Archive for the ‘Direct Mail’ Category

My Only Guarantee: If You’re Not A/B Testing, Your Marketing Programs Aren’t As Good As They Could Be

Monday, March 29th, 2010

There are not a lot of certainties for small business owners, but the one thing I can guarantee is that you’re not always right.  Neither are the marketing consultants you might talk to or the “best practices” articles you might read.  That’s why A/B testing is the one thing guaranteed to improve virtually every marketing program you have.

The concept behind A/B testing is pretty straightforward.  Try making one, and only one, change to your marketing campaign and see if it makes you more or less money.  For example, would more people respond to a restaurant promotion offering $20 off the total bill or a free bottle of wine?  We can guess or make assumptions all day long, but the only way to know for sure is to test the two offers head to head.  If you’re doing a direct mail promotion, this literally means splitting your mailing list into two groups and presenting one offer to one group and the other offer to the second group.  It’s very important that you only change one thing at a time, so keep every other aspect of the promotion identical, including when the mailings are sent (i.e. send them all at the same time).  Larger businesses with high volumes and big budgets can try something called multivariate testing where you change multiple things at the same time, but it’s far more complicated and expensive so I wouldn’t generally worry about that for most small business marketing programs.

There are a couple of other very important things to keep in mind when A/B testing your marketing programs.  First, you’re going to need to ensure you can track the results.  This includes measuring the difference in both the expenses and revenues.  For example, if you increase your promotion incentive from $10 to $20, you can’t just look at response rates to see which is better.  The $20 version needs enough additional responses to make up for the increased cost.  Also, you need to ensure there’s a way for you to tell which promotion generated the purchase.  For some channels like Search Engine Marketing (Google advertising), this is easy.  For other channels like a restaurant direct mail promotion, it may be a bit harder (but it’s still possible) to track the net profit generated for each test group.

The last thing I’ll touch on for now is the topic of sample size.  I’m not going to spend a lot of time talking about statistics, but it’s important to understand that your two test groups must be large enough to ensure that one group didn’t outperform the other purely by chance.  If you randomly mail different promotions to two groups of ten people and one person responds from Group A and two people respond from Group B, it will look like Group B was dramatically more successful.  However, because the groups were so small, you don’t really know if it was a better promotion or just random chance that made it more successful.    The more people you randomly include in each group, the more confident you can be that it was the change in your promotion that drove the increased response rate.

To summarize, here are the key things to remember for A/B testing:

  1. Only test one variable at a time
  2. You need to be able to track the results
  3. You need a large enough sample size
  4. You should start right away to improve the profitability of your marketing campaigns

I’ve discussed direct mail quite a bit, but A/B testing is also important for other marketing channels like search engine marketing and your general website.  I’ll have more on this topic in the coming posts.  In the meantime, thank you for reading.

The Power of Customer Relationship Management (CRM) For Small Business

Tuesday, February 2nd, 2010

In my last post, I explained what a CRM system is and some of the many uses for both small businesses as well as larger ones.  While simply having and utilizing a CRM system can instantly increase marketing productivity and communications, in truth there’s a lot more to be gained by integrating the system with a CRM process or mindset.  When done properly, truly implementing Customer Relationship Management processes can help increase sales and marketing ROI, identify and retain your most profitable customers, and generally increase the profitability of your small business.

At its core, CRM supports the key business principle of customer segmentation.  The premise of segmentation is that not all people care about the same things and they don’t act in the same way.  If you don’t actively segment your customers, you’re hurting your customer relationships in several ways:

  1. You’re not treating your best customers as well as you should because you’re not presenting them with special promotions and perks
  2. You’re spending too many resources on unprofitable customers
  3. You’re incenting your customers to ignore you by barraging them with many communications they don’t find relevant

A CRM system will allow you to track customer behavior, demographic information, and details about their key interests.   Truly implementing CRM into your business means using that information to personalize and strengthen your customer relationships.  For example, let’s think about a non-profit who’s interested in generating donations and recruiting volunteers.  A very common approach is to send out a monthly newsletter informing everyone on their mailing list of key activities or issues.  Perhaps they also rotate requests between donating and volunteering.  However, many of the donors may be out of state or busy executives with no interest or history in volunteering.  Further, perhaps a subset of donors has gone dormant and hasn’t responded to mailings in over a year.  By understanding your relationships, you could save money by eliminating the volunteer request mailings to out-of-state donors and potentially eliminating mailings to dormant donors all together (or create a special phone campaign targeting donors that have stopped responding to mailings).  This serves both to increase your marketing ROI as well as strengthen your donor relationships by not pestering them with things they don’t care about.  There are countless other examples of how this concept can be utilized.  For example, periodically running a report of your most profitable accounts (which aren’t always the biggest) and having an executive personally call to check in and thank them can go a long way.  If you haven’t read my earlier post entitled, “Not All Customers Are Created Equal – Stop Treating Them Like They Are”, I encourage you to scroll down and take a look for some deeper discussing around the benefits of customer segmentation.

Again, collecting customer information is the first step and will improve productivity, but fully utilizing that information to personalize relationships is the key to drastically improving your business and profitability.  Until next time, thank you for reading.

If You Don’t Have A Customer Relationship Management (CRM) System, You Need One!

Thursday, January 28th, 2010

In speaking with many small businesses, it’s become very clear that a high percentage of business owners don’t know what CRM is, let alone have a CRM system and a process to use it.  With that in mind, here’s a brief overview of CRM systems.  My next post will cover some of the many ways to use CRM to give help your business a competitive edge and improve your profitability.

A CRM system is essentially a powerful but user-friendly database that allows you to track valuable information about your prospects and customers.   CRM systems are fully customizable and can store information like contact information, demographic profiles, product interests, past purchase behavior, contract details, and sales opportunity details.  They have powerful reporting engines that let you slice your data almost every way imaginable.  Some can even be integrated into your business website so when a prospect fills out a contact form, a lead with all their information is created in the system and it alerts you via e-mail.  You can also control access so employees can only see or edit appropriate sections.

There are many different systems, but my preference is Salesforce.com for several reasons.  First, it’s amazingly affordable and scalable.  The most basic version is $60 per user per year (as of 1/28/10) and you can get a lot of great features for $204 per user per year.  Second, it’s an online model so you can access your system from any computer with internet access.  There’s no software to install.  Lastly, it’s simply a very powerful but intuitive system and you can be up and running in a couple of hours with some basic training.

A CRM system is valuable if you use it for nothing more than a central depository for tracking customer information.  However, that’s just the beginning.  In my next post I’ll discuss how you can really improve your business processes, marketing ROI, customer retention, and more by leveraging the full power of CRM.  Until next time, thank you for reading.