July 2008 - The Art of the Offer

How do you entice more customers to buy your goods and services? Make ‘em an offer they can’t refuse, of course. That’s if you can master the steps.

By Jack Gordon

A direct-response pitch might include any number of things: demonstrations, celebrity endorsers, the kitchen sink. But at the heart of every DR ad, in any medium, is the offer. What are you going to give me, the customer, in exchange for what investment on my part, and how do I start the ball rolling?

If the offer doesn’t persuade me-if I don’t accept the call to action by picking up the phone, or clicking the “purchase” button on the website or whatever-the campaign still might have some branding value, but in DR terms, it fails.

Constructing an effective offer is an art. If that sounds too grandiose, then Scott Paternoster recommends you watch a genuine master at work. Paternoster, president of Chief Media of New York City, an agency specializing in direct response TV and radio, says there still is no greater artist of the offer than the father of the infomercial industry, Ron Popeil.

Popeil, the man who coined the phrase, “but wait, there’s more…” doesn’t make an offer, he builds one, Paternoster observes. Take Popeil’s recent show for the Ronco Six Star Knife and Cutlery Set. The set has 25 pieces. But in his classic manner, Popeil doesn’t sell the viewer a 25-piece set. Instead, he presents a package that sounds attractive to begin with, then adds knives, choppers and cleavers one at a time-”but wait, there’s more”-until the perceived value seems incredible.

And he saves the capper for last: Did he say you could get all of these pieces for just $39.95? Well, call now, and for $39.95 he’ll send you not one 25-piece set but two of them. Yes, you heard him right! It’s actually a buy-one, get-one-free deal.

“The offer just keeps on building until the consumer can’t resist any longer and picks up the phone,” Paternoster says.

When that moment arrives, the consumer has reached what Ron Lynch calls the tipping point. It’s the point where the customer thinks, “this is such a value that I’d be silly not to accept the call to action,” says Lynch, chief creative officer for DRTV marketing agency Cesari Direct of Seattle.

The trick, says agency head Rick Cesari, is to find the particular piece of “magic” that will cause the consumer to tip. It might be a bonus item, a price point, a certain way of packaging the product or even a phrase. Often the only way to find the magic is to test different versions of the offer. Fortunately, he points out, the offer usually is the easiest thing to change in a DRTV commercial, much cheaper than shooting new demonstrations or testimonials-or a whole new show.

Working with a carpet-cleaning product called Rug Doctor, for instance, “we tested hard offers, soft offers, multiple-payment offers-lots of things,” Cesari says. “When we switched to the statement, ‘Payments as low as $39.95,’ that’s what opened up the phone lines.”

Or take a DRTV commercial for the Argenus Air Sterilizer. In initial testing, Cesari and the sponsor tried adding bonus items to the offer, but results were disappointing. They took the commercial to a focus group and discovered that consumers worried about the ongoing cost of replacement filters for the sterilizer. By adjusting the offer to include free replacement filters, Cesari found the magic. “A pretty expensive product is now selling well,” he says.

Lynch notes that the magic formula can change over the life of a campaign. When Rug Doctor’s results began to flag after a long, successful run, he says, the campaign was given new life by repackaging the cleaning solutions that come with the machine in a unique way. Rug Doctor comes with 12 bottles of soap, antifoaming liquids and so on, Lynch explains. The bottles were repackaged into three groups; one was for “pet stains,” for instance.

“So instead of selling 12 bottles of stuff, we sold ‘three powerful stain-fighting systems,’” Lynch says. “The explanation of value can be as important as the core offer itself. It’s not necessarily a matter of adding more.”

In many respects, a good offer is a good offer regardless of where it appears-on television, radio, online or in print. But the medium does matter.

For instance, Paternoster says that soft offers, which don’t disclose the price of the product, are well suited to radio advertisements because a radio caller, not having seen a demonstration, has more questions about the offer anyway. “Radio callers want more information before they make a decision,” he says. They expect to be told more, and they need to be sold more.

The biggest mistake marketers make with soft offers, whether on radio or TV, is not in the phrasing or the structure but in choosing the call center to which inquiries will be routed, Paternoster says. Soft offers require phone agents who can sell, not just order takers. Some call centers employ such agents. Some don’t.

In online selling, hard offers rule, says Johnny Mathis, CEO of Internet marketing agency Livemercial of Valparaiso, Ind. If you’re conducting an outright e-commerce transaction, you can’t very well withhold the price.

But because shoppers can get a lot of information about a product from a website, and can even research the product by looking at consumer blogs and so on, they tend to be more comfortable buying higher-priced items online, Mathis says. Maybe for the same reason, he adds, “we’ve had great success with continuity programs on the Internet.” He says that a number of clients feature a one-pay option in their TV spots, but include a continuity offer on their websites-an offer not available over the phone.

The technique works well with health and beauty products, and also for less obvious items, Mathis says. He points to Green Bags, a line of storage bags for vegetables and fruit: “On TV, the offer is so many Green Bags for X price. On the Net, you can buy the one-shot or, for a different price, they’ll ship Green Bags to you every 30 days.”

For a sale to be made in any DR medium, the customer obviously must accept the offer. But in some forms of marketing, success may depend more on targeting or timing than on the way the offer is structured.

In e-mail marketing, the overwhelming success factor has to do with selecting the right people to receive an offer in the first place, says Ryan Deutsch, director of strategic services for StrongMail Systems, an e-mail campaign management firm in Redwood City, Calif. In fact, the great advantage of e-mail marketing is that you can comb through online data (past purchases, items in abandoned shopping carts, etc.) to identify people likely to be interested in a particular product or type of offer.

E-mail offers that are “relevant” to the people who receive them-shoppers actively looking for golf equipment, for instance-are so much more effective than “blast” e-mail campaigns that tweaking the offer itself is a minor consideration by comparison. Deutsch says, “Broadcast e-mail gets responses in the 2-percent range, just like [paper] direct mail. With targeted, relevant campaigns, research shows an average 5X performance improvement.” That is, 10 percent instead of two.

Retailers including Home Depot and Bed Bath & Beyond have achieved 20-percent response rates by switching to targeted custom e-mail newsletters and announcements instead of blasting out offers on a one-size-fits-all basis, Deutsch says. It would take a rare tweak to a payment plan or a packaging scheme to get a 10X performance improvement in a campaign.

A similar principle applies to “event-triggered” offers-e-mail campaigns, TV or radio spots or other messages aimed to coincide with particular events: the World Series, the Fourth of July, a customer’s birthday or whatever. Here, timing the offer trumps tweaking the offer, says Tony Compton, Chicago-based director of product marketing for CRM solutions at Infor, a business-software maker headquartered in Alpharetta, Ga.

When the New York Giants won the Super Bowl last February, Compton says, QVC and other home shopping networks were on the air selling Giants merchandise “five minutes after the game.” The preparation enabling such timing is a weightier factor than the structure of the offers.

The trap many vendors fall into with event-based marketing is to base campaigns on events that are “too trivial in scale,” Compton says. The problem isn’t that their offers are poorly constructed, but that they “target too few customers about a multitude of events.” Yes, e-mail is cheap, and it’s nice that you know when your customers’ birthdays fall. But if only a handful of them were born on any particular day, the cost of your birthday-based campaign “probably will outweigh the benefits,” Compton says.

In most forms of DR marketing, however, the care that goes into building the right offer weighs huge in the campaign’s success. Cesari Direct’s Lynch points out that finding the tipping point that makes an offer irresistible sometimes comes down to providing the consumer with the right “alibi.” Take the case of a client’s infomercial for Total Trolley, a stepladder that converts into a hand truck or a flatbed dolly. Sixty to 70 percent of infomercial customers are women, Lynch says, so most of the show’s demonstrations show women using the Total Trolley. But some scenes also show a man using it in a garage to move paint cans and equipment, reach the top of the garage door and so on.

The likely buyer is still a woman, Lynch says, “but there’s her alibi: This will benefit her husband, too.”

In moments like that, the magic happens. The tipping point is reached. The call to action is accepted. A sale is made.


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