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.

Your marketing expenses are probably the biggest variable you can control. Those advertising dollars could directly determine the amount of your profitability. Controlling your marketing is how can you stop wasting money and keep more it!

Now by “control,” I certainly am not advocating unnecessarily limiting your marketing spending; rather, I’m saying — spend wisely.

“How do I spend wisely?” you ask. By knowing absolutely, without question or assumption, what marketing programs or channels are the most to least effective, and eliminating the least effective ones. You can re-direct your marketing resources in those areas that are the most profitable.

Tracking is the answer to knowing what sources are working (or not) for your company, whether they are offers, lists, creative, or channel specific. Which call-center agents or event/show promoters are the most or least effective? Not just the ones that produce the most leads . . . but more importantly, which ones convert those leads/inquiries into the most appointments? And which ones ultimately result in installed business?

If you can’t identify which marketing channels or individual efforts or “tests,” are the most cost-effective, you cannot accurately focus more resources on the “winners,” and thus, increase leads, revenues, and bottom-line profitability! (NOTE: “Valid Testing Methodology” is the topic of our next article.)

For an example, let’s say you’re spending $35,000 this week. $5,000 each on solo Direct Mail and Co-ops, 2 radio stations, and 3 TV stations. Your overall Gross Sales were $350,000; therefore, your Ad Ratio (cost of marketing / Gross Revenue) is 10% (or whatever your “allowable” range is). Your advertising was cost effective for your organization. Congratulations!

Without tracking all you have is the summary of your cost of marketing and its effectiveness.

With tracking, you discover that:

• There were no leads or sales from 2 of your TV Stations! That’s $10,000 down.
• The other station brought in $75,000 (6.67% G/Ad Ratio). One radio station brought in twice as many leads but no sales; however, the second station brought in $50,000 (10 % G/Ad Ratio).
• The solo Direct Mail represented $100,000 (5% G/Ad Ratio) in Gross Revenue while the Co-ops were $125,000 (4% G/Ad Ratio). But the mail’s cost was twice as much.
• Both Direct Mail and Co-ops’ performance was outstanding, the Co-ops brought in additional branding awareness for your company because of the increased household coverage.

Do you see how, going forward, you could re-direct your resources based on factual knowledge?

Tracking can be as simple as having a different “extension” on each different ad if you’ve only one phone number. Simply provide a spreadsheet with the “extensions” in use and their corresponding source; ask your agents to keep track of the calls they receive asking for a particular extension. Although with human error it’s not fool-proof, but leaps and bounds ahead of not knowing at all. Of course, tracking from the raw lead or inquiry to appointment and then to sales is a little more difficult.

You could use an outside source such as Who’s Calling or Ring Central to provide 3rd party separate “800” numbers for each of your ads. But again, it would be your internal staff’s responsibility to be able to track those leads through the process to Gross or Net Sales.

Or tracking can be more sophisticated with a different Validation Code being assigned to the following components, depending on the lead tracking software you’re using.

• Week of
• Source or channel
• Creative
• Offer
• Specific list segment, broadcast station, internet ad, etc.

With the proper software, you can also track the hours, salary, and productivity of your call-center agents, event/show promoters and Sales Representatives (even how effective they are per lead source).

By far the most comprehensive and cost-effective lead, sales, agent/promoter software is LeadPerfection. LeadPerfection is a totally enterprise-wide scalable system from marketing to sales to production and finally, accounting. The system is as easy to use as the Internet and provides easily read productivity reports for each department. (NOTE: While I recommend LeadPerfection, I am not affiliated with this company in any way, nor do I receive any compensation from them. After research of the 3 leading tracking companies, my clients and I have found it to simply be the best.)

Accurate tracking of your marketing channels, creative, list or offer tests, etc. is critical to improving your company’s customer acquisition process. Imagine the effect on your year’s end profitability if you could spend the same amount of dollars but increase your leads and revenues? You and your business will both grow.

– John Clements is a Direct Response/Lead Generation Marketing consultant. He can be reached at JClements@ClementsMktgGroup.com or 631-981-1994. www.ClementsMktgGroup.com

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