting sales of machine tool accessories to smaller machine shops and other operations with less than 100 employees, you might publish a white paper detailing the specific needs and applications of concern to owners of these operations, and describe how your company’s products address their needs by solving their problems. Informational premiums that solve the reader’s problems, and position your company as the leading expert in solving these problems, make compelling actionable offers.

Promotional offers are also attractive to first-time prospective buyers: Discount savings, free trial offers, or free samples, depending on your product and its price level, often give potential prospects the extra motivation they need to take the first step to contact your company.

The terms of your actionable offer need to be to compelling enough to strongly motivate potential prospects to contact you to close the loop on the offer, and, in your call to action, you need to make it clear to prospects what it is you want them to do next to contact your company: Visit your Web site to download a white paper or report, call your company to speak to a sales rep, or contact a distributor.

Set up your actionable offer for measurability: Use a dedicated Web URL for each mailing piece to track responses to each mailing in your test. Using a single word behind a slash after your Web site domain makes the URL simple enough for your reader to remember, like so:

www.yourcompany.com/savings

—assign a specific URL for each mailing piece you are testing, and track responses to each of these URLs after you mail.

Plan Ahead to Measure Response on Your Test

While you’re producing the mailing pieces, plan ahead to track and measure responses:

• To track access to specific URLs on your site, alert your IT department, or whoever else is in charge of your company’s Web site, to start counting page accesses to these URLs. Use a simple e-mail signup form to gather e-mail addresses from prospects who respond to your test;

• Print a key code below the toll-free number on your mailing piece. Ask your sales reps, or whoever else answers incoming calls from potential prospects on your company’s “800” line, to ask callers for the key code on the mailing piece, and make sure these responses are logged, either on paper, or in your company’s CRM system;

• If your mailing piece is using a printed reply card, make sure you are intercepting these cards in your company’s mail room, and logging responses by mailer and test panel by the key code printed on the reply card.

If your company’s sales and marketing team isn’t currently using a Customer Relationship Management (CRM) system, running a mailing test is a perfect time to start using one to log and track responses from your test. Salesforce.com is a powerful, very affordable CRM system that’s very easy to set up and use, and I know several companies who swear by it. If you don’t have a CRM system, a spreadsheet will do just fine for recording and tracking sales response from your marketing projects.

However you choose to track responses, do this early: Setting up your tracking, logging and measuring process for your test mailing before the pieces are printed saves you from turning this into a haphazard, last-minute fire drill after the mailing pieces are dropped.

Quantities to Test: How Many is Enough?

For a direct mail test involving three different mailing pieces testing three different positioning, sales copy, or promotional approaches, I usually like to test at least 2,500 names for each test mailing, but 5,000 is a better quantity to mail if possible, because it provides you with a more reliable basis for predicting future response. This means a typical test involves mailing between 7,500 to 15,000 total pieces.

Using “Nth-name selection:” When testing, you can get an accurate, representative sample of any large mailing list by requesting an “Nth-name selection” of this list. For example, to order a test sample list of 5,000 names from a large trade publication mailing list of 100,000 subscribers, request an “Nth-name select” of every 20th name throughout the entire randomly-sorted list to receive a representative sample of 5,000 names (i.e., 100,000 names, divided by every 20th name=5,000). The publication retains a record of the names you ordered for your test, and can omit these names when you place a re-order for a new list with them for another mailing.

What to Test?

While you can use direct mail to test just about any aspect of your marketing program, a typical testing scenario for most marketers involves testing different positioning and sales copy for a product, mailed to the best mailing list available (usually the leading trade publication for the industry).

Test panels: In direct mail jargon, any element you test is called a test panel. Using a spreadsheet, you can create a matrix row-and-column chart for your test, showing test panels for each of your testing elements. If you have a larger budget, you could test your three mailing pieces using three different mailing lists. For example, in addition to a test of a leading trade publication mailing list, you could test a list for the second-ranked publication, and a third list, such as a list of known buyers of similar products in your product category, or subscribers to a smaller, more specialized newsletter or publication in your field.

A test matrix for this larger test would look like this:

Mailing Execution

Once your test mailing pieces are produced and printed, they must be assembled, inserted, labeled, processed and mailed. If mailing multiple mailing pieces in a single test, make sure they are all “dropped,” or mailed, on the same day at the Post Office, to insure a uniform starting point for tracking response.

Tracking and Measuring Responses

Log and track responses to build a response curve: Once the test mailing is dropped, you should start receiving responses 3-5 business days later. Log and track each day’s responses by where they’re coming from—online, phone, and mail—to create a response curve for your mailing activities. A response curve showing cumulative daily responses to mailings (and other marketing activities) can help you project the total response you’ll receive on subsequent mailings based on the first few days’ responses. By helping you predict the final response of a mailing, a response curve can help you shorten the time required to make the decision whether or not to roll out with a larger mailing to larger numbers on the same list, based on the projected response from your smaller test mailing.

Measuring response: When running your first direct mail test, you’ll receive 90% or more of your total responses to your mailings in 3-4 weeks. By then, if you’ve been carefully logging your results, you’ll know if one or more of your test mailing pieces are pulling well ahead of others in your test, which mailing lists pull better than others, or even if direct mail is a viable marketing method for your company’s marketing program.

Response rates: What’s a good response rate for B2B direct mail? Response rates for test mailings to new lists vary widely, from .5% or less, to 5% or more, but 1-2% is a reasonable number that seems to work well for many companies selling products in B2B markets, and is a useful benchmark for making your analysis of your mailing’s return.

Rolling Out: How, and How Many?

If, based on your calculations, you’re getting solid sales response that meets your objectives, and you’re ready to expand your mailing program to mail larger quantities of mailing pieces to larger numbers of names on mailing lists, how confident can you be that you’ll get the same response when you mail to a larger portion of the same list on your next mailing?

To answer this question, you can use statistical tables to determine the range of response you’re likely to receive (at 95% or 99% confidence levels) from mailing to larger portions of the same list. These tables provide statistically-based assurances that you can mail much larger numbers of pieces on your next mailing and receive more or less the same response rate. From a practical standpoint, however, it’s always better to follow a more conservative course and mail 2 or 3 times the number of pieces in your test on your expanded mailing, regardless what the statistical tables tell you. If you continue to receive good response from your expanded mailing, you can continue to “triple up” on each subsequent new mailing.

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

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Attention Marketing Managers:
Get a Second Opinion  on Your Marketing Program. . . FREE

Think you should be spending less and getting more from your current marketing program? Tired of hearing empty “branding” promises from your ad agency that never seem to translate to actual, measurable sales results?

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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:

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