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Test Marketing For Success

Jul 1, 2009

In his book, "Think And Grow Rich," Napoleon Hill says one major cause of business failure is business owners' propensity to make snap judgments and act on guesswork. A retailer's success relies on the ability to attract new customers, while also getting current customers to return and buy more. Therefore, it's important to base advertising on what the marketplace wants, rather than on what a business owner thinks will work. Determining what the marketplace wants calls for subjecting every important marketing and advertising decision to a vote by the only people whose ballots count: customers and prospects.

This voting can take the form of small, inexpensive tests. An advertising test is different than a questionnaire, a survey, or a focus group. These are often skewed toward what participants think they might do, and are not a true indication of their willingness to put their money where their mouths are. By contrast, testing reveals which headlines, offers, prices, and other aspects of an ad or promotion will cause customers and prospects to buy. Best of all, the answers come before a fortune is spent on advertising.

The effectiveness of certain parts of an ad can be tested on small but representative samples of a retailer's market. The results are reliable, because each advertising question is answered with cash, check, or a major credit card. The ultimate purpose of testing is to demand maximum performance from every marketing and advertising dollar spent. One approach will often substantially outperform others. Without testing, it's impossible to know which approach works best. Just running an ad and concluding, "Gee, that didn't work," and pulling it, does not count as testing. True testing encompasses every aspect of an ad: the medium, placement, headline, price, offers, packaging, format, graphics and sales pitch.

Only diligent testing can ensure against a major marketing mistake. If an ad or promotion failed in a small scale test, it must either be adjusted and tested again or scrapped. Keep experimenting until you find the combination that really works.

After 25 years in the retail jewelry business, a man retired and sold diamonds at true wholesale prices, directly to the public, from his home. Because his prices were so low, he managed to sell several diamonds a month based solely on word of mouth. One day, he decided to start a company to sell low price jewelry and collectibles on a nationwide basis, using newspaper advertisements, and he chose Parade magazine as the medium. His idea was to place advertisements that looked exactly like those run in newspapers by the Franklin Mint. He'd just change the name and address. He calculated that if his ads pulled just six responses from every 10,000 ads placed, net profits would triple the ad cost. If he just got three responses per 10,000 he would at least break even.

On the strength of his projections and reputation, the man raised more than $200,000 from local investors and launched a first product, a gemstone ring. The initial ad cost more than $60,000 in the Los Angeles Times' edition of Parade. The paper reached several million homes, so the man expected to become rich quickly. But the product bombed. He tried a different product the second time, and still another the next time. Finally, after all of his capital was depleted, he was forced to quit.

How could this have happened, when all he needed was a measly six responses out of 10,000? Instead of blowing the whole budget on a couple of unproven ideas, he might have taken the time to run some tests in similar magazines with smaller circulations. These relatively inexpensive tests would have told him which ad concepts worked, which prices pulled the most orders, what kinds of terms his customers found most convenient, and anything else he needed to know before rolling out a huge, expensive campaign. It's better to find out what works and what doesn't before putting the whole budget on the line.

In testing one marketing variable against another, one always outperforms the others by a significant margin. A price of $19, for instance, may out pull $21 by three times. A certain headline in a newspaper ad might out pull another one by as many as five to 10 times. That's five or 10 times the result with no increased expense. While testing different approaches, carefully analyze and tabulate the results. When you find something that out pulls everything else, that becomes your, "control." Once you know what works best, you can test other variables in your advertising mix.

For example, when a headline works well in a magazine ad, test it in different magazines or different placements within the magazine, or in different sizes. But don't test more than one variable at a time, or you won't know what effect changing each one of the variables has. If you change the headline, the publication, and the format of the body copy, you won't have any idea which component accounted for the difference in results.

Another wholesale diamond seller found that his business became increasingly profitable the more he tested his advertising. His main selling point had always been below retail pricing. He had successfully run ads in the university newspaper with the headline, "Wholesale Diamonds," for several months in a row. He then decided to test three or four other headlines, based on low prices. Among them was, "If you're planning on spending $2,500 on a diamond engagement ring, I'll send you home with either a ring worth $3,800, or $1,000 still in your pocket."

This simple rearticulation of the selling point, "low prices," graphically illustrated just how low the prices were. It brought the ad alive to the readers. Inquiries and sales immediately increased by more than 60 percent. The new headline became his, "control." He then tested some other concepts against the low price one. One was based on the observation that people usually knew that wholesale diamonds were less expensive, but that they were leery of buying from a dealer that didn't have a big, fancy showroom. Confidence in wholesale dealers was not very high.

An advertiser's job is to raise confidence and lower risk. In this case, there was high risk and low confidence. The jeweler's next newspaper ad confronted this concern head on. The headline read, "Most peoples' greatest fear about buying their diamond engagement ring from a wholesale jeweler is that they'll be fooled into paying too much for an inferior diamond." The ad went on to explain that this company never considered any sale binding until the customer had the diamond appraised by a certified gemologist of their choice. It also described in detail a guarantee that ensured total customer satisfaction.

The huge increase in response this ad brought, drove home the importance of testing. No advertiser can tell the market what it will respond to. Experience can show what types of things tend to work best, but only testing can empirically prove what works best in every single situation. No seller knows how high is high, how fast is fast, how far is far, until several different approaches are tried. It takes longer to test than to not test. But in the long run, scientifically testing every facet of a marketing campaign will make more money for the business and help the business grow more rapidly.

One way to shorten the test time is to run two different ads at the same time. Instead of sending one direct mail piece to the entire list, for example, try sending one piece to half the list and a test piece to the other half. This can be done with other media. It reveals which ad pulls more effectively in a real live situation.

This article was edited from a story by Rich Harshaw, author, consultant, and founder and CEO of Monopolize Your Marketing, which first appeared on www.mymessentials.com.

Topic: Business Strategies

Related Articles: marketing 

Article ID: 1114

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