Archive for July, 2010

Direct mail: what’s a good response rate?

July 29th, 2010 by Bob Bly

Most people, when discussing direct mail response rates, think in
terms of percentages.

For years, 2% was viewed as an “average” response rate.

The problem is that percentages don’t take into account things
like the cost of the mailing or the price of the product being
sold.

A much better measure of direct mail response rates is
“break-even.”

“Break even” means the sales generated by a mailing is equal to
the cost of the mailing.

For a mailing that generates 150% of break-even, you make $1.50
in sales for every $1 you spend on the mailing, including printing,
list, and postage.

Here is a free online calculator you can use. It calculates the
percentage response rate your mailing must achieve to reach break
even. That way, you know whether your 1% response rate is good,
fair, or terrible in terms of ROI.

The online response calculator is free ? there’s no cost to use
the calculator as often as you like:

www.dmresponsecalculator.com

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Category: Direct Marketing | 44 Comments »

The 3-Part Formula for a Winning USP

July 26th, 2010 by Bob Bly

In 1961, Rosser Reeves published his classic book Reality in Advertising in which he introduced the notion of the Unique Selling Proposition, or USP.

Today the book is out of print and difficult to get. As a result, most practicing direct marketers don?t know the original definition of a USP. Their lack of knowledge often produces USPs that are weak and ineffective.

According to Reeves, there are three requirements for a USP (and I am quoting, in the italics, from Reality in Advertising directly):

1. Each advertisement must make a proposition to the consumer. Each must say, ?Buy this product, and you will get this specific benefit.?

Your headline must contain a benefit ? a promise to the reader.

2. The proposition must be one that the competition either cannot, or does not, offer.

Here?s where the ?unique? in Unique Selling Proposition comes in. It is not enough merely to offer a benefit. You must also differentiate your product.

3. The proposition must be so strong that it can move the mass millions, i.e., pull over new customers to your product.

The differentiation cannot be trivial. It must be a difference that is very important to the reader.

In general advertising for packaged goods, marketers achieve differentiation by building a strong brand at a cost of millions or even billions of dollars.

Coca Cola has an advantage because of its brand. If you want a cola, you can get it from a dozen soda makers. But if you want a Coke, you can only get it from Coca Cola.

Intel has achieved a similar brand dominance, at an extraordinary cost, with its Pentium line of semiconductors.

Most direct marketers are too small, and have too strong a need to generate an immediate positive ROI from their marketing, to engage in this kind of expensive brand building. So we use other means to achieve the differentiation in our USP.

One popular method is to differentiate your product or service from the competition based on a feature that your product or service has and they don?t.

The easiest situation in which to create a strong USP is when your product has a unique feature ? one that competitors lack ? that delivers a strong benefit.

This must be an advantage the customer really cares about. Not one that, though a difference, is trivial.

But what if such a proprietary advantage does not exist? What if your product is basically the same as the competition, with no special features?

Reeves has the answer here too. He said the uniqueness can either stem from a strong brand (already discussed as an option 95% of marketers can?t use) or from ?a claim not otherwise made in that particular form of advertising? ? that is, other products may have this feature too, but advertisers haven?t told consumers about it.

An example from packaged goods advertising: ?M&Ms melt in your mouth, not in your hand.?

Once M&M established this claim as their USP, what could the competition do? Run an ad that said, ?We also melt in your mouth, not in your hand!??

One more point: As direct marketers, we ? unlike most general advertisers today ? are compelled to create advertising that generates net revenues in excess of its cost.

Reeves believed all advertising had to do this. He defined advertising as ?the art of getting a USP into the heads of the most people at the lowest possible cost.?

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Category: General | 18 Comments »

Social Media’s Limitations

July 8th, 2010 by Bob Bly

“The real danger with social media is in marketers expecting too much from it,” says Linda LoRe, President of Frederick’s of Hollywood.

According to an article in Deliver magazine, 65% of marketers say they have not increased revenue or profited using social media.

And more than half of the adult population doesn’t use social media at all.

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Category: General | 244 Comments »