Writing
 Direct Marketing for Public Radio, Part 4: Conducting an Audit, Setting Priorities, and Developing a Plan By B. R. Forbes Originally published in the Development Exchange journal i.e. development, April 1989. The previous installments of this series on Direct Marketing have included an overview of direct marketing, market research, and using computers; direct mail; and telemarketing. This fourth installment of the series discusses methods for conducting a direct marketing audit, setting priorities, and developing a full direct marketing plan. Direct Marketing Overview: Who, how, what, why and when of direct marketing The term "audit" has been specifically used, rather than "analysis" or "evaluation," to indicate a more formal approach to assessing a direct marketing program. The audit should examine direct marketing activities along the following lines, which indicate the who, how, what, why and when of a direct marketing program:
As mentioned in the first installment of this series, direct marketing is the total of activities of moving goods and services from sellers to target markets employing direct response communication, measurement of responses, and a database of customer and prospect information. A target market is a group of individuals or corporations which share common traits and that have been identified as being likely to buy particular goods or services. The two most common target markets in public radio are individuals and corporations. But these two groups can be further delineated into more specific groups defined by other characteristics. For example, individuals can be grouped by age, interests, listening habits, sex, income, etc. Corporations can be classified by location, number of employees, industrial code, budget size, customer base, etc. Communication media: How is the message delivered? Some examples of communication media which can target specific audiences are:
Direct marketing can help improve both corporate and individual support efforts with the following objectives:
As in any type of marketing, direct marketing offers four strategies that can help stations grow: Market penetration, or increasing the number of donors within current target markets, is probably the easiest and most predictable way to grow. Stations simply continue to offer the same membership or underwriting benefits to the same prospects at the same price. Product development, or creating new products for current target markets, may be the next easiest and can be predictable, depending on the amount of research conducted. This may include offering "Producer's Club" benefits for individual donors of $1,000 or more or offering rotating "program fund" underwriting credits, at a lower than usual price, for your current corporate prospects. Market development, or reaching new target markets, may be more difficult and less predictable. The same benefits at the same price may be offered to lists of young professionals or to members of a local Union. Targeted diversification, or a combination of offering new products to new target markets, takes much more research and planning and is very difficult to predict. For example, a station may try to market a beer festival to 20- to 30-year-olds, a wine tasting for 30-to 50-year-olds, or paid public service announcements (PSA’s) to other non-profit organizations. Direct Marketing Audit Conducting the direct marketing audit The first step in conducting a direct marketing audit is to list all current activities by target market, objective and communication media. Next, report the amount of direct response each activity received in both numbers and dollars. Then estimate the cost of each activity, including the cost of the staff time devoted to each. Although sometimes difficult to calculate, the expense of staff time is a very important element in analyzing the true cost of an activity. Finally, calculate the cost-effectiveness of each activity by dividing the cost by the number of dollars and/or responses generated. At the bottom of each column, calculate the total to get an idea of the overall effectiveness of each objective. For example, a three-day, short-form on-air membership drive may have produced about 2,000 pledges of an average of 140. At about 90% fulfillment, this is about $72,000 in cash. The drive may have cost about $4,500 in staff time (320 hours at about $14 per hour, with salary, benefits and payroll taxes); about $1,000 in pledge forms and mail packages; $1,600 in postage (for volunteers, all pledge reminders, and premiums); $3,000 in premiums; and around $50 in various printing and photocopying for a total expense of a little over $10,000. Therefore, each dollar cost about fourteen cents to raise and each fulfilled pledge of $40 cost about $5.55 to acquire. See the following table for details.
Understanding the results As of yet, no example analysis exists for direct marketing activities conducted by public radio stations -- simply because few stations keep track of their results this carefully. However, completing this type of systematic analysis serves several functions:
Establishing objectives, goals, and strategies Once a station has determined where it stands, the station can project where it would like to be -through objectives, strategies and goals. Objectives: Each objective (retention, upgrading, regaining, and acquisition) should be examined for growth potential. If a station has a renewal rate of 50^ and a similar station has a rate of 60^, the station may feel that it can increase its retention rate. Through further analysis, the station may discover that first-year members' renewal rate is only about 40%. Goals: Once the objective is established for each activity, goals can be set, based on research and expectations. Continuing this example, since the average renewal rate of this particular station is 50%, the station may reasonably expect to raise the renewal rate of new members by 10^ to a total of 50% — thus increasing the overall rate. Strategies: Next, the strategy should be determined. In this case, the target market has already been identified (first-year members) so market development and total diversification are not practical. Since other members have a retention rate of 50^, the station may decide to keep the same product (basic membership) and work to improve market penetration (increasing the number of renewals within the current target market.) Choosing communication media The choice of communication media may depend on the results expected, the resources available, and skills required. Although many avenues of communication exist, a station may not have the money or experience to utilize some of them. Generally, the most expensive medium (per exposure) is telemarketing — it is also the most effective. Next in general effectiveness and expense is direct mail, with TV, radio, print and other forms of communication the least effective and least costly per contact. Successful stations test as many media as possible in order to determine their effectiveness. Then, the average "response cost" can be determined. When a station feels comfortable with a particular response cost, it can then utilize the communication channel more aggressively and consistently. For example, a station may already know that the response cost of getting a new member through a short-form fund raising drive is $5.50. Through a free offer from their bank to insert bill stuffers promoting a membership discount card, they may find that an investment of about $1,000 (in time and printing inserts) yields 100 members from a list of 5,000 (a response rate of 2%) for a total of $2,500. Although the $10 response cost (100 respondents costing a total of $1,000) of the bill-stuffers is almost twice as much as the on-air cost, the station may be more comfortable with the higher average cost, since the communication media is "off-air" and tapping a new market for the station. Determining priorities Having established objectives, goals, and strategies, each possible direct marketing activity should be prioritized. The priorities should be based on the assessment of several key elements, which should be determined through actual tests. You may estimate results from the activities of similar organizations if that's all the information available. Projected gain: Obviously, the activity with the highest potential for increasing income should be given a high priority - but this should be tempered with the following considerations. Projected cost: Some stations are flexible enough to budget for demonstrably good direct marketing activities. Most require each department to remain within a proscribed budget. However, a good direct marketer will introduce targets of opportunity as they arise and request that management allocate the money. Projected cost/benefit: A high gain direct marketing activity may also have a high cost. The highest priority should be given to activities which project a relatively low cost to a relatively high benefit. Technical capability: Make sure the station has or has access to the skills and experience necessary to plan and implement the desired activities. Forexmaple, many direct marketing activities depend on a flexible computer system -- and knowledgeable people to run it. Also, an in-house telemarketing project is useless without a skilled trainer. Staffing: Assess the staff time necessary to refine or add an activity -- include planning time, implementation, clerical, data entry, follow-through, etc. Then determine how much staff time is currently available. Place a high priority on those activities that require the least amount of staff time, and low priority for those that require additional staff. Timeline: Take into consideration the amount of lead time necessary for each activity, such as recruiting telemarketers, designing and printing materials, etc. The activities that can take place immediately should have a higher priority. Personal considerations: Some advantages or disadvantages of a project are not as quantifiable as costs or income — and are based on personal perceptions which may be as, or more, important, For example, a staff member may be very eager to take on a particular project -- which is threrefore more likely to be successful. On the other hand, a key co-worker may have an irrational dislike of billboards -- and may delay or deny station involvement. Assess all considerations by discussing activities with key people and base the priority on team reactions. A simple way to prioritize activities based on these seven elements is to score each from 1 (low) to 10 (high) and then add up the total score. If some considerations are more important, a weighted scale can be developed. Direct Marketing Plan Putting it all together Select from the list of prioritized direct marketing activities those projects which are reasonable to pursue within the coming year. Organize the activities by strategy (retention, upgrade/cross-sell, regain, and acquire/identify), by target market, and by communications media. Each activity should clearly indicate the objective, a specific goal, target market, strategy and communication media. For example:
Setting up a timeline Determine a reasonable timeline for each activity (i.e., additional gift mailing one week prior to on-air fundraising; telemarketing campaign to unfulfilled pledgers three months after on-air campaign, etc.) and indicate both the person with primary responsibility and other staff members who will be involved. Combine all dates and activities into one master calendar. This will present an overview of all direct marketing activity and deadlines. Some adjustments may be required to ease the workload between projects and to have time to celebrate success! Ongoing monitoring of direct marketing plan In order to stay on target, regular monitoring of the progress of the various activities is critical. Monthly reports are particularly helpful for comparing progress and results with the expectations of the direct marketing plan. Adjust the plan as tests are completed - and as deadlines get shifted. Keep the plan flexible and your mind open. And now a reality check... In the best of all possible worlds, everyone will have ample time to plan and plan and plan,.. But the real world often gets in the way. The process described here for auditing direct marketing activities, setting priorities and developing a plan is not simple. It's not quick. But it is thorough -and will help stations gain a better understanding of the current state of their direct marketing, along with the possibilities and full potential. If time is not available to go through this process, recruit a good volunteer or a marketing student. Or finagle a trade with a professional direct marketing company. Good, effective direct marketing efforts take time to develop and implement - and you should find the results are well worth the efforts! COMING UP: The final installment of this five-part series will examine a direct marketing case study.. |
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