Nine Tips for Two-step Acquisitions

By Gina Valentino

In the old days of cataloging, a two-step acquisition was defined as a prospect converting to a customer after he or she responded to two different marketing efforts — thus taking two steps. Step one was to respond to a compelling advertisement to get a catalog. Step two was to respond to the catalog by placing an order.

With two-step acquisition, the broad advertising net usually was cast in a trade magazine, and prospective customers replied by phone. Tracking costs for such acquisitions was simple, as the choices for the first step seemed finite, and the conversion meant loyal, long-term customers.

In merely one step, it's exceedingly difficult to specifically target the right prospect with the right offer at the right time. Engaging the prospective customer and determining what offer is right takes at least two steps. The intricacy isn't found in the steps; it's found in calculating the return on investment (ROI). Why? Too often for business-to-business (b-to-b) catalogers, the trick is to identify where the customer originated or, said differently, which "step two" was the purchasing motivator. The tougher question asks which combination of steps was most successful.

Following are nine tips for ignoring the status quo and potentially looking at two-step acquisitions differently.

1. If capturing source codes is elusive, outwit the responder. If responses are mailed in, use different P.O. boxes. Or try a static P.O. box number but different department numbers specific to the advertisement/source. The same methodology works for toll-free numbers. Indicate different extension numbers on the response device or a different toll-free number all together. If your Web site accepts responders (whether for more information or to place orders), use specific Web ad-dresses such as www.acme.com/vip. No matter the medium, track each source uniquely.

2. Always include a call to action. Too often aesthetically appealing or highly creative materials don't include the call to action. Always, always, always, have a contact number and Web site address (or URL). I'm amazed at how many times I see a company's name and logo missing from ads, collateral or other marketing materials. Again, track the ad (see Tip #1).

3. Entice prospects with free gifts, but not something they'd buy for themselves. The gift needs the following key elements:

- relevance to the audience (e.g., a digital pocket calculator for engineers, a mini measuring tape for contractors);

- a price less than $20 retail to comply with most corporate gift policies; and

- a trinket on which no one would really spend a lot of money.

4. Cast a wide net — frequently. All two-step programs are designed to help find and qualify prospects. Inexpensive remnant ads in trade magazines, industry publications and relevant space ads, or your participation in a co-op mailing, card deck or special insert program are all ways to be in front of your potential customers.

Also try adjacent avenues that represent the demographics or psychographics of your audience, not just their business venues. For example, a company selling to the detention and security industry may find most employees are ex-military personnel or members of the National Wildlife Federation. Running space ads in the relevant trade publications, or participating in a special section, co-op mailing or trade show, may prove to be untapped avenues in the two-step arena.

5. Start with the big picture and look at programs on a macro level. Allocating costs and calculating the return on advertising investment often is difficult. Select a finite period of time and review the total ad dollars spent to acquire customers. Compare the dollars spent to the total customers acquired, irrespective of the channel.

For example, if you spent $200,000 in advertising efforts to yield 26,000 new customers, the cost per customer is $7.50. Is that acceptable? Moving from a macro view, separate the total into subcategories (e.g., magazine ads, newspapers, card decks, Internet surveys). Assign a cost (if possible) to corresponding new customers. Identifying, even directionally, those programs that work best enables better decision-making next season.

6. Build on your success from the consumer marketplace. A new way to use the Internet and build a b-to-b customer file is to develop tests or assessments that are relevant to your audience. Look to the consumer marketplace for tips here. For example, the uncanny fascination with test scores and comparing an individual's level of knowledge to that of experts is a practice that is nearly addicting.

Here's how to do it: Direct your potential customers to a handful of questions that help diagnose problems or provide benchmarks. For example, a paint supply company could offer an online assessment that compares a prospective customer's level of knowledge regarding which paintbrush is right for a particular job, and compares the answer to an expert's, say, an engineer from the paint supply company. The prospect now is using the paint supplier's Web site and thinks of that supplier as a valuable resource.

The supplier also could use this opportunity to gain e-mail signups; use a questionnaire for qualifying catalog requests; or cross-sell products that correspond with the answers. Furthering the paintbrush example, if the answer from the assessment is "a fine synthetic brush," show that product and a "buy now" button, which is an excellent call to action (see Tip #2).

7. Don't limit your testing of two-step acquisition programs to print ads or direct marketing (e.g., catalog, Internet). Broaden the definition to include purposefully selecting prospective customers and creating a targeted industry summit.

An industry summit is an invitation-only, one- or two-day event of topics, relevant planning meetings and communication of industry trends, all ultimately relating to your company's expertise. (Many software developers use this tactic. They call them "User Conferences.") While potentially an expensive endeavor, the ROI is such that converting a customer is an important payback during the course of several years.

Some companies think big on a small scale. They select prospective customers from a regional area, limit the attendee list to 10, and use local speakers and media correspondents.

8. Think 10 times beyond your usual expense budget. Too often catalogers don't explore the option of space ads because the immediate reaction is: "We don't have the budget." On a small scale, running one space ad in a region for the usual investment may not yield adequate payback. But run a what-if scenario that identifies an acceptable return. Using historical performance as a benchmark, determine if running the ad in all regions and in sister publications blankets the marketplace. Granted, you'll invest much more money than you ever thought, but is the payback 10 times more new customers than you imagined?

This type of scenario-planning ignores the traditional corporate mantra of "We only budget x percentage of sales on advertising" and instead looks at ROI. This approach asks the question: "What would it take to acquire 10 times as many new customers as last year?" And it then asks: "What is the payback of this investment?"

9. Try a mini-brochure. First, define "mini" as it fits your business, as well as the necessary payback. B-to-b catalogers often find themselves competing for more customers within the same organization. From end-user to specifier, purchasing agent to headquarters, gatekeeper to decision-maker, tapping each person on the shoulder with a catalog may not be economically feasible.

Start by including a mini-brochure, for example, "How-to Tips" or "More Uses for the Widget" — and, of course, include a call to action. Your goal is to add more prospective customers, ask qualifying questions and ultimately convert the prospect to a buyer.

One way to help add instant recognition and credibility to your prospecting efforts within a given target company is to parlay your current buyer relationships. Your marketing message could say "Approved Vendor," or you could offer a testimonial from a current end-user.

Conclusion

Until the catalog industry is able to mail to only those prospects who will buy, keep testing new offers, messages, media and ideas. Continually build upon your knowledge to expand what works, and assess the advertising payback.

Gina Valentino is vice president/general manager at J. Schmid & Assoc., a catalog consulting firm based in Shawnee Mission, KS. She built her experience in marketing, promotions, e-commerce, circulation and catalog production. You can reach her at (913) 236-8988 or via e-mail at: ginav@jschmid.com.