Appendix F: Direct Mail Test Grid

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Appendix F:

Direct Mail Test

Grid

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Test Marketing

Direct Mail

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Direct Mail Test for Planned

Magazine

• Measures the response to the basic concept of a magazine through a test of response

James Kobak “Testing a New Magazine Through Direct Mail,”How to Start a Magazine

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Magazines: Direct Mail

• “Dry Test”

- the product is tested without being published

- the first issue may be years away

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• Also allows the magazine company to determine which combination of design, prices, offers, advertising copy, and mailing lists work the best.

http://www.ptarmigan.co.uk/New%20Pages/DM.html

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Mailing lists

• Bests lists are the

subscription list of a similar magazine

- keep this in mind when choosing the mailing lists for a direct mail test

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Test Grid

• Several variables could be tested:

- Copy (text of promos) - Price

- Payment Offer

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Test Grid

• Create a grid to plot the variables tested

• Different permutations of various copy approaches, prices, payments, and mailing lists

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Payment Offer Type

• “Soft” Payment offer: the

subscriber receives a trial issue, can cancel anytime

- ~60% chance of cancellation. “Hard” Payment offer: cash or

credit card payment must be made, no cancellation

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Sample Test Mailing Grid

Copy Approach

Copy A Copy A Copy A Copy B Copy C

Price $15 $17 $15 $15 $15 Offer Soft Soft Hard Soft Soft Mailing List (ML) ML #1 3,000 3,000 3,000 ML #2 3,000 3,000 3,000 ML #3 3,000 3,000 3,000 ML #4 3,000 3,000 3,000 ML#5 3,000 3,000 3,000 ML #6 3,000 3,000 3,000 ML #7-21 Control Lists (3,000 each) 45,000 416

Sample Direct Mailing Test

• Mailing lists (of different

qualities) 1 - 6 are lists generated from the subscription lists of similar magazines.

- A total of 3x2x2 permutations - The lists test for different copy approaches, prices and offers. James Kobak “Testing a New Magazine Through Direct Mail,”How to Start a Magazine

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Sample Direct Mailing Test

• The control package is Copy Approach A—Price $15—and a soft offer.

• Copy Approach A is chosen as the control because it is very descriptive of the magazine. James Kobak “Testing a New Magazine Through Direct Mail,”How to Start a Magazine

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Sample Direct Mailing Test

• The control package will be sent out to as many lists as possible. The more funds available, the more packages can be produced. • A people within a single mailing

list can receive several packages.

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Sample Results: DMT Acceptance %

Copy Approach

Copy A Copy A Copy A Copy B Copy C

Price $15 $17 $15 $15 $15 Offer Soft Soft Hard Soft Soft Mailing List (ML) ML #1 6.3% 5.6% 5.4% ML #2 7.4% 6.0% 5.9% 7.5% ML #3 4.3% 4.3% 5.0% 3.8% ML #4 5.5% 5.2% 3.8% 4.8% ML#5 6.8% 5.2% ML #6 5.4% 5.6%

420 ML #7 4.8% ML #8 2.1% ML #9 8.5% ML #10 3.7% ML#11 2.8% ML#12 4.6% ML#13 7.3% ML#14 1.5% ML#15 3.9% ML#16 10.3% ML#17 2.9% ML#18 4.6% ML#19 6.2% ML#20 5.4% ML#21 9.2% 421

Interpreting the Results

• In comparing the acceptance rates for the 2 different prices with the same copy approach and payment offer, sent to the same mailing lists, it was

determined that the response to the price at $16.97 was only 10.2% less than the $14.97. James Kobak “Testing a New Magazine Through Direct Mail,”How to Start a Magazine

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( )

Difference x x y n i i i i ₁₀₀ _% 1 =       −

∑

= y= acceptance rate a x= acceptance rate b i= mailing list # 423

Example: % Difference between the two prices for Copy A.

% 2 . 10 100 5 . 5 5 . 5 2 . 5 100 3 . 4 3 . 4 3 . 4 100 4 . 7 4 . 7 0 . 6 100 3 . 6 3 . 6 6 . 5 ₌₋       − +       − +       − +       −

Interpreting the Results

( )=       − ∑ = 100 4 1 i i i i x x y 424

Interpreting the Results

• Similarly, one can determine the % difference between the acceptance rates for different payment offers (hard vs. soft) for Copy A.

– the hard offer for copy A was only 9.44% less than the soft offer for copy A

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Interpreting the Results

• Recall that probability of

cancellation of “soft offer” is 60% • Hence, hard offers seem to be 30%

stronger in net subscriptions.

% 44 . 9 100 3 . 4 3 . 4 0 . 5 100 4 . 7 4 . 7 9 . 5 100 3 . 6 3 . 6 4 . 5 − =       − +       − +       − ( )=       −

∑

= 100 3 1 i i i i x x y

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• Overall, Copy B has a better acceptance rate than Copy A • Copy C had the worst results.

Interpreting the Results

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Interpreting the Results

• After calculating the

acceptance %, one should rank the lists in descending order.

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List #

Response %

"Effective Response" Rate (accounting for cancellation probability)

16 10.30% 6.18% 21 9.2% 5.52% 9 8.5% 5.10% 2 7.5% 4.50% 13 7.3% 4.38% 5 6.8% 4.08% 1 6.3% 3.78% 19 6.2% 3.72% 4 5.5% 3.30% 6 5.4% 3.24% 20 5.4% 3.24%

Lists Ranked by Response for Copy A

429 12 4.6% 2.76% 18 4.6% 2.76% 3 4.3% 2.58% 15 3.9% 2.34% 10 3.7% 2.22% 17 2.9% 1.74% 11 2.8% 1.68% 8 2.1% 1.26% 14 1.5% 9.00% List # Response %

"Effective Response" Rate (accounting for cancellation probability)

Lists Ranked by Response for Copy A cont.

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Interpreting the Results

• Established companies can work with a smaller

response rate because they already have a core

circulation.

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• However, a new magazine must usually secure a higher demand projections–about 6% to 8%–in order to have a good chance of success.

Interpreting the Results

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Improving the Acceptance

Rate

• A follow-up DMT with most favorable (profitable) variables can help confirm results.

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Improving the Acceptance

Rate

• According to the sample test, Copy Approach B—$17—Hard Offer is estimated as the most favorable for “Golden.”

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• Market research companies provide socio-demographic information about every zip code.

Improving the Acceptance

Rate

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• Combining test results with demographic characteristics helps a magazine to

determine best target zip code, and which other characteristics to focus on (Income? Race? Gender? Optimal Age?)