Soundview Executive Book Summaries
A Guide to Profitable Direct Marketing
Direct marketing has worked for Sears Roebuck, Sharper Image and Banana Republic, among others, and it could work for you. Lois Geller, the president of Mason & Geller Direct, explains that it can be the key to expanding your company's customer base and increasing its profitability. She and other direct marketing experts believe it is the single most effective way to sell, and Response explains how direct marketing can be tested, tracked and used to make a profit. Direct marketing campaigns sell billions of dollars worth of goods and services to consumers and businesses worldwide, and Geller lets her readers in on the secrets of its success.
Geller writes that anyone can use direct marketing tactics to create or improve business, and she offers step-by-step, scientifically planned, tested and proven direct marketing tools and techniques that can work for any type of business. By providing her readers with multitudes of examples of direct mail letters, reply envelopes, flyers, coupons, ads and television and radio campaigns, she demonstrates how these tools can be used successfully on both large and small scales. To back up her beliefs in these techniques and prove their effectiveness, Response also contains numerous interviews with the people who have successfully started and grown their own direct marketing enterprises.
Small Businesses Can Test, Too
Geller also explains the ins and outs of testing. Although big businesses have been very successful at performing this type of scientific experimentation, Geller offers tips to help small businesses get into the game. Instead of giving up after a single direct mail letter gets disappointing results, she writes, a small business can learn much from sending out the same letter with a small copy change. For example, she explains, a restaurant owner can send out one mailing that offers a free glass of wine with dinner, and in another mailing, the offer could be a 10 percent discount on weeknight dinners. The offer that gets the best response could be continued while the other one is dropped.
She writes that the most effective method of getting direct marketing to work for you is to "create small tests of several versions, calculate which produces the best return, and then do a larger mailing using those results." Because low-volume tests can be so useful, she writes that businesses of any size can benefit from this simple tool.
Since it is more expensive to get a new customer than it is to keep an old one, Geller also explains the importance of creating long-term relationships. She professes her faith in direct marketing as the perfect way to establish and maintain long-term customer relationships, as well as keep avenues open for referrals and new customers. She writes that any small business can benefit from sending out a flier or a postcard every few months to announce a sale, describe a new product or introduce a new staff member.
'What's in It for Me?'
Without an offer, Geller explains, direct marketing is merely retail selling by mail. To help companies answer the customer question, "What's in it for me?" she describes the elements of an effective offer that closes the sale. She writes that the three characteristics of an offer that works are:
- Believability: No one will believe they are going to get something very expensive for free. An offer must make sense to the customer.
- Involvement: Give the customer a special reason to buy. Get customers to visualize themselves already using a product or service. "Buy one and get one at half price," is a good way to help customers calculate how much they can save.
- Creativity: Be just a little different. An offer that is specific to a product or service being offered will get the highest response. Exclusive offers are also appealing.
The rest of Response delves into the fine points of identifying customers through compiled lists and list planning; creative techniques for successful direct mail packages, which include strategies for winning envelopes, letters, copy, design and order forms; direct response advertising; creating and mailing creative catalogs; fulfillment; determining costs and break-even points; and planning an effective direct mail campaign. She also helps big and small companies build relationships using modern technology, and sell internationally.
Why Soundview Likes This Book
Response covers the tactics and strategies of direct marketing from concept to long-term relationship by offering numerous examples and ideas that create customer interest. Geller knows her stuff, and in this updated and revised edition of her classic bestseller, she demonstrates the approach she has taken on her path to success as a direct marketing guru who has the tips and techniques that work in traditional formats as well as via the Internet and other electronic methods. Copyright (c) 2003 Soundview Executive Book Summaries
From the Publisher
"Response is a great practical guide for marketers and it's a key tool for us. I consider it to be the cornerstone of the group's Direct Marketing training." Liz Bieler, Director Insurance Services American Express Company
"Lois Geller's direct marketing genius has been winning customers (and awards) for me for years Now she has a true winner for herself. Lois' book is destined to be on the bestseller list for a long time."Anne McCall Simms, General Manager Fairmont Spas Inc.
"Response is a terrific resource to have in one's personal or professional library. It is filled with practical examples, valuable tools and insightful tips. It serves as a step-by-step guide to delivering successful direct marketing programs time after time after time. Whether it is used for professional enrichment or educational enlightenment, the reader will not be disappointed. It is an excellent book and I would recommend it for anyone doing a direct marketing program!" Renée L. Harris, Director, New York University Marketing and Management Institute Center for Direct and Interactive Marketing
"The practical approach and real-life examples in Response provide an invaluable foundation in direct marketing. Lois is a master teacher whose enthusiasm shines through on every page. I continue to reach for Response both for inspiration, and to ensure my own work is on target." Daniel Coyne, Marketing Manager, Special Projects, Direct Marketing Association, Inc.
"What's so unique about Response is that it brings direct marketing to lifeit offers insider information and only could have been written by someone who has tremendous knowledge and depth of experience. Lois has done a superb job!" Murray Miller, Senior Advisor to the President and COO, American Express Company
Read an Excerpt
Response! The Complete Guide to Profitable Direct Marketing
By Lois K. Geller
Free Press Copyright © 1999 Lois K. Geller
All right reserved.
Why Go Direct?
Every semester for the past five years, students have been crowding into a small, overheated classroom at New York University. These are not your ordinary degree-seeking students - these are innovators, inventors, importers, advertising account managers, catalog publishers, entrepreneurs, and small-business owners. They've all come to my class on Direct Marketing to learn what this industry's insiders already know: that Direct Marketing is the fastest growing, most cost-effective method of selling products and services in our country today.
Direct Marketing - a measurable, tested marketing method whereby products or services are offered to a targeted audience and a direct response is solicited - is a $95 billion business. Every time you receive a subscription letter, fund-raising solicitation, or catalog in the mail, or reply to an advertisement in print, on radio, or on television, you are a participant in a Direct Marketing campaign.
The people who come to class at NYU (like the woman who makes children's toys and clothes at home and wants to start a mail order business, and the building contractor whose only previous advertising success has been his ad in the Yellow Pages) don't have billions of dollars to spend. On the other hand, we also have students who are high-level executives at IBM, AT&T, and other large corporations who want to build loyalty among their customers, who want to build name recognition, and who want to venture into new areas of marketing.
This book is addressed to all those students, to small-business owners and entrepreneurs, and to marketers at larger companies who want to branch out using Direct Marketing methods - to anyone who would like to get in on the successful strategies and concepts of the Fortune 500. What this book will tell you is how you can use the same Direct Marketing tactics the experts are using - within your own budget.
This book will:
* Provide you with step-by-step, scientifically planned, tested, and proven Direct Marketing tools and techniques that can be used in any type of business;
* Include case studies and illustrations that demonstrate how these tools and techniques have been used successfully by businesses (including examples of direct mail letters, reply envelopes, flyers, coupons, ads, and television and radio campaigns);
* Describe how these same tactics can be scaled down to fit smaller budgets without losing their impact and effectiveness;
* Feature interviews with industry professionals in all areas of Direct Marketing, including creative directors, computer specialists, copywriters, fulfillment experts, printers, and, most importantly, entrepreneurs, business owners, and marketers who have successfully started and grown their own Direct Marketing enterprises. These stories from experienced professionals will prove the effectiveness of the tips and techniques offered in this book, and will help you understand how to implement these ideas in your own situation.
The Advantages of Direct Marketing
Although it seems as if Direct Marketing is a recent phenomenon, it's been around since the '90s - the 1490s! According to Nat Ross's A History of Direct Marketing (published by the Direct Marketing Association), catalogs have been traced back to the Middle Ages, soon after Gutenberg's invention of movable type. The oldest catalog on record was dated 1498, when Aldus Manutius of Venice offered fifteen books he had published by Greek and Latin authors.
The first form of a "customer satisfaction guarantee," a staple of Direct Marketing today, came from none other than Benjamin Franklin, who printed a catalog (featuring more than 600 books) with the following statement: "Those persons who live remote, by sending their orders and money to said B. Franklin, may depend on the same justice as if present."
It was in 1872 that Aaron Montgomery Ward produced his first catalog, and the era of mail order as we know it was born. It was his idea to purchase large quantities of merchandise at a discount from manufacturers and sell this merchandise to farmers through the mail. By 1904, however, Richard Warren Sears and Alvah Curtis Roebuck had taken over as mail order leaders, when their catalog circulation reached over one million. Pioneers in the Old West relied on the Sears & Roebuck catalog for all their needs: clothes, farm equipment, household appliances, toys, dishes, pots and pans. Everything you could think of was available from that one source. Over the years, Direct Marketing expanded from catalogs to include direct mail campaigns, direct response print advertising, TV, radio, and interactive computer programs.
Today, you may have to go to a variety of sources, but you can still buy almost anything through catalogs, personalized mailings, and direct response advertising. Here are just a few of the usual - and unusual - items you can now get through Direct Marketing, right from your home (not to mention your home itself, which you can get direct from the real estate cable channel). Some of these items are marketed by huge corporations. Many are from tiny companies that specialize in one type of product or even one single product:
Computers, software, vinyl siding, spices, insurance, septic tank cleaner, CD-ROMs, checks, furniture, food, jewelry, Fruit of the Month, Beer of the Month, Coffee of the Month, Potato of the Month, Vidalia onions, telephone services, credit cards, magazines, Urology and You Newsletter, mutual funds, time shares, insurance, books, vacations, music, tea, discontinued silver patterns, hazelnuts, apricots, mattresses, dinosaur bones, exercise equipment, steak, pet products, art, carbide cannons (ammunition extra), teddy bears, furniture, gargoyles.
What's obvious from this list is that almost any product can be sold using Direct Marketing techniques. It is the most effective method of making a product or service visible and available to those people who are most likely to buy. Some of the reasons for its effectiveness are:
* Measurability. Carole Ziter, founder and president of Sweet Energy, a Vermont-based company that specializes in selling apricots, dried fruits, nuts, and chocolates through the mail, started her company out of her home with a $200 expenditure. Now that it's a $2 million business, Ziter says, "I love Direct Marketing because it's such a controllable situation. I wouldn't want to go retail. With Direct Marketing, I know if I put something in the mail, I get a response. If I don't put something in the mail, I don't get a response. I can control my business. Not only that, I can track everything so I know exactly how I'm spending my money."
Direct Marketing is the only form of advertising that is measurable. You know exactly how many responses you get, and where those responses are coming from. That information can be used to make decisions about continuing, expanding, or reworking your marketing plans.
* Testing. The reason that big businesses are so successful with their Direct Marketing is that, as in scientific experimentation, each step is carefully tested, and its results analyzed, before another major step is taken. Large companies like L.L. Bean, Lands' End, and Victoria's Secret test different offer structures (an offer represents the terms under which a specific product or service is promoted, such as a particular price point, a discount, a premium incentive, or sale price). A Lands' End catalog on the East Coast, for instance, might contain one type of offer, and the same catalog on the West Coast have a different offer.
A small business can do tests as well. Many small-business owners and entrepreneurs will send out one letter or place one ad, get a disappointing result and give up. Perhaps if they sent out that same letter with a small change in the copy, they might have gotten great results. If you owned a restaurant, you could send one mailing in which you offered a free glass of wine with dinner. In another mailing, you could give a 10 percent discount on weeknight dinners. Then you would continue using whichever offer drew the best response. The most effective method of getting Direct Marketing to work for you is to create small tests of several versions, calculate which produces the best return, and then do a larger mailing using those results. Using the right tools, it is possible for a business of any size to do low-volume tests that will let them know which tactics have the best potential for success.
* Expanding customer base. Lillian Vernon started out selling a few products from her garage. Banana Republic started out with a few Army & Navy surplus items. Sears Roebuck, Sharper Image, Domestications - there are literally thousands of examples of companies, both retail and mail order, that started out small and grew to amazing proportions through Direct Marketing. You might not expect or experience that kind of growth, but Direct Marketing can be the key to expanding your customer base and increasing your profitability.
* Long-term relationships. As every sales and marketing book will tell you, it's much more expensive to get a new customer than it is to keep an old one. Once you lose communication with a customer, it's very hard to rekindle it. Direct Marketing is the perfect way to establish and maintain long-term customer relationships. I'm much more aware of this phenomenon since I opened my own business. We send out personalized cards to our customers every few months, even if they haven't done business with us in a while. That way, we know they'll keep us in mind if they do need us for a program. And we find that, even if they don't have any immediate business for us, they're constantly referring new customers our way.
Any small business can send out a flyer or postcard every few months announcing a sale, introducing a new product or a new staff member. This technique has been used for many years. Recently, I was at an antique show looking through old postcards of New York City. I found one postmarked February 11, 1928. This is an early example of Direct Marketing - Mrs. Fannie Goldberg, from Kirson's store in Waynesboro, Pennsylvania sent a postcard to one of her customers announcing her buying trip in New York City. I guarantee that Mrs. Goldberg's 2 cents personalized mailing was as effective as any of today's million-dollar computerized marketing efforts.
I'm usually a loyal shopper, but if I don't hear from a business for a long time, I start to wonder if they care about me as a customer. I imagine they've gone out of business. I look for a new place to shop. I'd be much more inclined to go in and shop at a store that sent me a personalized note, even one as simple as Mrs. Goldberg's, from time to time. When you work at establishing long-term relationships through Direct Marketing, you find that the money you lay out to keep a customer really pays off in the long run.
Dispelling Direct Marketing Myths
We here at Lois K. Geller Company Inc. Direct Marketing never use the "J" word when referring to the tons of mail we receive offering products and services for sale. We know that some people consider it "junk" and speak disparagingly about Direct Marketing. But that's only because they don't have the facts and figures at hand, nor have they had the more than 20 years of experience in the field that we have. Our experience in Direct Marketing enables us to dispel several myths:
Myth No. 1. "I never respond to Direct Marketing."
People tell me this all the time. They complain about all the "junk" mail they receive and say they simply throw it away. Yet when you actually get into a conversation, they tell you how many gifts they've ordered from catalogs, credit cards they've ordered from a telemarketer, and coupons they've clipped from magazines or newspapers. Or they tell you about a product they just ordered from a television infomercial or a home shopping network. The truth is that these are all forms of Direct Marketing, and Direct Marketing is now part of the way we live. In a time when both spouses are usually working, people have less and less time to go out and shop. Almost all consumers use Direct Marketing at one time or another as an alternative to retail shopping.
Myth No. 2: "It's easier to sell retail."
It may seem that way. You put the product in the retail store, and it either sells or it doesn't. But you have no control over that sale. You may not have any input as to how your product is being marketed, where it's positioned in the store, or how long it stays out on the shelf. Another disadvantage is that for retail, all the products have to be manufactured up front. Then, whatever is not sold is returned to you. In Direct Marketing, you can produce the products as you need them. And what happens if the retailer you're dealing with goes out of business? Even if you use Direct Marketing as a secondary means of distributing your product, you have a much stronger base for future sales. If the retailer closes, or no longer wants your product, you'll still have your own direct mail list of customers to whom you can continue to sell.
Myth No. 3: "My advertisement in the local paper does very well. I don't need Direct Marketing."
How do you know that your ad is attracting customers? How do you know how many people came into your store because of the ad, or how many were just passing by, or how many heard of you through a friend? With Direct Marketing, you do know. Send out a mailing, or put an ad in the paper that includes a coupon that says, "Bring this coupon into the store and get a 20 percent discount," and you'll know how many people responded by the number of coupons you receive. You have an immediate method of calculating the results of your marketing dollars.
Myth No. 4. "I tried Direct Marketing and it didn't work for me."
We're back to the concept of testing again (which we'll go into in detail in Chapter 2). It's possible that you may have sent your offer to the wrong people. Or the wrong offer to the right people. There are a number of variables, and just because one try didn't work out, doesn't mean the next one won't. While you are reading this book, you will discover how to choose the right target audience, and you will make them an offer they won't refuse.
A Direct Marketing Success Story
As you read this book, you'll find profiles of Direct Marketing campaigns that were actually, and successfully, used by large and small businesses across the U.S. and Canada. These will illustrate how the tools and techniques described in each chapter work in the real world. To give you an overview of an extremely successful campaign, we'll start with what came to be known as the Ford Women's Campaign.
In 1986 I was working at Vickers & Benson Direct in Canada. Ken Harrigan, who was at the time chairman of Ford of Canada, called about a problem Ford was having getting women into the Ford dealerships across Canada.
Excerpted from Response! by Lois K. Geller Copyright © 1999 by Lois K. Geller. Excerpted by permission.
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