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Marketing to Women

Here's a Dilbert cartoon that drives home an important message about one of the many behavioral differences between men and women.

This difference was best explained by Marti Barletta in Chapter 4 of her first book, "The Star Gender Culture."  Describing Star Point One:  Social Values, under the subhead, "Men Are Soloists, Women Are Ensemble Players," Barletta writes, "One of women's highest values is a feeling of closeness and connection with another person.

"As far as women are concerned, when two people are really close, they want to know everything about each other.  They want to know the other's dreams, doubts, and disappointments; their favorite food, shoe store, and vacation spot; their medications, worrisome moles, manicurist, and macaroni recipes.

"They even want to know about yesterday's tantrum and tomorrow's meeting with the contractor - nothing is too mundane or too personal.  (I can feel the men recoiling, holding the book a little farther away in case it's contagious!)  For women, though, that's the point, you see: getting personal. 

"To women, that's a good thing."

The Female Brain

A few months ago the book, The Female Brain, by Louann Brizendine, M.D. hit the bookstores.  An article, "Male-female differences:  It's chemistry," providing an overview of the book's message appeared in the September 20, 2006 issue of The Sacramento Bee.  It was written by David Brooks, a writer for the New York Times.

Brooks writes, "Over the past several weeks, I've found I can change the conversation at any social gathering by mentioning Louann Brizendine's book, 'The Female Brain.' 

"Brizendine is a neuropsychiatrist and the founder of the Women's and Teen Girls' Mood and Hormone Clinic in San Francisco.  She has written a breezy - maybe too breezy - summary of hundreds of studies on the neurological differences between men and women.

"All human beings, she writes, start out with a brain that looks female.  But around the eighth week in the womb, testosterone surges through male brains, killing cells in some regions (communications) and growing cells in others (sex and aggression).

"By 3 months old, girls are, on average, much better at eye contact with other people and picking up information from faces.  Later, girls are much more likely to use sentences that begin with 'Let's' while playing:  Let's do this or Let's do that.  They are more likely to take turns.

"Brizendine argues that of course culture and environment powerfully shape behavior, but brain structure and chemistry incline girls to pursue certain goals:  'To forge connection, to create community, and to organize and orchestrate a girl's world so that she's at the center of it.'

"During adolescence, the female brain is washed in estrogen.  Female teenagers, in general, experience an intense desire for social connection, which releases near-orgasmic rushes of oxytocin in the brain.  They are, on average more sensitive to stress (by age 15, girls are twice as likely to suffer from depression).  The male brain, meanwhile, is producing 10 times more testosterone than the female brain, meaning the male sex drive is, on average, much greater.

"Brizendine then describes waves of hormonal activity as women age.  Female brains vary with the seasons of life much more than male brains.  During menopause, for example, estrogen levels drop.  Personalities can change as some women derive less pleasure from nurturing and more from independence.  Women initiate 65 percent of divorces after age 50.  [Editor's note:  Marti Barletta refers to this change as "biological jujitsu."]

"These sorts of stark sex differences were once highly controversial.  Some feminists still argue that talking about biological differences between the sexes is akin to talking about biological differences between the races.  But Brizendine's feminist bona fides are unquestionable.  And in my mostly liberal urban circle - and among this book's reviewers - almost everybody takes big biological differences as a matter of course.

"Without too much debate or even awareness, there has been a gigantic shift in how people think human behavior is formed.  Consider all the theories put forward to explain personality. 

"Freud argued that early family experiences relating to defecation and genital stimulation created unconscious states that influenced behavior through life.  In the 1950s, the common view was that humans begin as nearly blank slates and that behavior is learned through stimulus and response. 

"Over the ages, thinkers have argued that humans are divided between passion and reason, or between angelic and the demonic.  But now the prevailing view is that brain patterns were established during the millenniums when humans were hunters and gatherers, and we live with the consequences.

"Now, it is generally believed, our behavior is powerfully influenced by genes and hormones.  Our temperaments are shaped by whether we happened to be born with the right mix of chemicals.  Consciousness has come to be seen as this relatively weak driver, riding atop an organ, the brain, it scarcely understands.

"This shift in how we see human behavior is bound to have huge effects.  Freudianism encouraged people to think about destroying inhibitions.  This new understanding both validates ancient stereotypes about the sexes, and fuzzes up moral judgments about human responsibility (biology inclines individuals toward certain virtues and vices).

"Once radicals dreamed of new ways of living, but now happiness seems to consist of living in harmony with the patterns that nature and evolution laid down long, long ago."

Copies of Brizendine's 2006 book, The Female Brain, are available new, in hardcover for $16.47 from http://www.amazon.com. 

In today's highly competitive consumer environment, it is critical that marketers have a thorough understanding of the significant differences between male and female behaviors.

Marketing to Women

If you're still not comfortable with developing a marketing to women strategy for your company, everything you need to know can be found in just 300 pages.

By reading both the first and second editions of Martha Barletta's book, Marketing to Women - How to Understand, Reach, and Increase Your Share of the World's Largest Market Segment, you will be equipped to develop a marketing strategy that will resonate with women - including PrimeTime Women^TM.

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Nonstop Networking

Standing in lines can be boring . . . unless you are in networking mode.  

In this weekly article, you'll find valuable networking advice from Andrea R. Nierenberg, "The Queen of Networking."

Nierenberg likes to think of networking "as the ongoing process of creating connections and nurturing relationships that benefit both parties over time."  You can start networking at any time and do it anywhere.  In fact, according to Nierenberg, most of us may already be doing it without realizing it.

Part I of Andrea Nierenberg's second book, Million Dollar Networking, published in 2005, is about meeting people and establishing relationships and business opportunities.

Chapter 3 is titled, "Techniques for a Successful Networking Event."

This chapter is devoted to presenting all the techniques you'll need for a successful networking event.

The second major subhead in Chapter 3 is "Arrival - Take a Deep Breath."

Arrival - Take a Deep Breath

Nierenberg writes, "You made it to the event.  You did your research; you have opening lines, small talk topics, and have polished your thirty-second infomercial.

"Now it's showtime.  You're ready!"

The networking techniques appearing under this subhead are:

• "Introduce Yourself to the Host
• "Get in Line
• "Dive into a Group
• "Start a Conversation with Your Dinner Partner"

This week we'll cover what Nierenberg wrote about getting in line.

Get in Line

Nierenberg writes, "A great strategy for meeting people at the beginning of any event is to head for the bar, refreshment table, or registration desk - wherever there's a line.

"Most people are not fond of lines, but at events where you want to meet new people, lines provide a natural opportunity to start a conversation with the person in front or behind you. 

"I actually like lines.  Here's an example of how networking while standing in line worked for me.

"It was 11:45 in the morning, right before lunch, and there was a line in front of the ladies' room (where else) at the restaurant where I was attending a meeting.  I noticed the name tag on the woman in front of me and realized we were attending the same meeting.

"'Have you come to these meetings before?' I asked her.  I also complimented her on the interesting necklace she was wearing.  As we chatted, I learned she was vice president of marketing for a large New York newspaper. 

"By the time we reached the beginning of the line, we had exchanged cards and I had promised that I would send her some information about my workshop and consulting business. 

"Three months later, when she was planning a sales meeting, she contacted me and hired me to do a presentation at her event. 

"Now she has become a valued client - all because we started talking in the line for the ladies' room.  Just be open and aware and realize an opportunity could be right in front of you."  

Next week we'll present what Nierenberg wrote about diving into a group.   

Learn more about networking and Andrea Nierenberg by visiting her website at http://www.mybusinessrelationships.com.

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Copywriting Insight

Thanks to the Internet - and especially online advertising - the demand for copywriters and freelance copywriting has grown exponentially. 

Tackling one of the many freelance jobs might be a good way to test and improve your copywriting skills while earning a few bucks.

Opportunities abound and there's little downside.

Such an opportunity was the subject of the pithy article, "It's All About the Hamiltons," by Wired magazine contributing editor Tom McNichol, appearing in the October 2006 issue.

McNichol's insightful story was discovered in the magazine's "Posts:  Dispatches from the Wired frontier" department. 

McNichol begins, "I've always wanted to be an adman, someone like Darrin Stephens in Bewitched:  Whip up a killer campaign in the morning, wow the client in an afternoon presentation, and knock back a cold martini by 4:30.

"So when I saw a craigslist [http://www.craigslist.org] post looking for people to write pay-per-click ads, I knew I was the man for the job.  PPC ads are, of course, the ubiquitous 'sponsored links' that appear on the results page of practically every search engine.  They're usually three lines long, about 20 words in total.

"How hard could it be?

"My prospective employer, the California-based stock-prediction Web site Predict Wall Street, made clear that it was casting a wide net in its search for talent.  Rather than a resume, I was to submit three or more three-line ads tailored to drive users to its site.  'To sweeten this process,' the listing promised, 'we will give $10 to everyone who puts in the time to submit original ads.'

"The best writers would become part of Predict Wall Street's freelance advertising team.

"I could already taste that martini.  First, I had to learn a few tricks of the trade.  Search engines impose strict limits on PPC ad length, and Google's are the most restrictive in the business: no more than 25 characters (including spaces) for the first line and no more than 35 characters for the second and third.  (A fourth line contains the advertiser's URL.)  These restrictions mean many PPC ads have a haiku-like quality. 

"I rolled up my sleeves and got to work:

"THE DOW IS NAMELESS,

formless, unfathomable.

The wise say nothing!

"Hmm, a little too haiku, that one.  I closed my eyes and sat quietly until the words raced down my arms and flew out my fingers.

"BEAT THE MARKET!

Don't guess, follow the pros.

Their pain is your gain.

"Not bad.  Strong tease up top, implicit promise of insider information.  Now, for an ad aimed at the losers.

"DON'T BE A MARKET CHUMP!

Make the market work for you.

Track stock picks in real time.

"That should attract some click action.  And finally, something to give the site some much-needed street cred in the investing 'hood:

"ALL ABOUT THE BENJAMINS.

See stock picks of the stars.

Real data, real time, real profits.

"I emailed my ads along with a jaunty note to 'roll these down the alley and see how many pins fall.'  An hour later, I received a reply from Mark Kaplan of Predict Wall Street.  'Wow!  These are great!!' Kaplan wrote, adding he was 'almost sure' they'd be calling on me to write more ads.  Plus, I'd soon be receiving that $10 he promised.  (Hey, it's all about the Hamiltons.)

"At last, a dream realized!  I pulled out the gin and vermouth, poured a drink, and reflected on my good fortune.  True, I was only $10 up, with no guarantee of paying work and little chance of making a living wage as a pay-per-click adman.

"But I was in the game.

"The second martini tasted even sweeter."

Forget the lengthy body copy . . .

. . . as you can see from McNichol's sample PPC ads above, writing PPC ads is a lot like headline writing.  In fact, it is all about headline writing.  

Learn to Write Winning Headlines

To learn more about the art of writing winning headlines, you can read the ten headline writing articles appearing in past issues of this newsletter, under the Copywriting Insight topic.  These "how to" articles appear in the following issues:

7/12/04:  The role of eyebrows or kickers in headlines and the three-part headline.

3/07/05:  David Ogilvy on headline writing plus nine headline strategies from Dean Rieck.

3/14/05:  Dean Rieck's "Four Tasks of a Powerful Headline," and Michael Masterson's "Secrets of the 4U's" formula to create powerful headlines.

3/21/05:  John Caples' five rules for writing headlines plus more headline advice from David Ogilvy and Michael Masterson.

8/01/05:  Tracy Gill's nine different approaches to writing headlines from an article in the March 2005 issue of insidedirectmail monthly newsletter.

10/24/05:  Gary Bencivenga's two most powerful words for writing headlines:  The IF . . . THEN technique for writing a great headline.

1/30/06:  Clayton Makepeace's headline writing tips.

2/06/06:  Clayton Makepeace presents a 65-word headline that accomplishes six major headline objectives.

4/17/06:  Michael Masterson's article, "How to Write Great Headlines," which appeared in the Monday, February 12, 2006 issue of the online Ezine, Early to Rise.

10/23/06:  Never use a pun in a headline.  Article includes two examples of newspaper ads where banks ruined their headlines by including puns.

Past issues of the ACTON Marketing, LLC newsletter are available free, online at http://www.actonfs.com/newsletter_archive.php.

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Focus On Design

"Less isn't more; just enough is more."

? Milton Glaser, eminent designer

On September 16, 2006, your newsletter editor received a direct mail package that can best be described as "just enough."

It arrived wearing a 6" x 9" coat of brown Kraft-style paper.  From the looks of the first-class postage stamp and the faux handwriting on the front, it was hand-made, not some high-volume production garment produced in some far away factory.

Its unusual look definitely caught my attention that day as it stood out from all the other mail accompanying it.

As an aside, the dead giveaway that this was a computer generated mail piece is the missing "g" at the end of the business name used by your editor when ordering books and magazine subscriptions on the Internet.  Some time ago when placing an order, the space provided for a company name truncated after 26 spaces.  Obviously this company rents its customer file so the "g" has been missing from many business-to-business solicitation pieces received over the past few years.

This spelling error should never have occurred, let alone been perpetuated over and over.  A spell-check program should have caught this error at its source.  A misspelled word in a customer's name or business name can be a "kiss-of-death" from a response perspective.

Overlooking the missing "g," a quick feel of the envelope (a habit acquired as a child checking to see if grandma's dime was inside the birthday card) told me this was a lumpy package . . . there was some goody awaiting me inside.

The design team had me - I had to open immediately.

Just enough is more!

Once inside, expecting to find an array of inserts, I was shocked to discover an almost blank piece of paper and some 3-D glasses.  Perhaps "thrilled" is a better description.

I wasn't staring at a personalized letter . . . it was more like a very discrete, secret, coded message about my website.  What website?  I don't have a website!   

Needless to say, to quote an old fishing metaphor, the design team had me hook, line, and sinker.

I rushed to my computer - fortunately it was already on - and jumped onto the Internet.  As the landing page was appearing, I grabbed for my neat 3-D glasses, eagerly placing them on my face . . . as I had done many times as a kid.

The landing page was a model of simplicity . . . what you would expect of a secret rendezvous point.

STEPHEN, THE SECRET

IS NO LONGER CLASSIFIED.

UNCOVER IT NOW

NEXT:  You're on the right trail ?

My special 3-D glasses enabled me to read the secret message, "UNCOVER IT NOW," appearing inside the red box.

In addition to the sparse copy shown above, the landing page included a simple visual bordering the left side and was accompanied by music appropriate to such a secret mission.

Clicking on the link under the red box, I found myself on an interactive landing page where the secret identity of the mysterious sender and the sender's message were slowly unveiled.

Copy on the landing page reads, "The answer is Vocus PR Software.  Vocus is a comprehensive and fully integrated web-based public relations management solution that is easy-to-use and affordable."

Within a period of a few minutes, the direct mail design team got me to stop sorting my mail, open the intriguing envelope, rush to my computer, log onto the Internet, enter the URL, don my special 3-D glasses, read the message, and follow the link to receive my secret message.

Mission Accomplished!

Now that's a very simple, yet effective direct mail package.

Think about this package the next time you're brainstorming direct mail formats with your agency.

Remember . . .

"Less isn't more; just enough is more."

? Milton Glaser, eminent designer

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Marketing Terminology Made Simple

Think you can't charge a fee to become a member of a loyalty program?

Think again.

The loyal members of Pizza Hut's VIP program willingly pay a $14.99 annual fee for membership.

Program details were discovered in Samar Farah's article, "loyalty delivers," which appeared in the September 2006 issue of deliver magazine.

A subhead under the article title reads, "Pizza Hut uses a frequent buyer program to grab a bigger slice of its best customers' business."

Farah writes, "Ideally, loyalty programs should be like valentines from brands to customers - ways to single out and retain the objects of their affection.  When programs work, the company is rewarded with loyalty, the consumer's way of saying 'I love you' back. 

"Ah, but love is tricky.  Today, most loyalty programs have lost sight of their true desires.  Many programs are little more than frequency cards burning holes in the customer's pocket.  Others are essentially discount programs targeting no one in particular - usually at the expense of the company's bottom line.

"Pizza Hut's VIP (Very Into Pizza!) program is a notable exception.  The 3-year-old program has not only managed to win customers' hearts, it also got them to be more loyal along the way.

"The company's fee-based program, promoted in-store, online and through direct mailings, is a model of simplicity: pizza lovers pay an annual fee of $14.99.  In return, they automatically receive a free large pizza and can earn another free pizza every month if they place two orders per month.  Plus, VIP members receive a coupon for a free side item every calendar month.

"Rob Boverie, director of media for Pizza Hut, says:  'Over the years we have learned the biggest opportunity is to retain our customers and especially our best customers.'

"The final idea for the VIP program, created in collaboration with marketing agency hawkeye/FFWD, included a fee component.

"Paul Bowman, managing director of direct and loyalty marketing at FFWD, recalls some early feedback when he suggested charging the company's best customers a fee to join.  'They were skeptical of asking their best customers to pay for being in the program,' says Bowman.

"But Bowman, who has helped brands launch loyalty programs since the late 1980s, was able to point to other successful fee-based programs that he has helped launch.

"The program launched with a large direct mail effort:  The company mailed invitations to frequent customers.  And Pizza Hut sustains the program through a continued use of direct mail:  Those who sign up continue to receive special VIP mailings such as coupons and program updates.

"Pizza Hut has been extremely pleased with the VIP results.  The program has generated significant incremental sales for Pizza Hut.  Here are the five rules of the road that hawkeye/FFWD recommends to those considering establishing a customer loyalty program:

"1. Don't forget to ask 'why?' and 'what?'

"Everyone these days wants a loyalty program, according to Bowman.  But he finds that many companies come to him looking for a loyalty program without really having thought through why.

"'They want one,' he says, 'but 80 percent can't define [a loyalty program] or why they need one.'  What set Pizza Hut apart from the start, Bowman says, was the clear objective of their problem and how a loyalty program could help.

"Pizza Hut approached hawkeye/FFWD with a very direct, concise goal: hold on to its best customers, which in the pizza category means those who buy at least one pizza a week.  But the company couldn't figure out why those pizza lovers kept switching between Pizza Hut and its competitors.

"'We call it saw-tooth behavior - best customers would spike, then disappear, then spike again,' Bowman explains.  'We knew they weren't leaving the category, they were just going somewhere else for their pizza.'

"Hawkeye/FFWD responded by helping Pizza Hut refine and expand its goal.  Not only should the loyalty program help retain the company's current best customers, but it should also grow that base, turning its near-best customers into loyal patrons.  The key, according to Bowman, was to determine why customers who were heavy pizza consumers weren't frequenting Pizza Hut every time they craved a slice.

"All loyalty programs, by definition, seek to change consumer behavior in some way, Bowman says.  Four factors drive such change: price, service, product and image.  Before moving forward, companies should consider which factors represent potential advantages for a brand and then design the loyalty program accordingly.

"'We try to construct loyalty programs to enhance these drivers and make sure we know where they stand in the best customers' minds,' Bowman says.

"Direct mail was key to Pizza Hut's effort to 'enhance drivers.'  For example, product innovation - from deep-dish recipes to breadstick offerings - helps differentiate the company from other brands in the space.  To entice VIP members to sample those new products, Pizza Hut mails them individualized coupons based upon their specific buying behavior and household makeup.

"Image is also an advantage for Pizza Hut, which considers itself a higher-end option for quick-service diners.  To enhance that perception, Bowman and company have given the VIP program its own unique look and feel that, Bowman says, elevates the existing Pizza Hut brand for customers who join the program.  'Receiving customized direct mail pieces and e-mail greatly improves the customers' attitudes toward the Pizza Hut brand,' says Bowman.

"2. Know your best customers and give them what they want

"There's no hope of changing your customers' behavior if you don't know what those behaviors are.  Here, Pizza Hut has an important leg up over many other quick-service establishments.  Its delivery service provides a reason for consumers to share phone numbers and addresses, and the company augmented that data with direct mail and electronic surveys about demographics and household purchasing behavior.

"'The Pizza Hut customer database enables us to know our best customers better than other QSR categories are able to understand their customers,' says Boverie.

"Without this kind of relevant data, brands are often forced to open their loyalty programs to all consumers, diluting their message.  'Lots of companies in fast food don't know who their best customers are,' says Bowman.  Hawkeye/FFWD reviewed three years of data on 5 million Pizza Hut customers - and then dug deeper.  They conducted focus groups probing for consumer habits and preferences:  What would their best customers, or their near-best customers, want from a Pizza Hut loyalty program?

"Armed with answers from these focus groups, hawkeye/FFWD and Pizza Hut were able to structure a loyalty program that met the needs and wants of Pizza Hut's best and near-best customers: it offers free pizza, tracks VIP members by phone number rather than with a membership card and it doesn't try to tango with any other brands by cross promoting.

"3. Create a cost to defect

"Loyalty programs should not be confused with promotional deals.  And here's the difference:  Promotions can induce a customer to change behavior in the short-term.  But a properly designed loyalty program should actually sustain those changes.

"In other words, there needs to be not only an incentive for your customers to stay but also a cost for them to leave.

"In the pizza delivery category, consumers typically place orders from home, and there is usually little cost to switching between brands.  A coupon from one brand may have made its way to the top of the kitchen drawer, dictating preferences for one particular Friday night.  But for the most part, there's no reason for customers not to try Pizza Hut one week, Papa John's the next and Domino's the week after.     

"The VIP program changes that.  The $14.99 annual membership fee makes customers self-select their way to preferred status.  And the investment creates a cost to switching - each monthly purchase brings the consumer within one order of a free pizza.  Why order anywhere else?

"And because the membership fee is annual, rather than a one-time buy in, the $14.99 investment is always a factor in consumers' decisions, never far from their minds.

"Bowman refers to this concept as 'compressing frequency:'  In a space like quick food service, where margins are low, profits come from increasing the frequency with which customers purchase your goods or services.

"Although the current model seems to be working, Pizza Hut is keen not to get too complacent.  What constitutes a good value proposition among consumers today may grow meaningless over time.  'If you don't continue to track customer engagement, then you may find that they start to see the value as not relevant,' Boverie says.

"Here, as before, direct mail plays a key role in the VIP program.  Through mailed surveys, Pizza Hut regularly queries its VIP customers about their preferences in order to gauge satisfaction with the program and to make decisions about future iterations.  Pizza Hut was reluctant to share details about impending expansions to the loyalty offerings, but they did confirm that changes are in the works.

"4. Don't skip the financial modeling

"Consumer brands are often tempted to roll out, and make changes to, loyalty programs in quick response to pressure from the competition.  That's according to Rick Ferguson, editorial director at Colloquy, a publishing company that specializes in loyalty marketing.  Ferguson urges brand builders to thoroughly calculate the costs and estimated ROI of their loyalty programs before going live.

"Pizza Hut tested and tweaked five programs before settling on the fee-based model.  Based on small rollouts in individual markets, the company kept a running scorecard and created predictive models of each iteration's performance.  Final scores were based on five performance factors:

"1. Retaining the company's best customers

"2. Converting near-best and new customers to the best category

"3. Increasing order frequency

"4. Increasing both sales and profits

"5. Improving market share

"Bowman admits there was some concern initially that the cost of offering so much free pizza might outweigh the profits of increased frequency - a concern they were able to rule out based on the trial programs.  They also used the trial runs to test methods of distributing offers and raising awareness - including e-mail, in-store announcements and direct mail.

"'We ran the test program, put it in a spreadsheet and predicted what we thought would happen in a national launch,' says Bowman.  'We were able to analyze many different factors, including purchase thresholds, e-mail and direct mail response rates, reward levels and customer segments.  In fact, in one market, we monitored program effectiveness across 48 unique test cells.'

"Through analytics, modeling and an extensive pro forma, Bowman and his team were able to determine whether each program concept would generate a positive or negative ROI upon a national rollout.

"For that level of preparation, Pizza Hut and hawkeye/FFWD get kudos from Colloquy's Ferguson.  'By the time you do a nationwide launch,' he says, 'you should be reasonably certain that you will get positive return on your investment.'

"Loyalty programs may be tactical, but their outcomes are not as immediately apparent as they might be in a straight promotional initiative.  'Lots of companies launch an initiative on Friday and expect results on Monday,' says Bowman.  'We had to wait six months before they could draw any conclusions.  That was really hard.  Everyone was very interested in seeing results.'

"5. Don't forget to say thank you

"It's not only polite, it's what focus group after focus group said companies don't express nearly enough.  'That's something you get across categories:  "No one recognizes me.  I buy from you a lot, but you don't recognize me,"' says Bowman.  The Pizza Hut VIP program is designed as a thank you, partly in the form of free pizza.

"But the 'thank yous' don't - and shouldn't - stop there.  Pizza Hut was careful to implement company-wide communications and training to make sure everyone involved understood the importance of recognizing VIP members at the point-of-purchase level, as well as expressing Pizza Hut's appreciation for their loyalty.

"'Loyalty can be nurtured at all customer touch points, so everyone in the company needs to be sensitive to enforce the importance of loyalty and their opportunity to influence it,' Boverie says.

"That sense of appreciation in turn helps the company to continue to gather customer data.  'The nice thing about these programs is that they create a safe environment,' says Ferguson.  Bombarded every day by marketing messages, consumers have learned to tune out 90 percent of that communication, he explains.

"In such an environment, only the most relevant communication cuts through the clutter.  'Customer response rate to surveys and direct mail are much higher [in a loyalty program] than they are in general,' Ferguson says."

A sidebar quote in large red letters at the end of the article reads, "The people running the show are not the people buying your product.  It's a mistake to assume that what you want is what your customers want.  You need to let them design the program."

Deliver magazine (USPS)

Subscribe to deliver today!

Your free subscription to deliver, a monthly magazine for marketers from the United States Postal Service, is available online at http://www.uspssales.com/deliver/. 

You can download copies of previous issues of deliver online at http://www.uspssales.com/deliver/Deliver_ViewIssues.asp?

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About Marketing ROI

ROI tip of the week:  Become comfortable calculating ROI and make it part of your direct mail planning process.  This information makes it easier to get budget approvals and the finance folks will respect you for doing it.

Information on calculating ROI the right way was discovered in the article by Steve Trollinger, "Measure Your Success:  How to run and read an ROI analysis," which appeared in the September 2006 issue of Target Marketing magazine.

Trollinger writes, "Return on investment (ROI).  It's one of the most commonly used phrases in the direct marketing lexicon and one of the paramount benchmarks on which success or failure of a campaign is measured.

"But as common a concept as ROI is, many direct marketers still don't perform the analysis or, perhaps worse, perform it incorrectly.  As a financial analysis, ROI is a measure of a company's net income related to its total asset investment.

"For direct marketers, that 'asset investment' generally is the advertising cost associated with generating the sales that contribute the net income.  Depending on the business, it also could include the investment in inventory to sell.

"For the purpose of this column, the focus is on advertising [marketing] dollars as the investment to illustrate the technique. 

"ROI then is the net profits (the return) related to the advertising dollars spent (the investment).  For example, if, after all the costs are accounted for, net profits for a campaign are $10,000 and the advertising costs for producing and mailing the piece are $50,000, ROI would be equal to $10,000 divided by $50,000 or 20 percent.

"What ROI is not is sales divided by ad spend.  This is a common mistake.  By focusing on sales as the numerator, none of the pertinent costs are addressed, and the calculation is virtually meaningless from a decision-making standpoint.

"If, using the numbers above, a company generated $95,000 in sales with its $50,000 investment, this miscalculation would render a 190 percent 'ROI.'  But if costs rise in any key areas such as cost of goods, advertising expenses, fulfillment or overhead, the profits will shrink and a big sales generator may become an investment loser.

"Using ROI Analysis

"For most mailers, ROI analysis is applicable as a strategy-level analysis as well as a post-mortem analysis. 

"As a strategic analysis, a pro forma ROI should be evaluated prior to any effort or campaign.  Each campaign, when built, typically is forecasted for sales and net profits at the segment level, as well as overall.  That campaign P&L becomes the foundation for the ROI analysis, and the results of the analysis should provide insights during the decision-making process for whether a campaign should be executed and to what extent.

"If the company's ROI requirement is 25 percent and the pro forma analysis suggests an expected ROI of 50 percent, this may indicate the mailing can go deeper into the housefile or can be mailed to more prospects.

"It's also important to perform the ROI analysis to establish campaign expectations against which the final results of a campaign can be measured.

"As a post-mortem tool, ROI analysis answers the question, 'What did we get for our money?' and starts the process of establishing the next effort's strategy.  After a campaign is complete, ROI analysis should be performed on as many aspects of a mailing as possible, including version tests, offer tests, individual drops and individual segments.

"Armed with this information, planning for the next effort starts with an understanding of the effects of various offers and versions on various customer and prospect groups and exactly what those variables generate for every marketing dollar spent.

"As a decision-making tool, ROI obviously is valuable.  If a company can get more for its money by letting it generate interest in a bank account than it can get by investing in a marketing effort, the money should stay put until either a program that will perform better is found or a way to make the existing program perform better by improving costs, increasing average order values or cutting the advertising expense is discovered.

"Calculating ROI

"Calculating ROI isn't difficult.  It starts with a P&L, which most companies would run as a pro forma prior to a campaign and as a final complete after a campaign is executed.  A typical cataloger's P&L groups together the merchandise, fulfillment, advertising and overhead components, so key benchmarks can be used to manage costs.

"The P&L provides the necessary information for calculating ROI: earnings before interest and taxes divided by advertising costs.  In this example, ROI is $100,489 [earnings or net profit] divided by $533,672 [advertising costs] or 19 percent.

"If this cataloger can get better than 19 percent return on its money by leaving it in the bank, it should.  Otherwise, this program is successful, and the ROI baseline should be used to compare other potential programs against it in the future.

"A pro forma ROI, run prior to the final go/no go decision for a campaign, can be less detailed but should follow the same general guidelines as the P&L version.  The chart [below] is an example of a pro forma that uses projected data, based on historical mailing performance and established corporate benchmarks for costs, to establish the figures for the ROI calculation. 

"Going into the mailing, the company knows that if, for example, the required return on capital is 30 percent, the campaign in question will dramatically exceed that.  From here, adjustments can be made in the plan to perhaps mail deeper or more frequently to 'water down' the ROI to a point where sales are maximized and profits are minimized down to the required level of return.

"As you can see, ROI analysis isn't difficult to do, it just takes a little time to set up the process to run the calculations.  Once set, the findings can be powerful.

"ROI analysis, run correctly, is as likely to find money left on the table as it is to find pet projects that will never be worth the money."

Steve Trollinger is executive vice president at J. Schmid & Associates, a catalog and multi-channel direct marketing agency.

Target Marketing Magazine

Target Marketing magazine is published monthly by parent company, North American Publishing Company (NAPCO).  NAPCO also publishes other periodicals including Inside Direct Mail, the only publication devoted exclusively to the analysis of direct mail in America.  In addition, NAPCO is the home of the world's largest collection of direct mail samples - the Who's Mailing What! Archive, referenced frequently in this newsletter.

For more information about Target Marketing, and to sign up for a free subscription, go to the company website at http://www.targetmarketingmag.com.

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Bank Marketing Research

The answer to becoming consistently better at creating new products and services customers want is:

1. Hire creative people?
2. Become luckier?
3. Adopt a disciplined approach to innovation?

The answer can be found in the new book Innovation:  The Five Disciplines for Creating What Customers Want, by Curtis R. Carlson and William W. Wilmot.

An excellent review of this new book, "Getting to 'Aha!,'" by Atlanta correspondent Dean Foust appeared in the September 4, 2006 issue of BusinessWeek magazine.

Foust writes, "How is it that some inventors like Thomas Edison are able to crank out one breakthrough after another, while others can spend a lifetime searching in vain for a single great idea?

"Similarly, why do some companies like Apple prove themselves capable of constantly churning out hit product after hit product, while other once-hot enterprises like Polaroid wither or die?

"These questions have long vexed scientists, business executives, and management gurus alike.  In their new book, Innovation:  The Five Disciplines for Creating What Customers Want, co-authors Curtis R. Carlson and William W. Wilmot argue that true innovation isn't as Hollywood has it, the result of a 'Eureka!' moment in a forlorn lab.

"Instead, they contend it more often springs from a disciplined approach to identifying and then delivering new products or services that fill a societal need.  Indeed, Carlson, chief executive of SRI International, a contract research and development firm in Menlo Park, Calif., believes that the more methodical and systematic companies are in their approach to innovation, the greater their chances at success.

"That gives hope to those of us who aren't named Da Vinci or Jobs, and makes this book a worthwhile read for any executive trying to keep his or her company ahead of the competition.

"Carlson practices what he preaches.  When he became CEO of the storied research shop in the 1990s (SRI had gained renown as far back as the 1970s for inventing everything from the computer mouse to robotic surgery), the firm's revenues were stagnant and its innovation pipeline had dried up.

"Carlson analyzed the situation and realized that the firm's approach to R&D was scattershot, and there was no framework for identifying and championing promising ideas.

"But over the next decade, Carlson returned SRI to double-digit growth by instituting the 'five disciplines' that he and Wilmot dissect in workbook fashion:

1.      "identifying important customer needs,

2.      "creating solutions that fill those needs,

3.      "building innovation teams,

4.      "empowering 'innovation champions' who keep the effort on track, and, finally,

5.      "aligning the entire enterprise around creating value for customers.

"To that end, Carlson and Wilmot suggest spending a lot of face time with customers to get real-time feedback on your ideas from the outset.  'Get out of your office, hit the road.  The best source of information about whether your value proposition is on the right track is your prospective customers and partners,' they write.

"Contrary to what most executives believe, the authors argue that building an innovative company doesn't require a cultural overhaul.  'You do not have to totally change your enterprise, fire all your people, or import arcane practices that no one understands,' they advise.

"Among the alternatives they offer: the 'Watering Hole,' a brainstorming session where new ideas undergo a formal review process.  Carlson runs this forum every two to six weeks at SRI, with five to 20 participants from different departments, including the team pitching an idea, technical and legal staff, and a market expert, as well as current or potential business partners.

"Presenters make a five- to 20-minute presentation, followed by 10 to 30 minutes of feedback around four key questions:

1.      "What is the market need?

2.      "What is your approach to addressing this need?

3.      "What are the benefits vs. costs of your approach?

4.      "And how do these benefits compare with the competition's?

"Carlson and Wilmot, who helped create the innovation workshop SRI runs for outside companies, say their experience at SRI has proven this format spurs critical collaboration among once-siloed departments.

"'Watering holes are an excellent way to eliminate organizational boundaries, which are major barriers to innovation in most companies,' they write.

"Still, the authors caution that even the best procedures are no shortcut to perseverance.  They recount how when a colleague told Thomas Edison that he'd again failed to find a filament that would not burn out, Edison replied, 'I didn't fail.  I just found something else that didn't work.'

"And sometimes the ultimate market for a great idea isn't the one you first imagined.  Carlson and Wilmot note that when one SRI engineer developed a technique for printing metals on paper - thinking it could revolutionize the greeting-card business - the idea was scrapped after the realization that the potential market was small, and there were already cheaper alternatives.

"But further research showed that a better application for the technology was printing cheap antennas for Radio Frequency Identification Device [RFID] tags.

"In the pursuit of innovation, there doesn't always have to be a Eureka moment."

Copies of this exciting new "How To" book on innovation are available new, in hardback for $18.15 at http://www.amazon.com.  If you're uncertain about whether or not to purchase a copy of this book, you may want to read the reviews of those who've already read the book and posted reviews on the Amazon site.

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Ask ACTON!

Perhaps the hottest format in direct mail today is the oversized postcard.

If you're like most marketers, you've been noticing that more of the mail pieces you receive are oversized postcards.

What you've not been seeing is an innovative approach to the postcard layout being used by ACTON Marketing.

At this point, a picture is worth a thousand words.

First, the traditional approach used by most direct mail agencies:

Notice how half the real estate on the back of the card is not being used for the marketing message.  It's a waste of valuable space.  As you can plainly see, there's no visual appeal to this marketing piece.

Now, for a look at ACTON Marketing's approach to the back of the postcard:

While viewing the backs of both postcards, ask yourself, "Which postcard format has more visual appeal?"       

Which postcard has a stronger appeal to women?

By simply moving the addressing block to the front of the postcard, the ACTON Marketing creative team has solved the major problem with using postcards as a marketing tool.

The front of the card is used for the headline and visual. 

The back of the postcard is where the real selling is done.  Make optimal use of the limited real estate available.

It's a good thing for ACTON Marketing clients that most direct response agencies are slow to catch on.

Open More Accounts by using a Marketing to Women Strategy

Everyone at ACTON Marketing, especially the copywriters and graphic designers, has spent more than three years developing and fine-tuning their marketing to women skills.

Members of the creative staff have worked directly with Marti Barletta to learn what works and what doesn't work with copy and design.  Today, most of the marketing pieces prepared for clients reflect the marketing to women strategy and tactics championed by Barletta.    

If you attended the ACTON Marketing symposiums in Las Vegas on August 6-8, 2003, Savannah on April 6-8, 2005, and Santa Fe on October 3-5, 2006, you not only heard Barletta speak about marketing to women, you were able to participate in the marketing to women creative review.

To take advantage of the marketing to women creative skills at ACTON Marketing, simply give us a call and arrange for a meeting to discuss how the experts at ACTON Marketing can help increase your new account openings by employing a marketing to women strategy.

You can unlock the secrets of great direct mail marketing and learn how to apply them to your marketing efforts by calling George Monnier at 402-470-2909.

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Past Issues of the Newsletter

All past issues of the ACTON Marketing, LLC newsletter are available online at http://www.acton.com/newsletter_jump.php.

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You may contact ACTON Marketing, LLC by calling 402-470-2909, Monday through Friday, from 8:00 am to 5:00 pm (CT).  Or write to us at:

ACTON Marketing, LLC

3401 N.W. 39^th Street

Lincoln, NE  68524