Now that you’ve set up your tracking system, let’s look at why and what you should track.
Testing is the “’life blood” of direct response marketing. Testing is critical for all DR Lead Generation customer acquisition channels. If you don’t test, how do you know which are your best offer(s)? Your best list? Or your best creative package?

If you continuously use the same images, the same offers in the same vehicles – consumers will eventually see you in the same light as the furniture store that’s been going out of business for the past 7 years. There will be no urgency to “act now” in your message. “Sally, we don’t have to call for

“Nth” select testing is the best methodology. By “Nth,” I mean every other piece is the test, every 3rd, every 4th, every 5th, etc. You maintain your testing selection throughout the universe you’re using. If the “Nth” select is not practical in the medium you’re using, while not totally scientifically perfect, you can also use an even/odd zip-code test, different radio/TV stations within the same market can yield valid testing results.

What do I mean by “element?” 1) Graphic design, 2) Offer, 3) Target audience, list, magazine, broadcast station – these make up the Marketing “Triangle.” If you’re testing the graphic design – the offer and target audience have to remain the same. If you’re testing different offers – the graphic design and target audience have to stay constant. You get the idea.

Next, you have to have statistically significant response numbers to be valid. Example: you tested and have twice as many responses from effort “B” as you do effort “A.” Great, you found a winner. Or did you? You got 2 responses from “B” and only 1 from “A.” Theirs is statistically insignificant responses to make any decisions.

The following are annualized results on various tests conducted over a period of a couple of months each. Of course this was over an entire region of the country encompassing 5-6 states. But I believe you can reduce the revenue gains down to a local level and still clearly see the potential benefits of conducting tests for your company.

NOTE: The lowest CPL or best Response % doesn’t always reflect the best ROI

NOTE: For those “math-letes” who are 110% scientifically inclined — if you have a local university handy, you might ask a professor in the math department to write you out a simple spreadsheet with the Chi-squared formulas built in. If you enter your known or “control” response percent and the “confidence level” you want for your test, the macros will tell you how many pieces you have to mail to attain the test results. The higher the confidence level the larger the test and control quantities will be. Depending on how radical your test, this could be a big and expensive gamble. For an initial test, I’d generally recommend a confidence level of 65 – 70%. If the test “beats” your control, then next test should be larger, maybe 75-80%. If the test still wins, I’d consider you either have a new “control,” or you have a test that equals your current control so you can alternate these packages and neither will “fatigue” as quickly.

It’s 2009, you cannot expect different results if you continue doing the same things. Test and see if you can beat your current “control” creative, offer or find a new audience for your products and services.

Let’s take a step back and think about ordering a pizza with just 1 or 2 or 3 toppings on different sides. Yes, this will appeal to the actual people who are ordering the meal.

But what happens if some friends come over who have not been involved in the ordering of your pizza? What if they just don’t like pepperoni and are allergic to cheese? They don’t get to eat with you. In fact, they may go out and eat elsewhere.

Or what happens if that pepperoni half (or third) falls on the floor? You’ve lost a major portion of your dinner. Either some people are going to go hungry or you’re going to have to spend more money on dinner to feed everyone.

Please, follow the analogy through. The choice of lead generation marketing channels (like pizza toppings) probably has the same affect on your potential customers. Almost everyone will react more favorably to certain advertising media and totally ignore or dislike others for whatever reason(s). Just like some people like onions, peppers, and mushrooms and others hamburger, sausage, and pepperoni.

For example, if you send a solo Direct Mail piece to a household that totally ignores the 4-letter words “junk mail,” you could literally send a $10,000 personal check to them and it will probably get tossed in the trash. However, that same household may think the world of a co-op mailing envelope (think ValPak, etc.) and open it eagerly to see the saving coupons for “product.” Alas, you’re not in there…but your competitor is. Who’ll get the business? Probably not you.

I know of a fairly sizable company in the New York Metro area that relied on Telemarketing for about 20% of it’s business and solo Direct Mail for another 15% of so. After 9/11, even with telephone redundancy, with all the phone lines down, this company couldn’t make calls for over 2 weeks. To compensate, they mailed literally over 100,000 additional Direct Mail pieces out of New Jersey. You’re right – anthrax. This company, while spreading their risk better than many others, lost approximately one-third of their business for several weeks in addition to the cost of the lost mailing. They lost 1/3 of their pizza dinner.

This company, “A,” relies on Telemarketing for 40% of their leads and Event Marketing for 38%. These two lead sources represent 78% of their business! What happens if one or both of those employee intensive channels fail – even temporarily? Their revenue is vastly decreased. They are only using 6 advertising channels total that rapidly decrease to 10% for Internet programs, solo Direct Mail, and the company website for 5% each and Referrals for 2%.

The greater the number of marketing channels or sources, the greater the opportunity you have of reaching the greatest potential audience for your products and services. With more channels, you’re increasing the opportunity for more customers to see your ads and do business with you. Lastly, you’re ensuring your company that if one channel fails to perform up to expectations, your down-side losses are minimized.

On the other hand, company “B” has 9 marketing channels it uses with the greatest percentage being 15% each for Events, Internet and Referrals with 10% each for Magazines, Broadcast Media and Telemarketing and the remaining 3 advertising sources at 5%. They are reaching broader customer awareness and decreasing their risk for any one or several sources under-performing.

I certainly am not advocating that you have to advertise in every media that knocks on your door wanting your business; however, I am counseling you to review what channels you are currently using and the percent of both leads and revenue that come from those channels. Hedge your bet as best as you can. Each of you know what advertising sources are available in your area and with proper tracking and testing (the topics of our next 2 articles), you can possibly use more channels to reach potentially un-tapped customers. Advertising in more sources also helps ensure your business has continued success if some of those sources “fall off the table.”

“Look For Lots Of Ideas. ‘The best way to get a good idea,’ recommends chemist Linus Pauling, ‘is to get lots of ideas.’ The next time you have a problem, don’t stop with the first right answer. Look for other right answers. How do you keep a fish from smelling? Cook it when you catch it. Throw it back. Keep a cat near. Burn incense. Cut its nose off.” – Roger von Oech, Creative Think and author of “A Whack on the Side of the Head” and “A Kick in the Seat of the Pants.

Have a pizza party and order as many ingredients on different slices of your pizza as you can so that everyone you invite over will find a slice they want to eat. And please remember, “Keep Your Attitude Half-Full, not Half-Empty!”

John Clements is a Direct Response / Lead Generation Marketing consultant.
www.ClementsMktgGroup.com