If you watch sports, you’ve seen a “pre-event routine” in action.

In baseball, major-league batters will go through their pre-event routines before every pitch. Watch them and you’ll see some batters come to the plate, take two swings and then tap the edge of the plate with their bat before each pitch. The routines vary with each batter, but practically every major leaguer has an established routine.

You’ll see the same thing in basketball. The next time you see a player taking a foul shot, watch what they do. The player may bounce the ball twice, hold the ball and then bounce it again before taking the shot. Whatever their routine, they will go through the same sequence of events each time they take a foul shot.

Athletes use pre-event routines to prepare for success. It gives them focus and purpose, and helps them achieve a higher level of performance. Now we need to develop our own pre-event routine to make our direct mail more profitable.

How direct marketers can use a pre-event routine

As direct marketers, we know the importance of testing. But what do we test? Dick Benson, in his book Secrets of Successful Direct Mail said, “Any idea you honestly believe can economically increase response is worth testing.”

But how do we know whether a test idea has a reasonable chance of economically increasing results?

First, let’s acknowledge that to increase our mailing’s profitability, we need to do more than increase the response rate or generate a higher average order. For our test to succeed, we must generate more net income than the control. And while we can’t always predict which test will succeed, we can insure that we don’t waste money by testing things that have little hope of increasing profitability.

Here’s a real-life example that proves the point.

Several years ago, I worked with a client whose previous agency produced a test package that everyone predicted would increase response. And it did.

The test package was creative, the graphics were incredible and the format was certain to stand out in a crowded mailbox. In fact, it was so impressive that the agency predicted that people who received the package would display the mailing on their office bookshelf. And perhaps they did.

But unfortunately, the client lost a bundle of money—and the agency lost the account—because no one bothered to price the test package’s rollout costs and determine out how much additional response would be needed to justify its higher cost.

If they had, they would have realized that this elaborate package needed—this is a true story—a 476% increase in response to break even with the control.

Now, I’m not saying that you can’t outperform the control by nearly five to one. But is it a reasonable expectation? Even if the test package doubles or triples the response rate, it’s a big loser. And this is where a pre-event routine helps.

Doing the math first

Before we invest our own money—or the client’s money—we need to do a little math and determine what results a test package must generate to justify its cost. And with this information, we can make an informed decision on whether the test can give us a reasonable expectation of economically increasing response.

My routine is simple and works like this: If the test cost $100/M more than the control and you currently average $25 per order, then the test will need to generate four additional responses per thousand pieces mailed. Therefore, if your control is pulling a 1% response rate, your test needs a 1.4% response to break even.

Here’s a simple worksheet I use before committing to a test.

You may find this approach to be too simplistic for your needs but, regardless of our methods, we all need a pre-event routine that causes us to ask, “Is it realistic to expect this test to increase results by 40%? Is this test a good investment?”

With a pre-event routine, these questions are answered before we spend a dime on the mailing. And whatever approach your pre-event routine takes, the process is essential to getting the greatest return from your direct mail test dollars. Like professional athletes, we’ll achieve a higher level of performance with good preparation.

When times get tough, everyone wants to cut direct mail costs. After all, if we can bring in the same amount of money and spend less, our profits increase.

And there are ways to cut costs without necessarily hurting the effectiveness of your mailing.

Cut Costs or Make Money?

You can, for example, trim your package format by ¼ inch or so to make it run better on your printer’s press, use a cheaper paper, test smaller formats, omit package inserts or eliminate the premium.

But don’t act too quickly.

Before getting caught up in the rush to cut expenses, we need to remember the objective of our direct mail campaign.

Because few, if any, of us mail to save money.

For most of us, the mailing’s objective is to make money.

This is a huge distinction. Saving money and making money isn’t the same thing. And, more often than not, we can increase the mailing’s profitability by adding to the package rather than by subtracting from it.

To increase your mailing’s profit, even as you increase its cost, you can:

• Add an involvement technique—a survey, membership card, petition, name stickers, a certificate—anything that gets the reader involved with the package. But it’s not enough just to toss the piece into the package. You must weave it into the copy and give it a reason for being there.
• Offer a premium and promote it with a separate insert—I’m a strong believer in premiums and need a reason not to offer them. The premium doesn’t need to be expensive and can be as simple as a white paper, a decal or a bookmark. But it does need to have a perceptible value.Many groups hate premiums believing that they cheapen the organization. But most donors and customers respond to them and, in my experience, when used properly, a premium will increase the mailing’s net profit.
• Test a larger format. A larger format is going to increase your production cost and perhaps even your postage cost. Yet they grab attention and generate response. Today, fewer oversize formats are being mailed so they command even more attention in the mailbox and can be especially useful for acquisition campaigns. In tests, when nothing other than the format size was changed; I’ve seen response increase by 100% when using a large format.
• Add an insert that emphasizes your guarantee. (If you’re not using a guarantee, you need one.) The mailing’s recipient has plenty of reasons—real or perceived—not to respond to your offer and the guarantee helps remove any hesitation that might otherwise jeopardize the sale. And by featuring your guarantee with a separate insert, you’re calling attention to your promise of a good customer experience.
• Include a lift note. The lift note, signed by someone other than the letter signer and printed on a different paper stock—the perception is that it’s coming from source other than the main letter—has many uses. You can use it to add credibility, present a testimonial or endorsement, emphasize your risk-free offer, expand upon the offer, tell a story, customize the offer to particular list segments and provide an added “push” to get the reader to respond.
• Spend money on list segmentation. Every good list includes bad names and every bad list includes good names. And since the mailing list is the most important component of your mailing, there’s no better place to spend money than to refine your list segmentation. List modeling/profiling isn’t cheap but with better segmentation you can increase your response and even reduce your total costs by mailing fewer, but better targeted, mailing pieces.

All this isn’t to suggest that you should drop your efforts to reduce costs. But cost cutting alone will not produce sustainable success. And I’m not suggesting that you change your control mailing without testing.

I am, however, suggesting that before investing in a new test mailing, you do the math to determine how much of an increase in response or average order is needed to justify the mailing’s added expenseand decide whether, with the changes being tested, this is a reasonable expectation.

It’s certain that we will continue to come under increased pressure to reduce costs but as direct marketers, we must change the conversation from how to cut costs to how we can make our mailings more profitable.

In my last post, I talked about when to test direct mail premiums. Now, let’s discuss 3 different types of premiums, why you’ll want to test each one and how to make them work for you.

First, let’s acknowledge that when we test a premium, we’re testing a change to our offer and nothing, other than list selection, will have as great an affect on our results.

We use premiums to motivate the reader into taking a specific and desired action. It isn’t to reward, inform or thank the reader but to promote response and increase the mailing’s net income.

If this sounds crass, recognize that whether you represent a commercial or nonprofit client, the most important measurement of your mailing’s success is net dollars.

Net dollars will not only please the shareholders, it provides the food, shelter or medicine so desperately needed by those your organization serves.

Make no mistake about it. Premium will increase your costs. But our objective – whether working for a nonprofit or commercial mailer – is to increase net dollars to fulfill the organization’s mission.

Here’s a true story…

Years ago, I went to a county fair with a friend. As we were walking down the fairway, a “barker” came out and offered us a silver dollar for 50¢. Immediately, I accepted the offer yet my friend refused. Why? She said, “I don’t want to spend the money.”

Unfortunately, that’s how too many people look at their direct mail. Even investing more can generate additional net dollars, the don’t want to spend the money.

If you’re satisfied with a .01% or .02% improvement in results, then save the cost of premiums and test the color of ink on your envelope or copy changes on pages two and three of your letter. But if you want major improvements to your mailing’s profitability, try offering a premium.

Here’s 3 ways premiums can work for you…

Front-End Premiums

When testing a “front end” premium, you’re giving it away in the mailing. For example, a fundraiser might include free name labels or a software company may include a free CD in the mailing.

Other front-end premiums I’ve used successfully include pamphlets, Certificates of Appreciation, membership cards, name stickers, decals, pens, greeting cards, note cards, flower seeds, key chains, plastic luggage tags, bumper stickers, iron-on patches and membership cards.

Front-end premiums often generate a higher response rate but are more expensive since you’re paying to send the free gift to all recipients – respondents and non-respondents alike. (And yes, “Free Gift” is worth the repetition of words.)

It’s also true that front-end premiums can reduce the average order/contribution and long-term value of the respondent since some responses will be guilt-motivated.

Front-end premiums may even “lock” you into premium mailings when it comes time to renew these donors/buyers. But, because they generate a higher response, they’re great if you want to build your donor/customer file.

And the bottom line is still net dollars. If you increase net dollars, a higher cost or smaller average order shouldn’t matter. You’re still returning more money on the organization’s investment and generating more dollars to fulfill the group’s mission.

Back-end Premiums

With a “back-end” premium, the recipient must respond to receive the gift. For example, a magazine publisher might offer a free book to people who respond before a certain date. Or, a nonprofit might offer to send you a free coffee mug once they receive your contribution.

I’ve successfully used calculators, American flags, emergency road kits, coffee mugs, calendars, ball caps, plaques, lapel pins, membership cards, free trips, software, travel bags, tool kits, digital cameras and books as back-end premiums.

Their advantage is that you’re only fulfilling the premium to those people who buy/contribute so your overall costs are lower. Additionally, those who respond to back-end premiums typically have a higher average order and their lifetime value tends to be higher than those who only respond to front-end premiums. But back-end premiums may not generate as many responses as a front-end premium and they do require added fulfillment costs.

Fast 50 Premiums

A “Fast 50” limits the premiums to the first fifty people who respond. (You can also have Fast 100s, Fast 75s, etc. There is nothing sacred about “fifty” but it’s what I’ve used and it works.)

Lately, I haven’t seen Fast 50s used but they can give you the best value of any premium offer.

You’re limiting your premium to the first 50 people who respond so your costs are lower than either front-end or back-end premiums. And, because you’re only fulfilling 50 gifts, you can offer a higher-value premium.

Yet because everyone receiving the mailing is eligible, your copy can have the same “hype” as any other back-end premium.

Typically, I gained a 25-30% lift when adding a Fast 50 premium offer to the mailing. (For nonprofits, I’ve also tested offering gifts to the first 50 people who responded from each state but found little difference in results from a straight Fast 50 offer.)

Conclusion

When testing premiums, you’re changing the package’s offer so the return on investment can be immense. And when used intelligently, there should be no stigma associated with premium offers.

What premium should your organization test first?

It’s nice to test a gift that relates to the organization’s mission – the environmental group’s backpack offer for example. But don’t overlook the greed factor. For years, it was hard to beat a hand-held calculator but you have to test and see what offer is best for your group. It’s simply a search for balance – perceived value vs. cost.

Do you test front-end, back-end or a Fast 50 premium?

Ideally, you will test all three and see what works best for you. If you can’t do that, ask yourself, “what is your objective?” Are you trying to build your file quickly? If so, you may want to test front-end premiums or a Fast 50.  If you’re looking to increase the average contribution or order, consider a back-end premium.

And premiums aren’t just for acquisition mailings. Test them to your house file too.

But whatever you decide, do the math first! Know how much the premium must increase response to breakeven with the control. It makes no since to test a premium that’s so expensive it needs a 500% lift to break even.

Good luck and let me know your results.

There are only two occasions when you should test direct mail premiums.

The first is when you’re not using premiums. If you’re not, you should test them now. The second occasion? When you are using premiums, you need to continue testing new ones.

Many organizations hate premiums. But most donors and customers love them and since this is a customer-driven business, I suggest you test them now.

Premiums don’t have to be expensive gifts. Often the best ones are unused merchandise sitting in a warehouse or the nearly forgotten informational pamphlet that’s begging to be used.

Countless organizations have enjoyed huge success by offering address stickers, note cards, decals, bumper stickers, iron-on patches, certificates of recognition, membership cards and a host of other relatively low-cost premiums. As long as you can give the premium a perceived value, it can be a valuable tool in increasing your mailings’ response.

If you can connect a premium to the organization’s mission or offer, all the better. For example, the American Diabetes Association offered a cookbook of low-sugar meals. An auto club offers an emergency road kit while an environmental group offers a backpack. Not only do these offers connect with the group’s mission, they give the prospect an additional reason to respond.

But don’t overlook the “greed factor.”

Net dollars is the deciding factor of success and a calculator, radio or iPod may, for example, work better than a premium that is a natural tie-in. It’s something you’ll have to test.

Why do premiums make such a difference in a mailing’s success? Because when you add a premium to the mailing, you’re affecting the offer. And, as we know, nothing other than list selection will make more of a difference to the mailing’s success than the offer. The return on investment can be significant just remember. . .

• Do the math first! Know how much the premium must increase response to breakeven with the control. It makes no since to test a premium that’s so expensive you’ll need a 500% lift to break even.

• Don’t make the mistake of adding the premium offer into the letter’s P.S. and thinking you’re done. The premium is part of your entire package, not just an afterthought. You may want to feature it on the outer envelope, in the letter’s “Johnson box” or lead sentence, the response form, or even in a separate insert. And, depending upon the premium, you may want to build an entire story around it.

• The prospective donor or buyer isn’t obliged to respond just because you enclosed a premium. And even when the mailing enjoys a higher response rate, the average contribution or order is often lower.

• But a lower average contribution/order isn’t reason enough to shy away from testing premiums. It simply means you need to give extra attention to your efforts to upgrade the donor or resell/cross-sell the buyer.

• Many first-time buyers/donors may require another premium to continue responding. Once you’re into the premium business, you may always be in the premium business. On the plus side, with a premium you can recruit a donor or customer who would not have responded otherwise. And as long as your premium offers out net non-premium offers, you’ll still ahead.

• With premiums, your package cost will be higher. But what’s important is net dollars.

• Don’t assume that if a particular premium works for another group, it will work for you. You’ll need to test different premium offers — and non-premium offers — to see what works best for you.

• Don’t forget to consider the cost of fulfillment when using a backend premium.

You do want to test a premium but remember it’s only one part of your direct mail package. You must still observe the essential elements of traditional direct mail — list, offer, copy package and timing. While a premium can dramatically improve your mailing’s results, it alone won’t guarantee success.

Oh…I mentioned that there was only one reason to test premiums and that’s to increase net dollars. Whether you’re trying to please shareholders or raise more money to feed the hungry, cure the sick or shelter the homeless, it’s net dollars that gets the job done.