Archives for category: DRTV

An area which companies do not focus enough attention on, yet is just as important as the offer, is the upsells.  Most companies focus on customer acquisition, because it determines the viability of a campaign, but it’s the back-end of a successful campaign that truly determines your bottom line.  Optimizing the back-end can be the single most important aspect to increase a company’s profitability.  The back-end is broken into two parts.  The first consists of the upsells (to the TV product) offered during the IVR/web order.  The customer is calling because he/she is excited about the TV offer; therefore, sell her more of what she wants.  Deluxe versions typically work best, then offer additionals at a discount with free shipping. The upsells should be extremely well connected to the initial TV offer.  Continuities can be very successful in the upsell stream of collectible products.  A well-designed continuity can receive 25% response and can account for 50% of your overall RPO (revenue per order), depending on the offer and it’s location in the upsell stream.  Continuities typically do not lend themselves to low priced, mass-market products.

The target RPO from a $10 TV offer should be about $60, much higher than that will likely cause significant problems with credit card charge back and returns.  Each upsell takes away from the response of future upsell offers as the customer’s attention span wanes; too many upsells causes the IVR length to lengthen unacceptably.  I have listened to IVRs that can run 18 minutes.  This causes significant frustrations for the customer and can easily lead to customer input errors that again lead to increased charge backs and returns.  It is important to A/B test upsell position order as well as price points to optimize your upsell stream.

If you are involved in the direct marketing television industry, you probably already read The SciMark Report.  If you don’t, you definitely should.  The SciMark Report is Jordan Pine’s blog about the short-form DRTV industry.  Jordan reviews most new short-form direct response spots and also semi-annually compiles a comprehensive list of the top fifty direct response spots (based on media spend).    When he reviews new spots he typically provides a synopsis of the spot, his thoughts and predictions, as well as a link to the spot’s landing page. The site is a fantastic resource for keeping up on the industry, as well as, a great tool for researching what has previously been tried.

You need to watch the pricing of your various television spots, as well as, when they air.  For station XYZ, late night runs from 11pm to 2am and costs $1200, while overnights run from 2am to 5am and cost $300.  If your spot airs at 1:53 am, and you are charged $1200, it is highly unlikely that your spot will be profitable as the number of viewers towards the end of late night is substantially smaller than the number of viewers during the beginning of late night.  A good media buyer will be watching this for you, but, as with everything, its important to watch the details.

Do you BOGO (Buy One Get One Free) or give a different item away as the freebee?  Every DRTV offer needs to be tested to find the optimal approach and the economics of the item can effect how you create your offer.  As a starting point, for short form mass market $20 or under items, BOGO has proven strongest as it gives the TV viewer psychologically the best price, while giving maximum retail flexibility.  For child items, I stay away from the BOGO, as a BOGO cuts down on multiples, thereby hurting your RPO (Revenue Per Order) as parents typically buy one item per child.

For collectible or niche products, I have found that a second similar item as the freebee works best, rather than a BOGO.  This is stronger than simply doubling the original offer, as the similar bonus item decreases the customer’s cost per item, but does not cheapen or lessen the exclusivity of the original item.  This also allows for the depiction of a second strong visual image of the event.  For Horticulture I have had success with buy 2 get 1 free as well as giving away a second similar item.  Both approaches have achieved a higher RPO than the BOGO, due to upsell multiples.  As always, the answer is to test, test, test.

It’s easy to make the mistake that more is always better.  If we add in an extra freebee, of course response will increase, but in reality the freebee can be detrimental if it takes focus away from the main item offered.  When creating your offer, you need to watch out that your amazing offer doesn’t turn into ‘the kitchen sink’.  This is one occasion were more can actually hurt rather than help response.

We created a beautiful 6*9 mail package for a die-cast car offer.  The offer consisted of a free die-cast car with the purchase of two other cars.  Each car also came with a free glossy trading card.  The offer was successful and rolled-out.  On an expansion mailing we decided to test adding in an extra freebee.  For the program, we had produced a leather display wallet to show off the trading cards.  It sold well inshipment, as well as an upsell to phone orders, so it seemed like a logical freebee to test.  For the mailing we A/B split, with 2/3 getting the original offer, and 1/3 getting the free display wallet in addition to the original offer.  Normally the test portion of the mailing would be much smaller, but we went with a larger test size because the response to the second offer had to be better, as the customer was receiving everything from the original offer, plus more.

Response from the test group dropped by 20%, while the control group continued to perform the same as prior mailings.  The original offer was great and focused overwhelmingly on the free car.  The test offer, distracted some of the customer’s focus away from the free car and shifted it to the less impressive free display wallet.  In hindsight, the results made sense.  When we created the offer we fell into the trap of more is always better, but the math proved sometimes less is more.

A collectible is a niche product; this has its advantages and disadvantages.  I have found a success rate for collectible television spots of better than 1 in 4 while successful mass market spots range from 1 in 20 to 1 in 40+.  Collectibles will never do the overall sales of a mass market product, however, product niches can often be targeted very successfully.  For the Obama Presidential Coins, one individual station accounted for 50,000 customers.

Programming also is more impactful on a niche product.  On a recent campaign, spots airing on a profitable station did 2.5x to 3x when the spot ran on a program that was related to the genre of the collectible and over 7x when the programming concerned the actual subject matter of the product.  Typically it was only an additional 10% expense to make sure that we aired during specific shows.

Niche products require more of an exacting pinpoint rather than shotgun approach.  They do not offer the retail opportunity, however niche product customers have a higher lifetime value, as they often continue to purchase similar products in the future.  Niche products do not offer the home-run potential of a mass market product, but they definitely offer a better batting average.

Once the order is placed through the IVR or Web, the second portion of the back-end is the fulfillment.  This is an area that is not focused on enough, as it is often outsourced.  You have spent tremendous efforts to lower you CPO (Cost Per Order) and increase your RPO.  But are you maximizing the efficiencies of your fulfillment?

The piecemeal billing of fulfillment companies is relatively straightforward, but marketers often leave costs out of their forecasted economics.  Are you truly counting all of your fulfillment expenses in your economics?  Do you know what your true shipping costs are for each customer shipment combination, including split package charges, gas surcharges, etc.  I realize how simple this sounds, but speaking from previous experience, accurate data is often difficult to obtain.

Companies are often using antiquated computer systems that were created when the company was much smaller.   Over time, they have continuously built additional modules that were not thought of when the computer systems were originally designed.  This can lead to portions of the computer system not correctly interpreting information from other portions, thereby producing bad data.  There is nothing worse than making a ‘correct decision’ off of incorrect data.  Does your internal system communicate efficiently with your front-end (orders coming in from IVR, web and affiliates) as well as with your fulfillment house?  Are you able to produce the proper reports to accurately analyze all aspects of your programs?  Accurate data is the lifeline of direct response marketing; you should never feel like you are flying blind.

Another issue to look at is inventory.  Are you shipping product as soon as orders are received?  Any delay causes increased credit card decline rates that can have a detrimental effect on the bottom line (even though the front-end CPOs looked fantastic).  Do you have inventory of all of your upsells in stock, or are you unnecessarily splitting shipments to customers?

The front-end of DRTV is what most marketers view as the fun part, but it’s the ‘boring’ back-end that can have the biggest impact to profitability, as back-end improvements drop directly to the bottom line.

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