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Marketing Challenge
A software company, which sells high-end portfolio management software to the banking
industry, seeks to generate qualified sales leads for its sales force.
Direct Marketing Application
Financial Software/Lead Generation
Background
This small software company was just a few years old when we met them. The owner
was a banking consultant who had developed three "back-office" software
products.
We were first asked to create a more sophisticated and professional direct mail package
which the client believed would help improve response. The existing package was thick
with information. It included a pocket folder along with several documents: a product
brochure, a history of the company and a summary of reports that the software could
produce.
What We Recommended
Our first reaction to the existing package was not that it needed a more professional
design but that it was not being used correctly. The direct mail package the company
had been using for lead generation would, we thought, be more appropriately used
as a fulfillment package.
Our recommendation, therefore, was to keep the existing package intact but only send
it out in response to inquiries — those prospects who actually request it. We then
suggested a new lead generation package be developed in the form of a simple letter
package — a standard #10 envelope, one-page letter and reply card.
What We Did
In developing the lead generation direct mail package, we decided to create two packages
and test two offers. One package focused directly on the product and offered an Information
Kit; the other focused on the need to automate "back office" functions
(this was 1985, and few "back office" functions were automated at the time)
and offered a Q&A brochure on the subject.
We also selected two job titles (the Portfolio Manager and the Accounting Manager)
within each bank and tested the response from each title.
In terms of costs, the new smaller packages were produced for a lot less than the
larger existing package (75¢ vs. $2.00 per piece).
How It Worked
Both new letter packages produced about three times the original response rate (1.5%
vs. 0.5%) from the larger original package. The Q&A offer produced a slightly
higher response rate but the lead quality was not as strong as the Information Kit
offer. The client decided to continue with the letter package using the Information
Kit offer.
The increased response rate combined with the lower production costs reduced the
cost per lead significantly, slashing the cost from $400 to $50.
Shortly after the program was finished and the leads were followed up, we held a
meeting with the sales people to get their feedback. What we learned was that although
many leads came from smaller banks, the cost of the product was too high for most
of them.
We then decided to eliminate the smaller banks from the list selection — cutting
the mailing quantities in half. Later, after more testing, the list was cut further,
eventually yielding a list one-tenth the size of the original list.
Subsequent Activity
We applied the same strategy to the direct marketing efforts of the company's
other two products with very similar results. We also used a similar direct marketing
strategy to generate leads for the firm's consulting services. Eventually, the company
was acquired by a competitor, and we continued to work with the new firm for many
years. |
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