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Archive for September, 2010

Premiums And Freemiums: Whos Doing What

This article appeared in the 2005 July/August issue ofSubscription Marketing newsletter.

Premiums and Freemiums Who’s Doing What? by Shira Linden

Just like in the fashion industry premiums have their hotsellers and their hasbeens. The industry is sensitive tochanges in technology that render some premiums obsolete and topolitical events that affect the business climate. Stan KonikPresident of Konik and Company a merchandise premium supplierto the publishing industry for over 30 years reports thatcameras which used to be very popular are now defunct thanksto digital photography. Calculators and many electronics havealso gone by the wayside he added. Some premiums simply go outof vogue. Pens for example are now dead. Umbrellas are onlyused on a limited basis because the quality is not there at theprice point marketers want to pay between 2.00 and 2.50 peritem and decreasing. “People are looking for lower priced itemswith high perceived value” Konik declares. He reports that manywant imprinting so his firm offers customized products as wellas dropshipping. September 11 turned the premium industry onits head. “All business ceased” said Konik. He noted that nowbusiness is back to pre9/11 levels but the nature of thebusiness has changed. Scissors and knives were popular before9/11 but have practically disappeared save for one magazinecatering to hunters. Conversely security devices such asradios with attached flashlights and sirens are good movers.Current top sellers include jumbo display clocks with timetemperature and date travel alarm clocks with temperature dateand alarm binoculars mini radios and scan radios databanksmini PDAs that incorporate calculators pedometers especiallyfor health newsletters and tools like the motorized powerdriver screwdriver. Stainless steel travel mugs and tote bagsare also doing well. Konik likes to see clients feature thepremium on the envelope on a 4color buckslip and in theletter. He claims that when the premium is predominantlyfeatured marketers will see a 28 lift in response versus anonpremium mailing.

Premiums Can Send Results South Overall the majority ofmarketers who weighed in looked favorably upon freemiums andpremiums. The exception was VNU. Neil Eisenberg CirculationDirector of VNU Business Publications stated that AmericanArtist previously used pamphletsized books with repackagededitorial content such as 101 Tips for Painters as well ascanvas duffle bags. When they removed the premiums about threeyears ago response went up. “I can’t say why I don’t know ifit was just luck or the premiums didn’t inspire our prospects toreply” Eisenberg stated.

Premiums Freemiums = Business as Usual On the other handseveral publications use premiums routinely. For over a decadeHighlights for Children has been using premiums and freemiums intheir packages to consumers as well as teachers. “We’re famousfor our freemiums said Bill Hummel Senior Vice President ofMarketing. “We use them as door openers. We get lots of brandidentity with those. They definitely lift response and have ahigh perceived value. We create our own they’re unique anddistinctive and tie into the publication. We’ve used them forso long it’s pretty much a given with us.” Most although notall Highlights packages also have premiums. Their gift sub offerincludes a free “Hidden Pictures Calendar” with eachsubscription ordered a premium that refreshes itself whichmakes it attractive. Highlights also mails a teacher packagewhich includes a choice of items teachers can use in theclassroom such as reward stickers.

Premiums Out Freemiums In For the past year freemiums havesubstituted for premiums at Kiplinger’s. The freemium enclosedin their statement of benefits package “12 GradeA Ways toBuild a Nest Egg for Retirement” is an attractive 4colorlaminated insert. Subsequently Kiplinger’s dropped thelamination and went to a lesser paper weight with an aqueouscoating and results still held up. Carol LePere CirculationDirector and Associate Publisher indicated they tested thefreemium along with a new package. “The whole package workedlike gangbusters. The freemium doesn’t cost much yet provides avalueadded benefit subscribers have come to expect.” Recentlythey redesigned the freemium for their upcoming mailing to keepit fresh. LePere reports that retirement is the most popularpersonal finance topic followed by taxes. The market changestoo quickly for stock tips. Previously Kiplinger’s relied oneditorial premiums with their renewal promotions. They also tiededitorial premiums into a soft offer.

Combination Offer “We’re not a big premium user” said KenGodshall Senior Vice President of Consumer Marketing at HearstCommunications Inc. “We like to sell the magazine on its meritsat a reasonable price.” But when Hearst tried a combination salein the Quality School Plan setting “It boosted response so muchit got our attention. We wanted to appeal to a younger femaleconsumer so the offer was buy Seventeen and get a six monthsubscription to Cosmo Girl. It turned out to be one of thebiggest successes in publishing last year.” A postcard mailerenticed prospective Cosmo subscribers with a bonus 6issue subto Marie Claire. Goodshall indicated the combination sale isquite new just one to two years old. He called it “smartmarketing” indicating they’ve had some success in renewals aswell which makes the response even more attractive. But everymarketing coup has its down side. “We can’t do it all the time.The limitation is that we can’t make this offer continuouslyjust a few times per year” he said.

Winners Rely on Premiums According to Hallie Mummert writing inTarget Marketing “Blockbuster Direct Mail Secrets of thedecade’s most successful controls” April 2005 “The biggestpredictor of success between longterm controls and those thatburn out within two years can be boiled down to one word: gifts.Grand Control winners 257 Axel Andersson winners whose mailingswere tracked over the last decade offered premiums or freemiumsin their efforts nearly 400 percent more than their general mailcounterparts. Specifically 44.7 percent of the Grand Controlsused such incentives as name and address labels specialreports tote bags plush animals flower bulbs stickerscalendars and calculators to drive response.” Or do they? Yetaccording to the CircTrack 2004 study of paid consumer magazinecirculation premium usage in direct mail control offers hasdropped from 41 in 2000 to 26 in 2003 the last year thatfigures were available. When consumers were queried in theCircTrack 2004 consumer survey 58 of consumer magazinesubscribers prefer price discounts 21 favor an extended termsubscription and only 14 prefer gifts. Of those who haverenewed a magazine subscription in the past 12 months 64.3were motivated by a price discount 20.6 by extended term 7.4by gifts and 6 by the editorial product itself.

The CircTrack findings are upheld by ParadyszMatera a leadinglist brokerage and consulting firm serving the magazinepublishing industry. Glenn Lalich Vice President reportspremium use was down across the consumer magazine marketplacedropping from 51 in 2003 to 47 in 2004 although not all typesof incentives saw declines. The most common incentive premiumupon payment held steady at 36 of consumer magazine promotionsin 2003 and 2004. Freemiums stayed at 7 for both years. Asexpected given the growth of hard billme offers tied to voucherpackages incentives designed to increase upfront responsepremium on order declined from 9 in 2003 to only 6 in 2004.Lalich reports use of editorial versus merchandise premiums hasseen little movement in recent years adding that on themerchandise front one of the more popular items of the pastyear or so has been the personal organizer from mailers likeTime U.S. News World Report and even Details. Conde Nast alsooffers a variety of interesting fashion bags/handbags for titleslike Glamour Lucky and Vogue.

Shira Linden is a freelance copywriter and creative consultant.She can be reached at 203 3710654 or via email atSSL16cornell.edu.

Chris Burns American Profiles Mailing Telemarketing List company. Providing telemarketing lists to the direct marketing industry since 1996.

A full service mailing telemarketing list company with over 40000 lists available. http://www.americanprofiles.net/.

Online counts and orders 24/7 http://www.mailinglistsusa.com/.

Getting Into Mailing: What Printers Need To Know

Many printers frustrated with minimal revenue gains look tomailing services to drive incremental profits. Adding mailingservices can offer synergy with existing printing services withminimal investment and a fast learning curve.

Are You Ready?

Recent surveys indicate 65 percent of everything printed iseventually mailed. If your printing jobs follow this patternyou could be ready to incorporate mailing services into yourbusiness.

Step one is to review your mailingservice plans with keycustomers whose buyin is critical to your success. Thesediscussions will provide a better understanding of what it willtake to get the job done which in turn can strongly influenceinitial software and equipment priorities.

Likely components may include a workstation minimally apowerful desktop PC equipped with USPSapproved presortingsoftware; an inkjet addressing machine; work tables forstaging; a strapper tabber postage meter and scale; plus aconveyor inserter and assorted supplies. Naturally you’llneed additional floor space to accommodate this equipment; mostmailroom floor plans suggest a minimum requirement of 400 squarefeet.

Investment Costs and ROI

Speed volume and mailing class all significantly influenceinitial cost outlays. An occasional mailer handling postcardswith small runs for instance can probably get started withlittle more than 15000 in startup expenses; largerscaleoperations may require a substantially greater initialinvestment.

Don’t let the price tags scare you away: with an expectedaverage revenue of .07 per piece mailed a 15000 investmentwould take roughly 215000 pieces of mail to break even. Anddepending on the nature of your planned mailing services youcould even repurpose existing equipment or buy refurbishedhardware resources until you’re on your feet.

As you shop for mailing solutions you’ll notice the clicheacute; “Youget what you pay for” applies far more to hardware purchasesthan to software where big performance can come in remarkablycosteffective packages. How can you tell what software is rightfor you? Start with basic USPS qualifications:

* CASS: Coding Accuracy Support System certificationconfirming the use of uptodate ZIP 4 carrier route and5digit ZIP coding data is a must for any presorting software.* PAVE: Presort Accuracy Validation and Evaluationcertifications vary by sorts and mail classes. Is the softwarePAVEcertified for the types of mail you expect to handle? *Visit www.ribbs.usps.gov/files/vendors/paveflis.rtf for a listof PAVEcertified software vendors.

The USPS: Intimidating but Manageable

Don’t let postal rules frighten you away from potential newrevenues! Requirements set by the United States Postal Servicefor mailings are undeniably complex but resources areeverywhere that can help you stay compliant productive andprofitable in your new venture.

First trust your mailing software: those CASS and PAVEcertifications prove it’s been programmed to followeverchanging postal details. Also many software developersoffer free technical assistance; some even train their supportstaff in mailing details as well as the software itself. Theright provider will be happy to hold your hand until you arecomfortable with their product.

Instead of trying to achieve mailing “expert” status overnightpace yourself by becoming well versed in regulations that applydirectly to the mailing needs of your key customers. The USPSposts the latest regulation changes in the Domestic Mail Manualfind it at pe.usps.gov/text/dmm300/dmm300_landing.htm andplenty of other free publications are available to walk youthrough essential postal rules.

Safety in Numbers: Professional Mailing Resources

Try to develop a working relationship with your local PostOffice not just meeting the local Postmaster but gettingfacetoface with the personnel who receive and handle yourmailpieces. Many newtomail printers join their local PostalCustomer Councils which offer forums to discuss general mailingissues among postal representatives and mailers at all levels ofexpertise.

Your most significant organizational “ally” might turn out to bethe Mailing Fulfillment Service Association the nationaltrade group that serves as the “voice” of mailers. For detailsvisit www.mfsanet.org.

Choosing Mailing Software

What qualities should you look for in a software solution?Consider these factors:

* “Easy to learn” is important but no more than “easy to use.”Wizardguided steps may seem valuable as you’re getting startedbut once you understand how to use the software they’llprobably slow you down. * Don’t underestimate the importance ofseamless integration from entrylevel products to morefullfeatured versions. Nothing is worse than outgrowing yourexisting software only to learn that suitable upgrades don’texist or require learning from scratch. * Nail down allcompatibility issues not just with the computer on which itwill run but also with your existing print infrastructure. *Make sure the software will handle your current needs and isnot “dumbed down” in terms of speed or the number of records itcan handle. * How good is the Customer Support? Seek thirdpartyreferences from industry forums not just the cherrypickedhappy customers vendors may provide but unrehearsed contactsthat can give you the unvarnished good and bad news. Don’tforget to include references from printer manufacturers. * Besure to consider all costs not just startup figures. Find outhow long the initial data subscription lasts and what’sincluded in annual renewals. * If you already offervariabledata printing services good news: VDP is now hot inmailing as well. Some software packages support and evenenhance this technology.

Marketing Mailing Services

Many printers stumble into mailing services; some subcontractdirect mail jobs only eventually realizing the benefit ofbringing jobs inhouse; still others buy or merge withexisting mail houses. Here are some strategies for buildingmailing services into your business:

* Know Your Market. A thorough awareness of your current clientbase will help you launch into mailing while anticipating futurecustomer needs. Try to determine how much of what you currentlyprint is mailed after leaving your shop. Next learn about yourcustomers’ presort needs and position yourself as a logicalcandidate to handle that work. Finally see if they havedatabase demands such as list hygiene or deduping and make acase for why you should handle that datamanipulation work. Theone who controls the database controls the customer but thatcontrol won’t be handed over lightly. * Make it Personal. Reviewyour plans with your top mailing prospects. Key benefits may getyou the business: billing yourself as a onestop shop offeringfaster results and predicting time and cost savings forcentralized printing and mailing. * Heed the Competition. Keepservice offerings in line with your market by learning whoyou’re up against what they offer and what they charge. *Spread the Word. Exploit all points of customer communicationsfrom traditional advertising to promotional copy on yourpackaging and bills and from revamping your Web site toincluding an “Ask me about mailing services” message to yourphone system’s onhold recording. * Join the Clubs. Seek outand become a member of industryspecific organizations. Peoplebuy from people and networking is an important element ofnewventure success.

What’s In It For You?

Once you’ve answered the questions and checked off the “todo”points described above you’ll find mailing to be a rewardingaddition to your printingservices business. It’s hard toimagine a better way of exposing such a sizable chunk of yourexisting business to incremental revenues. What’s moreprintermailers often claim that incorporating mailing serviceseven helps build their printing business. Customers enjoy theconvenience and economy of a “onestop” printandmail houseand they’ll have you to thank.

Good luck and good mailing

Chris Burns American Profiles Mailing Telemarketing List company. Providing telemarketing lists to the direct marketing industry since 1996.

A full service mailing telemarketing list company with over 40000 lists available. http://www.americanprofiles.net/.

Online counts and orders 24/7 http://www.mailinglistsusa.com/.

Marketing With Discounts And Promotions

Retailers went deep and wide when it came to discounts this past holiday season with mixed results. But as consumers expectations for discounting continues how do businesses continue with promotional strategies without losing their shirts?

Some businesses knee jerk reaction is to cut back on everything and anything but Amy King vice president of business intelligence at Valpak warns businesses not to rush into a discount strategy but to start with a plan and then stick to it.

She shares some straightforward do’s and don’ts of promotions and discounting and advice on how businesses can monitor their campaigns to make sure they are generating revenue.

Best known for the familiar blue Valpak envelope filled with discounts Valpak has been in the promotions game for 40 years and was a pioneer in offering coupons on the Web when Valpak.com launched more than 10 years ago. Valpak helps more than 54000 businesses a year and has a wealth of experience across industries. Valpak knows how to structure a discount strategy that not only works but is profitable says King.

Here are five tips that King and her colleagues offer:

1 The discount should be relevant and make sense for your business.

Make sure the offer is appealing to your clientele and fits how your customer buys from you. For example Buy One Get One Free BOGO appears to be a strong offer on the surface but if your customer wouldnt typically buy multiples at the same time it is not likely to work well. Be sure you understand your customer so that the offers are relevant says King.

Also businesses must stay focused on the objective of the advertising campaign. Offers should match the behavior that youre trying to create says King. That might mean using themes or offers that encourage repeat visits. Also diversify your offers to appeal to different types of consumers.

2 Be committed to your campaign.

One of the most important parts of any direct mail program is frequency. You need to advertise consistently so consumers see it and can respond when they are ready.

Sometimes a consumer sees the offer but they dont respond right away says John Widmer Valpaks Audience Research Manager.

Depending on the buying cycle of an industry or personal economics businesses need to remember it can take several months or more for a consumer to respond. That has to do with need and timing says Widmer. Consumers look for an offer that is appealing and has value and they may respond immediately. But with big ticket high commitment items they are likely to take more time to consider the offer and wait until they need to make the purchase.

They may not seek you out unless youre right in front of them when they need you which is why it is important to advertise regularly says King.

3 Mail to the right homes dont waste your advertising dollars.

How do you know who to mail? Target your mailings to your best potential customer and then decide how large an area to mail.

You wouldnt stand on a street corner and shout your offer to random traffic would you? To get the best use of your time and energy youd want to target your message to the people most likely to respond. Do the same with your direct mail advertising. Take advantage of marketing partners that can provide you the latest research as well as consumer targeting by geography demographics behavior and past expenditures.

As for how large your mailing should be thats not just a budget question.

When asked How far would you drive for an offer? consumers in our focus group told us that the better the offer the further they would drive said Widmer. If its a good offer a high ticket offer then they are willing to go further.

Now think about your business. How far can you go? Dont overextend your business to the point where it may impact your bottom line or service level. For example if youre in a service industry and have a limited number of trucks you may need to limit the territory where you mail.

4 Balance strong discounts against your bottom line

Sure universal offers such as 15 off 50 may get customers to respond says Widmer The problem is that businesses dont take the time to structure discounts that get consumers in the door AND still make them some money.

Look at your product mix. Look at your margins because if you dont thats where youre going to get burned warns King. Be smart and evaluate what you can reasonably offer. And dont be afraid to put in appropriate exclusions on specific items that dont fit the discount model.

5 But I cant discount

Some businesses dont want to discount because they are afraid it will cheapen their brand or they dont have the margin to support eyecatching discounts.

They are concerned and should be about coming up with something meaningful and sustainable says King. For that there are different strategies they can use.

• If you cant discount showcase your everyday values.
• Lead with the offer or value statement.
• Promote new items with a discount.
• Reward multiple visits to the business. For example if the customer eats at your restaurant three times the fourth visit could be free.
• Require the purchase of another item that has a high markup such as beverages.

But sending out a wellplanned campaign is only part of what it takes to be successful with a promotional strategy. Follow up is critical to success.

Success is a science

And once consumers do respond measure results against your objectives. Was your goal to generate new customers? To drive phone calls? To promote a new menu item? Make sure you compare results against those goals.

And dont just staple the coupon to the receipt and put it in the register. Analyze the transactions. Did those customers just buy the discounted item or are they spending more? said Keith Malo Valpaks research services director. Valpak research shows that wellplanned discounting typically prompts customers to spend more.

Be prepared or it could flop

When businesses discount or offer a coupon for the first time they may not be prepared for the response it will generate. King warns that could be a mistake.

If you drive consumers to experience your product or service and youre not prepared to be at your best you might as well shoot yourself in the foot said King.

Educate and train your staff to accept the coupon. Not only so you can measure it but also so the consumer feels wanted welcomed and appreciated. Training your staff to handle promotions coupons is just as important as the offer itself.

Although many businesses depend on a seasonal rush a wellplanned trackable incentive or discount will continue to connect them to their customers throughout the year.

But will they come back?

An offer gets them in the door the first time whether they come back again is up you and your staff.

Build your customer experience so they will come back. You want to be a quality provider says King. No one can substitute providing good customer service its essential to understand what that experience is like from your customers point of view.

Valpak offers advertisers a call tracking tool which allows businesses to not only track where calls are coming from but allows them to listen in to recorded calls. Advertisers are sometimes shocked when they realize what goes on in the interaction between consumers and their staffs.

A coupon is not going to solve that kind of problem says Malo. Its going to create demand but its not going to cure customer relations.

The way to achieve success with discounts and promotions is to be prepared. Work with a trusted experienced partner and research what others are doing on the Web. Your best strategy is to do your homework and then measure measure measure says King. Tracking your return on investment is critical to a longterm successful campaign.

About the writer:  I work at Valpak where we provide our advertisers with the most effective direct marketing programs by connecting them to our Valpak audience.