As a follow-up to the “Odd Couple” post, here I’ll talk about Channel Switching as a way to effectively marry direct mail and email in a multi-channel campaign.

First recall the key point of the “Odd Couple” post.  Multi-channel marketing, particularly simultaneous direct mail and email, can reduce campaign ROI because the incremental channel, often the email channel, doesn’t always result in enough incremental response to recoup its cost.

Channel Switching  can solve this problem by effectively utilizing both channels.  Here is how it works:  The idea is to run a multi-channel campaign, email and direct mail in this case, in stages beginning with the most cost-effective channel (email) and then SWITCHING to the less effective channel (mail).

First, use email to generate as much low cost response as possible.  Since Email is typically less expensive than direct mail the ROI on this first round is attractive.  However since email response rates are often poor it’s important to use direct mail as a follow-up to increase the total response to your campaign (or you may not hit your overall response target).

Second, follow-up the email drop with a direct mail drop to the email non-responders, preferably using a predictive response model to maximize your response rate.  It’s often the case that prospects tend to respond to different channels and so you may find that your direct mail response rate is unaffected by the previous email drop.  In fact you may find that the email helps to increase your direct mail response rate although this is not always the case.

The combination of the two drops increases overall sales while reducing the cost per sale since the cost of the email generated response is less on a unit basis. 

Direct mail and email used together in a multi-channel campaign can work wonders for your ROI - or sink it. 

No doubt, email is HOT and AccuData helps many companies develop and execute multi-channel campaigns involving email and direct mail.  But I find myself advising clients quite frequently NOT to marry email and direct mail – at least not in the way we are often asked to do it - which is to simultaneously drop email and direct mail together to the same list. 

Why?

The problem is that a careful economic analysis often shows that while the output metric of such an approach is often better (e.g., response rate), the ROI can be much worse.  Think about this simple math:

Let’s say your champion approach is a direct mail program that generates a 1% response rate at a cost of $0.50 per piece.  Now you layer on email and the cost of doing this is $0.05 or 10% of the direct mail cost.  That means your total response needs to be 1.1% to break even.  Make sense?

But in reality the cost of email can be higher, especially if you are prospecting for businesses or other targets that require you to purchase managed or specialty email lists.  So the cost could be more than 10%, maybe 20% or more.  So now you need a 1.2% response rate to break even.  Now that just covers the cost of the email – we’ve not factored in other costs such as the cost to develop the email creative, the cost to develop an effective website or landing page, etc. 

It is possible to generate incremental lift of 10% or 20% by coupling email with direct mail in the same drop - absolutely.  But in many cases we don’t see this result and the campaign winds up driving more sales, but at a higher cost per sale.

Now there IS a potentially better way to use email effectively in tandem with direct mail.  It’s called channel switching.  I’ll blog about that next time.

This week AccuData launched a new product called Snapshot.  It’s a big deal around here.  What is it?

Snapshot is an ecommerce application on our leads site, www.acculeads.com.  Snapshot allows a user to upload a customer list (b2B, B2C) at which point the system automatically appends data (demos, lifestyle, SIC division for B2B lists, etc.) and produces a profile report or a “Snapshot” of the uploaded customers if you will.  Beyond producing the profile, Snapshot automatically scores a target geographic area for prospects that statistically look just like the customers uploaded into the application - leads that are available for purchase online.

For many of our clients Snapshot is a big step-up from simple selects or heuristic targeting methods.  The Snapshot approach applies statistical rigor and can improve lift while at the same time providing a good deal of information helpful in channel selection and in the development of creative and offers.

What really excites me about Snapshot is that we’re offering what was formerly a time consuming analytics process on the web with extremely attractive economics.

I’ve been getting a good amount of email asking for tricks to improve response rates for email and direct mail. 

I’m going to give-up one of my favorite tricks in this post, but before I do I hope you have read Andrew Russo’s post “A new era of predictive analtyics.”  He reminds us that response rate isn’t really the important metric - it’s about “adjusted response,” ultimately the EBITDA generated by a campaign.

Here goes:  I’m about to turn 43 and I can tell you that my ability to read the small type typically used in emails and some direct mail pieces is quickly eroding.  The truth is I don’t often put on my reading glasses just for your email or direct mail and it goes in the bin - I’m just not that into you!

So what to do?  It’s simple really.  Append age to your list or pull it from your house file.  Simply increase the font size a bit for those over 40.  Simple to do, and you will see results if you are dealing with customers or prospects over 40 or so.

Now some of you know that in the case of direct mail there might be an impact to printing costs.  This is just something you have to watch, perhaps adjust your copy to ensure that the increased font size doesn’t result in incremental production costs.

Amazon.com made a smart move several years ago when Steve Shure (my former boss at Amazon.com) was hired from Time Inc. to lead Amazon Prime, and then again when Steve was subsequently asked to assume global responsibilities for driving traffic to Amazon’s web properties (some might call this marketing).  Steve had been with Time Inc. for over 20 years overseeing consumer marketing for People, Sports Illustrated, Popular Science and other top publications.  He was (is) a world-class direct marketing expert among other things.

In hiring Steve, Amazon made an explicit choice to bank on Steve’s classic direct marketing skills and not his online marketing experience per se.  I  believe that Steve would be the first to tell you that there were candidates with more impressive online credentials than he had at the time.

Coming from an extensive web background (peoplefirst.com, capitaloneautofinance.com, attwireless.com, amazon.com) I get as excited as the next guy about web 2.0 (hence Letters@!), cool new web technologies and jazzy online advertising advancements.  But the more I talk to our ecommerce clients and help them think about their next set of opportunities, I’ve realized that the industry needs to go back — call it “web 0.5″ — and think about the classic issues of segmenation, good copy writing and creative, disciplined testing.  Has anyone designed a good online version of a Johnson Box?

Of course we’re all going to move forward.  I have no doubt we’ll be talking about web 3.0 and 4.0, and so on, in no time. But at the same time AccuData helps our clients move forward with innovative new strategies, we’re also going to spend a lot of time helping them go back to basics.

By the way, where is Bill Toohey?