Strategy: Anatomy of a Marketing Test

Ask your postal service bureau to give you the postage estimates on both ways, to be sure where the cutoff is. If the postage savings outweigh the price of selective binding, then selective binding is the way to go. How you handle A/B splits is even more important today considering the higher mailing costs that just went into effect.

In my chart (see below), the housefile, rentals and cooperative database lists are split into offer vs. no offer. “No offer” is the control group and “offer” is the test.

Contribution Analysis

What’s shown are the rolled-up results or totals by offer vs. no offer. In all cases, the offer beat the control as measured by the RPC (revenue per catalog). Based on this, we can draw a conclusion and confidently roll out the test.

The results of any test should include a contribution to profit and overhead analysis. On the surface, test results might look good. But you need to know if the offer and/or test can be cost-justified after all expenses have been considered — including the cost of the offer.

Do your homework. Know how much you need to increase the response rate and/or average order size to cost-justify an offer. For any test to be successful, it must increase the contribution to profit and overhead.

Testing is critical to success. It’s a way to separate opinion from fact. Don’t just assume something will work. Test, test and re-test! «

Stephen R. Lett is president of Lett Direct, a catalog consulting firm specializing in circulation planning, forecasting and analysis since 1995. He is the author of “Strategic Catalog Marketing,” a Catalog Success book published by Target Marketing Group Publications. You can reach him at (302) 537-0375 or at www.lettdirect.com.