 The
Value Of Online Marketing - A Case Study
How to Market Online
without SPAM or Purchasing Lists.
Published
in the October edition of
Computer Link Magazine
Online
marketing offers effectiveness, speed,
and cost advantages over other forms
of direct marketing. It can also initiate
a long lasting relationship with customers
and provide valuable marketing information
for use when conducting additional online
marketing campaigns.
We
were recently involved in a combination
online and direct mail campaign which
yielded some interesting results. This
actual case study confirms the important
synergy between online and classic direct
marketing techniques.
The
client was an office products manufacturer
who wanted to test selling supplies
to registered users of their products
in the Small Office Home Office (SOHO)
market. The approach was to conduct
a marketing test over a three month
period, to determine the overall viability
of the program.
The
list was comprised of customer contact
information derived from product registration
cards, where a little less than half
of the registrants provided email addresses.
The test itself included both an email
and direct mail component, which utilized
a small custom-built tactical Web site
that provided online ordering capability
with credit card payment.
The
offer had two primary component parts.
First, 25% off list price of a special
combined product offering, and second,
free shipping.
The
budget for the program broke down approximately
as follows:
- 50%
Printing and postage
- 20%
Web site development
- 14%
Offer development and creative
- 10%
Direct mail services and telephone
order taking
- 6%
Email delivery
The
marketing program was delivered first
by email and was followed by direct
mail.
The
email offer had a response rate of 8%
to the Web site and received an order
rate of .8%. The bulk of the email ordering
was done in the first 72 hours and was
98% complete in 7 days. There was a
high percentage of undeliverable email
addresses (28%) primarily due to a couple
of years delay in the time between collecting
the information and the distribution
of the offer. Normal bounce back rates
are usually around 10-15%.
Two weeks after the email offer went
out, the direct mail offer was sent
to the entire list, including everyone
who had also received the email offer.
The direct mail offer produced an order
rate of .7% and took 4 weeks to complete.
This offer contained both the Web site
URL and a (800) number for ordering.
Surprisingly the direct mail piece resulted
in 1/2 of the orders being taken through
the Web site and the other 1/2 through
the telephone call center.
Even
more valuable than the sales themselves
were the comments received through a
few survey questions, as part of the
online ordering process. Direct marketing
success requires significant testing.
Through these tests, the client was
able to gather valuable direct feedback
from their customers that will help
them to determine their next offer and
improve their success. Those survey
questions revealed which products customers
desired in future offers. There were
numerous comments that stated that the
supplies that were offered at 25% off
the list price were equivalent to the
average street price, therefore revealing
that the primary reason for ordering
was the convenience of doing so online.
Several hundred of the direct mail recipients
that we did not have an email address
for and did not order any product, requested
future offers online. Customers overwhelming
rejected an offer for a new marketing
program, which could have been costly
to implement and which we now believe,
would have failed. The biggest surprise
was that the product, which was originally
intended for the SOHO market was used
overwhelmingly for personal use!
Some
interesting comparisons also occurred
between the email and direct mail offers.
If we assume the fixed costs in this
test included Web site development,
marketing offer development, and creative,
then the variable cost per order was
$51.45 for direct mail and only $12.30
for email. The average order size was
10% greater in dollar volume by email.
Additionally, the order conversion rate
for email was 13% higher than direct
mail. The conversion to order by email
was also competed four times faster
than by direct mail.
The
test was a success and the client is
now extending and expanding their program.
Based on standard business metrics the
client's profit from the 90 day pilot
project provided a greater than 54%
return-on-investment compared to the
cost to conduct it. Additionally, they
now have online ordering capability
and an expanded database of email customers
to repeatedly communicate with and present
additional offers to. By expanding the
pilot, this effective method of marketing
online can contribute significant profits
to the client company.
The
values of online marketing that can
be drawn from this test are numerous.
First, this entire direct marketing
campaign was conducted without any outside
lists or resorting to the use of SPAM,
which we all deplore. We drew upon internal
client company information and built
and expanded its email base online for
future communication. Notably, there
is great synergy between the use of
direct mail and email when used together.
By way of the direct mail, resulting
in 50% of the orders being taken through
the Web site, the client now has accumulated
an email address from those customers
for future email offers. Direct mail
can be used with a high level of effectiveness
to convert customers to online ordering,
for fast, efficient and cost effective
email offers and communication in the
future.
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