You have two reasons to offer a guarantee:

First, it’s the right thing to do. A meaningful guarantee shows that you believe in your product. And, when you’re asking for someone else’s money, you should believe in what you’re selling—if not, don’t do it.

Second, you’ll want to offer a guarantee because it can build profits.

Buyers, whether online or traditional direct mail, have plenty of reasons—real or perceived—not to respond to your offer. After all, whether we’re fundraising or selling a product, we’re asking the prospect to trust us to do what we promised. And unless we can overcome the prospect’s uncertainty, we’re going to lose the sale.

A strong guarantee shows that you believe in your offer. It’s your written assurance that you accept responsibility for the quality of your product or service. It’s the promise of a good customer experience; it helps remove the hesitation that might otherwise jeopardize the sale.

How to write a guarantee

Every organization or business—including nonprofits—can offer a guarantee. Explain in clear, easy-to-understand language:

• What product or service is being promised
• How this product or service benefits the buyer
• Any terms, conditions or limitations—whether the product must be registered, if it is a 90- or 120-day guarantee, whether you will repair the product or replace it, if you are offering a full refund or a prorated amount, etc.
• What the customer needs to do to activate the guarantee—call a toll-free number, go to a Web site or return to the store
• And what the buyer can expect from you if they have a problem

Tell the customer everything they need to know but keep the guarantee short and to the point. Run it past the legal department before it goes to print, but do not include legalese in the guarantee. If there’s legal language that you must include, work it into the letter copy on page two or three—and absolutely no asterisks. Asterisks reek of insecurity.

Call attention to your guarantee

Position the guarantee where it will be seen. Put it in the letter near the closing—close to the call to action—and mention it in the postscript. Also, add the guarantee to the response form and any brochure or freestanding insert. Even consider a separate “Guarantee Certificate” enclosure.

Put a certificate-style border around the guarantee to make it stand out. In the letter copy, introduce the guarantee with a sub-headline and double indent the text to catch the reader’s eye.

Put the guarantee on your Web site, the product’s landing page, the checkout page, and on any collateral material. Show people that you’re proud of your product and proud of how you take care of your customers.

Make your guarantee stronger

The stronger the guarantee, the fewer reasons the prospect has to hesitate or feel uncertain before responding.

If you’re offering a “Money-Back Guarantee,” there’s no extra cost to offer  a “100% Money-Back, No-Risk Guarantee.” Also, consider a “Double Your Money Back Guarantee.” And if you offer a “1-Year Guarantee,” consider a “3-Year Guarantee.”

A good guarantee makes it easier for the prospect to buy your product. And, as long as it’s believable, the stronger the guarantee the better.

Make it easy

Make it easy for the customer to use the guarantee. Let the customer know that if they are unhappy with the product, they should just return it and you’ll promptly refund its full cost. No questions asked.

If the customer must return a product, include free shipping—both ways. Maybe even throw in a small gift or handwritten note in apology.

The true value of a better guarantee

Without doubt, some people will take advantage of your guarantee and try to rip you off for a few extra dollars. But the vast majority of people are honest, and offering a stronger guarantee can not only reduce buyer reluctance and increase sales, it can also help build customer loyalty.

People want to believe they’re getting the best product for their money. And they want to know they’re dealing with a company that values their business.

A strong guarantee is your promise to give the customer a positive experience. It tells the customer that there’s no need to try another company—even if the price is a few dollars lower—because you’re going to take care of them.

Even if they never need to take advantage of it, your guarantee gives the customer the confidence to make the buying decision and want to continue doing business with you.

Our customers are our most valued asset. And however much it costs to honor your guarantee, it will be much less than the cost of replacing an unsatisfied customer.

I guarantee it.

Your offer needs to be specific and to clearly state how it benefits the prospect. It includes the product—or for a fundraiser, the organization’s mission or project—the price or asking amount, terms, incentives, guarantee, etc.

And, of all the components of your mailing—other than the list—the offer is the most important element of your success. If you’re looking for breakthrough results, here are 17 quick ideas to consider:

1. Offer something free—a free gift for responding, a free trial period to test the product, free shipping, etc.
2. Offer something new. Along with “free,” “new” is still one of the most powerful words you can use.
3. “Flip-flop” your offer. Rather than emphasizing “You’re paying $400 too much for auto insurance,” test “You can save $400 on your auto insurance.” You can sell a product at “50% off” or offer the reader “Buy one and get one free.” You can offer a product for $24.99, or test selling it for “$29.99 with free shipping.” In each of these examples, the cost to the mailer is the same, but repositioning the offer can lead to a big difference in results.
4. Use specifics. Rather than offering to save the reader $400, offer to save him or her $398.43. Although it’s less of a savings, the specific dollar amount can attract more attention and give the offer added credibility.
5. For political fundraisers, rather than ask for money to “help elect” a candidate, raise money to “defeat” the opponent.
6. Use goals that people can relate to. For example, rather than raising money to feed millions of hungry people, ask for help to feed one hungry child. Rather than cutting taxes by billions of dollars, offer to save each taxpayer $1,023.
7. Where possible, don’t use percentages. What does it really mean to save 25%? Instead, offer to “Save $19.” Rather than “Sixty percent of all consumers agree,” use “Three of every five consumers agree.”
8. Test a premium. If you’re already offering a premium, test a new one. (See “Why Test Premiums…”)
9. Test new prices and/or asking amounts
10. Provide a guarantee. Everyone can offer a guarantee; if you don’t think you can, you shouldn’t be selling the product. Even a nonprofit can offer a guarantee to use the donor’s money wisely or promise to refund the donor’s initial contribution if they ever become dissatisfied with the organization.
11. Include a trial offer. Like the guarantee, a trial offer limits the prospect’s risk and reduces their concerns about responding.
12. Make the offer “For a Limited Time Only.” By including a specific deadline in your offer, you can force the prospect into making a decision.
13. Offer “Early Bird” savings or gifts. (“If you act within the next 10 days, you get…”)
14. Test “Yes,” “No,” or “Maybe” options with peel-off stickers that the recipient transfers to the response form, or include the options with simple check-off boxes. Giving the prospect Yes or No options typically increases response. And adding a Maybe option often boosts response even more.
15. Offering a “Charter Membership” gives the prospect added recognition and is a simple way to boost response for a new organization. Also, consider offering an “Introductory Price” as a cost-effective way to acquire new customers.
16. Offer a “Bill Me Later” option or installment payments. The “Bill Me Later” option is common for subscriptions, and offering installment payments can make large-ticket items seem more affordable.
17. Regardless of your offer, sell only one thing at a time. This is one of the oldest rules of sales—ignoring it can prove costly.

You often get the best results by combining two or more unique offers, so don’t be afraid to mix and match from the above list. If you find a premium that works, perhaps adding free shipping or a discount will increase the mailing’s net revenue even more.

And this brings up an important point. The measurement of success is net dollars. If you need to increase your mailing’s cost to sweeten the offer, don’t let the higher cost be the one thing that stops you. If you believe the new offer has a reasonable chance of increasing the mailing’s net return, it’s worth testing. Focus on net dollars. (See “The What, When and How of Direct Mail Testing.”)

When you need breakthrough results, test your offer. Other than careful list selection, nothing will make a bigger difference in your success.

We all know the importance of direct mail testing, but too often money is wasted on unproductive and unwise tests. Here are 21 basic rules worth reviewing to get the most from your marketing dollars:

1. Before you start production on any test, do the math first. How long will it take to recover your test costs, and what increase in results will you need to beat the control? Proceed with the test only after showing that there’s a reasonable chance that it can economically increase response.

2. Don’t test just because you’re curious to know “what if.” Have a solid plan of how you’ll turn the test results into a profit before you invest in the test.

3. Be sure you test a sufficient quantity to obtain reliable test results.

4. “Replicate” each test when possible—rather than mail one test cell of 10,000 names, split the names into two equal groups and mail the same test to two groups of 5,000.

5. When possible, mail the same number of pieces for each test.

6. Create two test-size cells from the names that will receive your control mailing and use them as the baseline for measuring your tests’ success. These “control cells” will eliminate any bias that mailing to a larger body of names might cause, and, if there’s a production glitch, they can protect your cash flow. Now, rather than hold the entire mailing until the production problem is corrected, you can mail most of your control and hold these test-size cells until your tests are ready to mail.

7. Constantly test for new lists. Nothing will make a greater difference in results. And when you get a new package breakthrough, review the lists you tested earlier and see if your new, better-performing control makes them worth retesting.

8. Rely on the experts for list selections and data work, but make certain you understand what they’re doing. You don’t necessarily need to understand the math behind modeling, but you do need to be certain that the experts understand your objectives.

9. Test new offers. Second only to lists, you’ll get the biggest return from your test dollars by testing new offers.

10. Test new graphics for the outer envelope. These are among your most cost-efficient tests, and they can help keep a control “fresh.”

11. Mail your tests and the control at the same time and, as much as is feasible, from the same postal outlet.

12. You can’t argue with the test results, but don’t follow them blindly. Pyramid—roll out with ten times the number of pieces tested—and reevaluate and/or back test.

13. Don’t get test-happy. Test only those things that can make a meaningful difference to your mailing’s success. It may make sense to tweak the control for incremental gains if you’re mailing in large volume, but if not, limit your tests to the big things—lists, offer, format and copy.

14. Follow up quickly. And minimize your risks and improve the reliability of your results by using proven lists for your tests.

15. More often than not, you’ll increase profitability by increasing the package’s cost—not by taking away from it.

16. If you’re not using a premium, test one. If your control uses a premium, test a new one.

17. If your control includes a brochure, test without one. A brochure often distracts readers and delays their move to the response form. (This is one exception to rule 15.)

18. Make sure your tests receive full credit. Are replies to the 800 number and the website being counted?

19. When calculating how well your test will perform against the control, use rollout costs.

20. Measure your results by net dollars—not response rate or cost per order. If you can’t spend it, it doesn’t count.

21. And, as elementary as this may seem, be certain that you have a competent system in place to receive, count and report results.

You don’t need to be a rocket scientist to succeed in direct mail. But you do need to know what, when and how to test. And you must have the discipline to follow the results.

Let these 21 rules guide you and you’ll have a great start toward a more profitable direct mail campaign.

What to test

In his book, Secrets of Successful Direct Mail, Dick Benson states, “Any idea you honestly believe can economically increase response is worth testing.”

The key words are “economically increase response.” But what is economical? Typically, the more dramatic a change you make in a package, the more dramatic the difference in results.

For example, when you need a breakthrough, test the components that have the greatest influence on the mailing’s success—lists, offer, format and copy. Forget about testing minor changes on page three or the color of the return envelope. Test big things for big results.

However, for clients mailing larger volumes, “tweaking” the control for incremental gains often makes sense.

For example, Client A and Client B both have an average response rate of 1%, with a $25 average transaction. Both test a new package that lifts results by 10%. The only difference is that Client A has an annual mailing volume of 1 million pieces. Client B mails 10 million pieces every year.

For Client A, with its smaller mailing volume, this 10% lift means an annual difference of $25,000 in income. But for client B, the same 10% lift means $250,000 in additional income.

While the smaller client might appreciate an extra $25,000 to spend, it is probably not going to have a major impact on the organization—especially after accounting for test costs. On the other hand, a quarter of a million dollars is “adult money.”

But whatever you decide to test, do the math first. Even if the test beats your control, it won’t make sense if it takes too long to recover your test costs or requires an unobtainable rate of response.

When to test

The best time to test is when you have a successful control. A too-common mistake is to delay testing new concepts because “our control is still working.” By this reasoning, you wouldn’t test new concepts until the control takes a dive, and this is a disaster for cash flow. You may even find that it’s time to update your résumé, because there’s not going to be enough cash flow to make payroll.

Instead, test from strength, not weakness. Virtually every mailing is an opportunity to test. However successful your control is, and however long it’s been the control, it can be improved.

How much to test

When deciding how many pieces to test, the important thing isn’t how many pieces you mail with your test package. What’s important is how many responses you get back.

Your test volume should be no fewer than the number you need in order to produce statistically reliable results. Mathematicians using formulas I won’t even pretend to understand tell me that as few as 39 responses can be statistically valid with a 90%–95% probability of accuracy. Personally, I’m more comfortable with closer to 100 responses.

You can use an online calculator to tell you how much to mail, but the concept is easy. Just take the control’s response rate and see how much you need to mail in order to produce 100 responses. For example, with a 1% response rate, you would need to mail 10,000 pieces to produce 100 responses.

As a rule of thumb, you’ll want to limit your total test volume to no more than 20%–25% of the total mailing. This way, if the test fails, the returns from your control will help absorb the loss and preserve the operating budget.

Smart testing

Testing is essential to profitable direct mail, but we need to test smart. Evaluate the success of the test based on its rollout cost, but always do the math first and make sure you can pay back your full test costs in a reasonable time.

And remember Dick Benson’s advice and test only what you honestly believe can economically increase response.

J. Paul Getty once said the three keys to wealth and success are, “Rise early. Work hard. And strike oil.”

That may be good advice. But for those of us who must depend upon something other than striking oil, I say the three keys to success for a direct marketer are to TEST, TEST, and TEST!

But before we test, we must recognize that not all tests are productive or cost-effective. My next post will be “What, How and When to Test” but in the meantime, here are 7 costly mistakes that you’ll want to avoid when testing:

• When you’re looking for breakthrough results, it makes no sense to test small things—the color of the return envelope, minor copy changes buried in the letter or a different paper stock, for example. When you need a breakthrough, test the big things—list, offer, format and copy—to get big results.
• Do the math first. Before you make the test mailing, you need to know how much of a “lift” you need to break even. Make sure you have a reasonable chance of winning. On the other hand, don’t conclude that the test “costs too much” without doing the math. Increasing your package cost by 50% doesn’t necessarily mean you have to increase response by 50%. Much will depend upon the size of your average order, so do the math first.
• Don’t ignore past test results. At times, we get valid test results, but they weren’t what we expected so we’re tempted to ignore them. Your test results are the voice of your customers, so listen to what they’re saying—even if it’s not what you expected to hear.
• Don’t test more than one thing at a time—or test everything. You can’t test a new format to a new list and conclude that the format made the difference. However, you can test new copy and a new format—to the same list—as long as you recognize that you’re testing the package, not the format or the copy.
• Don’t think that just because something worked for another mailer, it will work for you.
• Rather than become stuck in a “make it cheaper” mode, test adding features and benefits to your package. More often than not, you’ll increase profits by adding to the package rather than by taking away features and benefits.
• How many times have you heard, “I don’t need to test; my control is still working”? The best time to test is when your control is working. Don’t fall into the trap of complacency. Otherwise, you’re going to put a serious hurt on your cash flow.

To succeed in direct mail, you don’t need to be a rocket scientist, but you do need to understand the fundamentals of testing and have the discipline to follow the results.

Test results are like a road map, and when you follow them, they’ll lead you to success.

Early in my direct marketing career, a mentor taught me, “The fewer people you mail, the more you can mail.”

It took me a while to grasp this simple concept, but in reality, it speaks to the core principle behind successful direct mail.

Being able to target your mailing to a narrowly defined audience—and highlighting how your offer solves specific needs—has always been one of the most powerful benefits of direct mail. Yet far too often marketers fail to exploit this advantage.

You may have a product or offer that appeals to more than one market segment. But speaking to each of these groups individually—and showing how responding to your offer will benefit the prospect’s individual needs—is the key to achieving maximum response.

Consider these examples.

• As a small business, I have a need for financial software to monitor expenses, issue payments and track invoices. The software I use fulfills all these needs—and will work equally well for many larger businesses. But unlike some companies, I don’t have a need for inventory control, tools to handle large payrolls or credit card processing and trying to sell me the product based on these benefits would be a mistake.

• For acquisition mailings, even your highest-performing mailing list will include names that are unlikely to respond to your offer. By ranking the demographic characteristics of your best customers/donors, you can see which demographic groups have the highest propensity to respond. Then, by overlaying this profile onto your prospect lists, you can eliminate those segments that don’t share the most-likely-to-respond characteristics.

• When mailing your customer/donor file, there’s no need to mail every name every time. Some donors and customers are unlikely to respond more than once or twice each year. By identifying the customer’s tendencies—they only respond to annual renewal mailings, particular seasonal offers, or certain package formats or techniques—you can limit the frequency of your mailings yet continue to benefit when the customer is most likely to respond.

Each of these three examples illustrates how mailing to a more highly defined audience can—despite any decrease in mail volume—increase net profit. And with today’s technology in list selection and personalized printing, it’s never been easier to customize your mailing to speak directly to the needs of individual recipients.

It’s a mistake to think we can save money by rolling all the product’s benefits into one mailing and sending it to a broad audience. Doing this may lower your cost per thousand but total expenditures will be unnecessarily high.

By sharpening the mailing’s focus, we can use different teasers on our outer envelopes…write more-targeted lead sentences for our letters…display the product’s benefits differently…offer a guarantee that addresses specific concerns of a narrow market group…and even offer unique premiums for various market segments. All of which permits a more personal conversation with the reader and lets us show how our benefits fulfill his or her needs.

Aligning our benefits more closely with the needs of the reader may reduce mail volume, but ultimately we’ll enjoy a more successful and profitable mailing.

In his novel, Anna Karenina, Leo Tolstoy wrote, “Happy families are all alike; every unhappy family is unhappy in its own way.”

What Tolstoy was saying is that to be happy, a marriage must succeed on a number of levels including: financial, sexual, how to raise children, in-laws and religion. Every successful couple finds agreement in each of these areas. But an unsuccessful marriage can break apart when there’s disagreement in any one of these areas.

The reasons for happiness are same. The cause of unhappiness is unique.

Can’t we say the same about direct mail?

Every successful direct mail package is alike while an unsuccessful package can fail in its own way.

All successful mailings are the result of thoughtful list selection, a powerful offer, persuasive copy, an effective format and good timing.

Yet a mailing can fail when it lacks any one of these characteristics. We can have the most powerful offer and persuasive copy, for example, but when delivered to the wrong audience, it fails.

Successful direct mail isn’t rocket science.

We don’t need a new book with a clever title, a new buzzword or a 3-hour seminar to tell us what makes direct mail work. It’s the same today as it was 25  years ago. And it’s what will make direct mail successful 25 years from now.

Good list selection. An unbeatable offer. Persuasive copy. And an efficient format. All delivered to the right person at the right time.

Miss any one of these ingredients for success and your mailing fails. But each of them right and your mailing, like Tolstoy’s thoughts on a happy family, will enjoy far more success.

One thing we can do to improve the profitability of our direct mail is to learn the lessons of a famous jam study.

That’s right. Jam. The stuff we spread over our toast.

In a gourmet market, Professor Sheena Iyengar of Columbia University and her research assistants set up a booth offering samples of Wilkin & Sons jams.

Every few hours, the researchers switched from offering customers a selection of 24 jams to offering a group of only six jams.

Each participating customer – regardless of the number of selections offered – received a $1 savings coupon and tasted an average of two jams.

Here’s the interesting part.

Of those shoppers seeing the larger display, 60 percent stopped to sample the jams. Yet when researchers switched to the smaller display, only 40 percent of shoppers stopped for a taste.

But of those sampling from the smaller display, 30 percent decided to buy jam while only 3 percent of those confronted with larger display purchased a jar.

The display with more choices drew the largest crowd but customers presented with fewer choices bought more.

Researchers then repeated the study using a wide variety of products – everything from chocolate to speed dating. And each time, regardless of the product tested, offering fewer choices to the prospective customer resulted in more sales.

Professor Iyengar concluded, “In reality, people might find more and more choices to actually be debilitating.” And while it may be too simple to conclude that offering lots of choices is bad, we shouldn’t assume that providing more choice is always better.

What does this have to do with our direct mail?

Look through your mailing samples – particularly at the response device. We’ve all seen response devices from nonprofits that suggest five, six and even seven asking amounts. And the offers we get to bundle cable, phone and Internet service can be paralyzing.

Offering too many choices can immobilize the reader’s decision-making process and cost us a sale.

Taking the lessons from Professor Iyengar’s study, let’s make it simple for our reader to respond. For nonprofits, three suggested contribution amounts plus an “Other” option is more than enough. But whether asking for a contribution or a lead or a sale, keeping it simple makes it easier for the prospect to respond and feel good about it.

Littering surveys with too many questions is no different. Surveys are a great way to involve the reader with our mailing but we need to keep it simple.

You’ve probably have received a telephone call asking for your participation in a survey. You’re interested in the subject so you say “yes” and 20 minutes later, you can’t wait for the call to end.

Let’s not make the same mistake with our mail.

Remember, when we include a survey in a mailing, its purpose isn’t to gather information, it’s to encourage a response!

Limit yourself to five or seven questions and allow the reader to move quickly to the order form.

And finally, don’t accept the argument that the reader needs more choices to understand the offer’s full value. Instead, accept this as a challenge to do better list selection. Better segmentation of your mailing list will reduce the need to overwhelm the reader with too many choices.

We can all learn from the jam research. Keep it simple, make it easy for the reader to respond and the result will be better than your morning toast.

Direct mail isn’t a complicated business. If you can get more people to read further into your letter, you’re going to achieve a greater response.

Successful direct mail is a conversation that motivates the reader to take a specific action. If we can get the prospect to listen more, or in our case read further along in our letter, we’ll have a greater chance of getting them to take the desired action.

Here are 18 proven ways you can increase readership of your direct mail letters and achieve a more profitable mailing campaign.

1. Make the letter look like a letter. Practically everyone is going to recognize it as a “mass mailing” but create the perception of a personal letter.
2. Include a salutation. You wouldn’t start a conversation without a greeting so include a salutation with your letter. And assign title codes. There is nothing more impersonal tan “Dear Mr. Tom Jones.” (Even if you only have title codes for half your prospects, use them. Getting 50 percent right is much better than 100% wrong.)
3. You’re writing one letter to one person. Good direct mail is an “I” to “you” medium. Not “us” and “we’s.”
4. Sell benefits, not features. You may be proud of what you’re selling but the letter isn’t about you. Write about what’s important to the reader and show them the benefits of responding.
5. Use wide margins and double space between paragraphs. And don’t justify your right margins. Flush left, ragged to the right.
6. Use a serif type for your letter copy – Georgia, Courier and Times Roman are examples. (Serif type has the little “feet” at the bottom and is proven to enhance reading flow and reduce eye strain which is why your newspaper, magazines and published books use serif type.) Graphic designers seem to love sans serif type – Arial, Helvetica and Verdana are examples – but save it for headlines and things you don’t want read like disclosures.
7. Typically, the letter’s first paragraph and the P.S. at the end of the letter get the most attention. Use these areas to capture the reader’s attention and tell them the benefits of responding.
8. Remember, you’re trying to communicate, not impress. Write in a conversational style as if you were speaking face-to-face and if this includes incomplete sentences, the use of contractions or a preposition at the end of a sentence, so be it. As a rule of thumb, if you can’t spell a word or need to look up its meaning, don’t use it.
9. Use your words to create an image for the reader. If the reader can see himself or herself in the situation you create, they’ll take an interest and read on. It’s like selling a house. When you hear the prospective buyers talking about where the sofa will go, you know you’ve got them. Same thing here. With your words, let the reader picture how they’ll benefit by responding today.
10. Use an involvement device – surveys, petitions, punch-out tokens, samples of cloth, address labels, greeting cards, CDs – anything you can use to get the reader involved will increase readership and response.
11. Keep your paragraphs short. You want to vary your paragraph length to keep your copy interesting and flowing. But as a rule of thumb, limit each paragraph to no more than five lines.
12. Always indent your paragraphs. Eye-camera studies show that indented paragraphs “catch” the eye moving down the page and make the letter more readable.
13. Single space the letter. Double space between paragraphs.
14. Don’t end a page with a complete sentence. Look at your newspaper. To finish practically any article, you have to turn the page and that’s exactly what you want the reader to do with your letter – keep reading toward the final call to action.
15. When using abbreviations, always spell the word out when first used. For example, rather than beginning a letter with “ACLU.” you would write, “American Civil Liberties Union (ACLU). You’ll lose all momentum if the reader must turn back to the start of the letter to understand what you’re talking about.
16. Remember, as a direct mail copywriter you’re a salesperson competing for the reader’s time. Get to the point and stay with it.
17. When using “handwritten” notes in the margin and/or underlining, be sure the letter signer uses the same pen used to sign the letter. This is one letter, written by one person, to one other person. Make it believable.
18. Use nothing smaller that 10-1point type (except for disclaimers) and for an older audience, you’ll want to use a larger 12-point type.

As direct mail copywriters, we can’t close the sale without getting the prospect to read our letter. Use each of these proven 18 tips to increase readership and you’ll see a positive impact with your response.

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.