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Archive for October, 2010

Truth in Advertising

October 27th, 2010 by Bob Bly

Legendary adman James Webb Young, who started selling fruit by mail around the same time that Harry & David did, tells the story of an apple-growing season where he was nearly ruined.

Violent hail storms bombarded his apple trees with ice pellets, causing bruising and pock marks.

He feared massive complaints and returned if he shipped the bruised fruit to his mail order apple buyers. But if he didn?t ship the damaged apples, he would have to refund all the orders, and his mail order business would be ruined.

The apples were damaged only cosmetically. The hail had pockmarked the skin, but this did not affect the flavor or freshness.

Young went ahead and filled his orders with the pockmarked apples, and in each box shipped, enclosed a preprinted card that read as follows (I am paraphrasing):

?Note the pockmarks on some of these apples. This is proof that they are grown at a high mountain altitude, where the same extreme cold that causes sudden hailstorms also firms the flesh and increases the natural sugars, making the apples even sweeter.?

According to Young, not a single order was returned. In fact, when orders came in for next year, many order forms had handwritten notes that said, ?Pockmarked apples if available; otherwise, the regular kind.?


Category: General | 96 Comments »

The RFM Formula

October 18th, 2010 by Bob Bly

When I first got into direct marketing, I took a course in direct mail copywriting with legendary copywriter Milt Pierce at New York University.

One day a student asked, ?Professor Pierce, why is it that, as soon as I give a donation to a charity, they immediately send me another letter asking for more money??

Milt replied: ?Because they know, from experience, that the person who just made a donation is the one most likely to give again.?

Huh? This threw me. It seemed counterintuitive.

?But Professor Pierce, if I just gave money to a charity, then I would feel I?d fulfilled my obligation for at least a while. And I might even be annoyed that they are coming back to me asking for more.?

?Nonetheless,? Milt replied, ?experience proves that the person who just gave is the most likely to give again.?

He explained that this phenomenon was called RECENCY, and it held for commercial direct response as well as nonprofit, and that it was part of a formula called ?RFM? ? for ?recency, frequency, and monetary.?

The first element, RECENCY, refers to how recently the person made a purchase through direct response.

According to RFM, those who purchased the most recently are most likely to buy.

This is why it?s usually worth paying a premium to rent the ?hotline? names on any mailing list ? the names of customers who have bought via mail order within the last 12 months or so. The hotline names invariably outperform the other names on the list, because of RECENCY.

The ?F? in RFM is FREQUENCY ? how often the customer buys.

Here, we know that the more often someone buys, the more responsive they are to additional mail order offers.

This is why some mailing lists offer a selection called ?multi-buyers,? These are customers who have bought more than once. Invariably, multi-buyers outperform the names of one-time buyers on the list.

The ?M? in RFM is MONETARY ? how much money the customer spends, or the size of his average order.

Here, you want to look for mailing lists where the average order is in the same range of your product?s price.

Let?s say you are selling a video program on ?Overcoming Infertility: How to Have a Child When You?ve Been Trying Without Success.? The price is $99.

You rent a list of people who have subscribed to an infertility magazine for $12. You mail to the list, and the mailing doesn?t pull. Why not?

The problem is this: while the people on the list have demonstrated (a) an interest in infertility and (b) that they buy information by mail, they have NOT demonstrated that they will spend $99 in the mail. Twelve dollars, yes; ninety-nine dollars, no.

The solution? Find a list of people who have, say, attended a workshop on infertility or bought a test kit via mail order for $100. This might work, because not only do you know that the people on the list are mail order buyers and interested in infertility, but they have demonstrated that they will shell out a large amount of money for the right offer.


Category: General | 60 Comments »

The Magic of a Dollar

October 12th, 2010 by Bob Bly

It?s common knowledge that ?free? is the most powerful word ? and the most irresistible offer ? in direct marketing.

But can you guess the second-most powerful word or phrase ? and the second most irresistible offer?

It?s ?one dollar.?

Experienced direct marketers know that, at times, charging a dollar (or a penny) for something can be more effective and pull even better than the free offer. The old pros call this technique ?the magic of a dollar.?

Here is a great example of the magic of a dollar at work. It involves a company selling an accounting software package.

It was a good program, and the USP (unique selling proposition) was that the software was ?modifiable?: It was build on a popular database, so a user proficient in the database could modify program features, functions, and screens to fit his specific business. But direct mail packages selling the software barely broke even.

The software was priced as follows:

General ledger–$79.
Accounts payable–$49.
Accounts receivable–$49
Inventory control–$39.

The total price for the complete package: $255.

One day, the company decided to test a new mailing. The outer envelope shows the pricing as follows:

Accounts payable–$1.
Accounts receivable–$1.
Inventory control–$1.

This time, direct mail recipients paid attention. After all, who sells software for $1?

The Johnson Box of the letter repeated the pricing, but filled in the missing detail:

?Accounts payable–$1.
?Accounts receivable–$1
?Inventory control–$1.

?when you buy general ledger for $251!?

Notice that the price of the complete software system is the same: $255 total. The offer is just a change in semantics (both system prices are $255). But the new offer attracts attention by seeming to offer software at $1 a module.

Could you buy just accounts payable for $1? Yes and no. Yes, you could buy it. But it wouldn?t work, because the other modules all require general ledger to function!

?I hate the idea of this test,? the creator of the software complained. ?It seems like a cheap gimmick.?

But he didn?t hate the results: The ?$1 a module? offer outpulled the ?straight? offer by 10:1 in gross revenue generated. Mailing costs were identical, because the same package was used for both mailings, with only minor modifications to the copy for the $1 offer.

A variation of the magic of a dollar offer is the magic of a penny offer. Here, something is offered for a penny. In direct mail, this is particularly effective when you glue a real penny to the top of page one of the letter ? a real attention-getter.

You can use the magic of a penny for any offer where there is either a free premium, free trial, or free evaluation or estimate.

In your letter, you say a variation of the following:

?The [premium, trial, evaluation, or estimate] costs only a penny. And we?ve even enclosed the penny for you!?

Yes, it?s a gimmick, but it works.

Free, of course, is the industry standard offer. It?s easy to use, applicable in almost any situation, and almost always effective.

But the magic of a dollar or the magic of a penny can sometimes do even better. I suspect the reason is its rarity: Because dollar and penny offers are much less common than free offers, they stand out and get more attention.

That?s just a theory, but I have seen enough tests to know that dollar and penny offers can in fact work. Try it. You make like it.


Category: General | 43 Comments »

Xerox’s Genius

October 7th, 2010 by Bob Bly

Xerox had a problem.

When customers pulled the seal from its toner cartridges, a small puff of toner escaped, which had consumers concerned.

Here’s the clever label Xerox pasted onto its toner bags:

“To ensure our cartridges are of the finest quality, we test each and every one before it leaves our factory. When you pull the toner seal, you may see a small puff of dust. This indicates the cartridge was tested and passed the Xerox performance specification.”


Category: General | 84 Comments »