We all know the world has changed. Technology has brought more information into the palm of your hand today than could fill a room 30 years ago. Marketing has certainly changed. There are exponentially more media options and delivery channels than even 20 years ago.
However, one thing that hasn’t really changed is human nature, and that’s where I see young marketers making the same mistakes over and over.
Back in the day, which means about 1990 in case you’re wondering, direct marketing consisted of direct mail catalogs and letters, telemarketing, direct response TV (infomercials), and that’s about it. Since then, we have seen the rise of email marketing, highly targeted online marketing, mobile marketing, and much more.
As direct marketers, we lived by some tried-and-true rules that were based on years of analysis and testing by some very sharp analysts. These rules were all rooted in the understanding of human nature and purchase motivation. Again, while the way we buy may have changed, the way we think has not. We’re still motivated by the same desires, and we still react the same way as our parents and grandparents. For example, think of your reaction when you first saw the 3-D animation in Avatar. That’s the same reaction I had when I first saw the special effects of Star Wars back in the late 1970’s.
As I continue to work with new media channels and improved technology, I often run across classic mistakes and think about some of those “old school” rules. Here are hare five of my favorites…
40/40/20
The “40/40/20 rule” explains what constitutes the response for a marketing campaign. It breaks down like this:
- 40% of the success of a campaign is due to the audience
- 40% is due to the offer or product
- 20% is due to the creative
This rule was popularized in the 1960’s by a direct mail guru named Ed Mayer. While it may not be perfectly suited to every situation, this is one rule that I tend to bring up quite often. You’ll notice that the majority of the success is due to sending the right message to the right person. If you can find the people who are most interested in what you’re selling (at that time), the chances for success are much higher. No secret there.
Creative is important. Design, colors, fonts…all good. But they do not make for successful campaigns. Relevance is the key, which is why the big daily deal sites are spending big bucks trying to figure it out. Actually, my sense is that they’ve already figured it out, but lack the inventory to act on it.
Be sure you understand exactly who your audience is, that you have permission to market to them , and that you can find them using today’s technology. Then hit them with the right message at the right time. Is it any wonder that remarketing has been such a success? Kudos to the folks who popularized that tactic.
RFM
RFM stands for Recency (when was the last time they bought?), Frequency (how often have they bought?), Monetary Value (how much money have they spent?). This is the traditional formula used to distinguish between customer segments. Customers who have bought recently, buy often, and spend a lot are the top tier. A simple way to measure RFM is to create five “buckets” for each variable and number them from 1 (lowest value) to 5 (highest value). Then add the scores for each customer. Your 15’s are the best customers. Your 3’s are probably unprofitable.
This rule has stood the test of time because no matter what business you’re in, your customers are not all created equal. It is important to segment your customers and prospects so you can provide more relevant messaging to them. It’s amazing how many companies still blast out the same emails and text messages to their entire customer base. The excuse is usually “lack of resources”, which usually means they’re not allocating their time according to the 40/40/20 rule.
80/20
The 80/20 rule is the oldest of our old school rules. It’s also known as the Pareto Principle, because a dude named Vilfredo Pareto noticed back around 1900 that 80% of the land in Italy was owned by 20% of the population. He then started seeing that the same held true in other countries.
Well, in business, we find the 80/20 rule all over. In most businesses with repeat customers, you will find that about 80% of your sales (or profits) come from 20% of your customers. You may also find that about 20% of your products make up about 80% of your sales.
You can apply this rule to online marketing as well. In social media, if you did some research you will likely find that 80% of your posts (blog, Facebook, Twitter) are read by 20% of your audience and 80% of your replies are from 20% of your audience.
Have you ever noticed that the industry standard for email open rates is about 25%? That means that roughly 80% of your emails are opened by 20% of your audience. And the same holds true for click-thrus.
Use this rule to understand and identify the “minority that provides the majority”. Nurture them and find others in the 80% who should be in the 20%. Use it to continuously improve your site, your marketing, and your products. Try to break the rule. You won’t be able to, but you’ll improve your business results.
AIDA
This is another of my favorites. AIDA stands for Attention, Interest, Desire, Action. Attention is the creative message that first attracts the prospect (think AdWords). Interest is where the prospect becomes engaged with your benefits and solutions. Desire is when the prospect is convinced that your solution is the right one. Action is when the prospect “makes a move” to initiate the purchase.
Remember that bit about human nature not changing? This is it. AIDA is the path that we all take when deciding to buy. Depending on your business, it may take place in two seconds or two years.
The best user experience professionals understand AIDA whether they know the term or not. At the risk of overusing acronyms, AIDA is in the DNA of UX. Here’s a great article by Louis Lazaris about the use of AIDA in web design:
http://www.noupe.com/design/
$ > %
This final rule is something that has made old school direct marketers a lot of money over the years. It states simply that all things being (relatively) equal, dollars off promotions will generate higher response and more profits than percent off promotions. This gets a lot of head-nodding from people who have experience testing offers and promotions.
Again, this is a human nature thing, and the principle here is that people like simple, straightforward offers. Consumers don’t like to have to think. They especially don’t like to have to do math. A dollar figure is a finite number that people can immediately understand and relate to. Percent off promotions require some computations and sometimes have the scent of deceit.
So there you have it. Five timeless rules that can help improve your marketing. They will crop up from time to time, so remember them. But more importantly, remember the spirit of these rules. Remember that who you target and what you say is more important than how you say it. Remember that all customers are not created equal and that the minority accounts for the majority. Remember that there is a buying process that customers go through to buy your product. And remember that people don’t like to think, so keep it simple.
Jay Weinberg is President of The JAY Group, a Chicago-based loyalty marketing firm that helps companies vastly improve their performance through business intelligence and smart marketing programs. Follow his company on Twitter @thejaygrp or contact him the old school way at jay@thejaygroup.com.
