Testing Your Way to a Breakthrough

There are breakthroughs lurking in all of our businesses. They are in the mind of someone in your organization and are just dying to get out there to be tested.

One of the things I love about being in the direct marketing industry is the relative ease and low cost of testing. As responsible catalogers, we should test something in every mailing. “Test, test, test” is my mantra for catalogers. By testing you might find ways to cut expenses, achieve incremental revenue or dramatically alter the course and performance of your business. But to find ‘em, you gotta test ‘em.

In this article, I’ll discuss several ideas to test in your upcoming mailings and hopefully get your juices flowing for more great tests in the near future.

Before I discuss the ideas, let’s examine some important testing habits.

Prioritize. Be sure you’re working on the “big” ideas. Test important things that really can make a difference in your results, and continue to reprioritize as you go.

Make it a clean test. Test one thing at a time and keep it as simple as possible. One of the most common testing errors is having too many variables in the test. Another is failing to have a good control. You must be able to isolate and identify the one thing you’re testing and ensure that nothing else is happening in the control to skew the results.

Roll out a winner. Be absolutely sure you can afford to implement the results. We’ve seen companies test ideas they wouldn’t be comfortable rolling out because of additional capital investments required or even because of company cultural issues. If you can’t or won’t roll it out, don’t waste time and money testing it.

Share the plan. Make sure everyone understands the hypothesis being tested and what will happen next with either a positive or negative result. Before the test is mailed, ensure everyone agrees that the creative or marketing execution will enable you to interpret the results.

Split-test head-to-head. The only way to get accurate results is in a head-to-head (A/B) test within the same segments. Don’t test one segment against another, one region against another, or test in two separate mailings. Too many other variables can affect the outcome, and you could roll out something that won’t yield the same results you saw in the test.

Test thoroughly. Be sure your test sample size is large enough. I always split-test several segments, and ensure that split cells don’t fall below a minimum number of names needed to yield at least 100 orders from the segment.

Double check results. If a full-scale mailing is risky (i.e., it requires an up-front investment or has a potentially large opportunity cost,) then it’s a good idea to re-test in a subsequent mailing. Make sure everyone is confident with the results and that your lift is high enough in the test to suffer a drop-off in the rollout and still yield positive results.

Back test during the full-scale mailing. Hold out some names in the initial rollout, and back test the old control to be sure you’re still getting the lift you expected.

Six Steps

Now that we’ve established a good foundation of testing habits, let’s review several testing ideas. If you can’t implement these ideas exactly, maybe you can alter them to fit your company.

1. Cover concepts. Your cover is vital for getting prospects to “step inside” and see what you have to offer. If you’re doing a fair amount of prospecting, I recommend testing several cover concepts to make sure you’re selecting the most effective one. Test a product cover against a lifestyle one, several products against an individual product, selective focus or an intriguing perspective against something more straight forward.

It’s especially important when testing covers to understand the concept you’re testing and make sure it can be executed in different ways. Otherwise you’ll be testing only a particular cover execution and won’t be able to roll it out in consecutive versions. You might even want to test a couple of different executions of the same concept at the same time just to make sure that it is indeed the new concept that is out-pulling the old one, not just a specific cover.

2. Offers. When you find problem segments in your file (low average order value, low frequency, low response, etc.) that you need a special offer to remedy, make sure to test several offers to ensure maximum profitability. I’ve seen many offers get good initial results and later prove too expensive to be profitable in a full-scale mailing. Also, you don’t have to give an extreme offer to yield the same or better profitability to certain segments. Sometimes a message with no offer is enough to get the results you need. Remember, you can’t improve your results at any cost … the offer must be profitable to continue.

3. Contact strategy. Knowing when and how often to contact your customers can result in significant lifts in results or cost savings. A contact strategy test is done by using names across several segments that will get the catalogs at different times and frequency than the control.

If you haven’t performed a contact strategy test (or haven’t done it in the past few years), it will definitely be worth your while. Many small- to medium-sized companies find they can actually mail more often (especially to their best customers). This is an easy way to boost the top and bottom lines. In addition, you’ll find the optimum spacing between mailings and the best time to be in-home for your particular product offering. A contact strategy test takes up to a year to perform correctly, so make sure you plan properly.

4. Add or subtract pages. Although adding pages is a much better sign of a company’s health and vitality, subtracting pages (even if only during off-season) can be effective at optimizing results. Often a book with a different page count really can move the response needle. Whether it’s getting more sales from your better customers or optimizing your costs, check out both areas of opportunity. Before adding pages, I suggest that at least 75 percent of your current pages be profitable. This could even be true only for your better segments as long as there are enough of them to merit the extra cost and complexity of adding the pages.

Before subtracting pages, be sure the cost savings are at least as much as the revenue you’ll lose from the dropped items. Also ensure that the number of remaining pages is sufficient to make the catalog look and feel substantial and not like a brochure. A good rule of thumb is that you’ll garner 50 percent of the increase or lose 50 percent of the decrease in dollars per catalog. In other words, if you add 10 percent more pages, you’ll get a 5-percent lift, if you cut 10 percent of your pages, you’ll see a 5-percent drop-off.

5. Add a new product category. This can be done with extra pages, or by taking out your least productive items to make space for the new ones. Testing outside your core product offering can bring you new customers, as well as increase purchasing by your existing customers.

Be sure that the new category is distinct from your current offering, yet fits snugly with your brand positioning. The product category also should have enough potential (i.e., selection in the marketplace) to become at least 10 percent of your business.

6. Try a cheaper paper. Whether it’s a lighter basis weight or lesser grade, as long as you don’t damage your brand, I have yet to see a less-expensive paper lose in a test. With a combination of paper and potential postage savings, it’s hard to get the lifts necessary to pay for expensive or heavy papers.

Within each of the above ideas for testing there are many variations on the theme. Pick something that’s appropriate for your business and customers, and find out what potential breakthroughs are lurking. And remember one of my favorite sayings: “The definition of insanity is doing the same thing and expecting different results.” Testing does not have to be costly, so if you lack even a little money in your marketing budget for testing, start lobbying for some today!

Phil Minix is executive vice president and general manager of J. Schmid & Associates. He can be reached at (913) 236-2408 or at philm@jschmid.com.