How to prosper in the post-crash economy.Dear Colleague:
With marketers putting the finishing touches on their January mailings, Craig Huey, president of Creative Direct Marketing Group, believes there is a huge opportunity now. That's especially true for financial newsletter publishers because retail investors have been edging back into the market.
But it's also true for publishers of non-financial newsletters. What do you need to know to navigate the current economy?
1. Re-examine your market strategy. Huey offers this example: In California, his kid skis with her shirt off. But he's going to school in the East, and "I got a call. He needs winter wear." Turns out fall and winter in the East are much different from fall and winter weather in California.
You, too, need to adapt to the new market environment. "Know your cost per lead, cost per sale and lifetime value of each custumer," says Huey. "You need to know your audience really well," says Huey. "What are they thinking and doing in this post-crash environment?"
He recalled that John Wanamker, the Philadelphia department store magnate, once observed that "half the money I spend on advertising is wasted. I just don't know which half." You want to know what's producing results for you, so you don't waste money on image building.
Image marketing is the No. 1 mistake investment marketers make, Huey says. Every ad should, in one respect or the other, ask for the order. That's why direct marketing is so attractive: You can target investors getting back into the market. It's accountable. You can test your assumptions and look for future database marketing to upsell and cross sell.
2. Move them from skepticism to greed. It may be too soon for retail investors--the ones who buy investment newsletters--to be greedy. In fact, if they aren't afraid of losing money in a bear trap, they are certainly skeptical. "Right now investors are starting to ask how they get back the money they lost," says Huey. "Your job as a marketer is to move them from skepticism to greed--how I get back what I lost without losing more."
Fear of President Obama and economic turmoil is leading investors to buy gold and gold-mining stocks. Also working: Low priced stocks ("Investors aren't necessarily looking for large cap stocks," says Huey. They want low-priced stocks because they thing they can get a better return"), real estate and investment relations campaigns.
"High net worth investors don't have confidence in who they used in the past and they don't have confidence they can invest on their own. That's our creative challenge," says Huey.
3. Review Your USP. Think in terms of what your marketing is. Have you identified what makes your newsletter or service unique? What people will see in your newsletter they won't see anywhere else? "It makes no difference whether its direct mail, e-mail or whatever. I have to see that unique selling proposition," Huey says.
4. Address uncertainty in your copy. If you don't recognize there was a stock market crash, you'll cut your response 50% to 70%, Huey says. Also: the recession, fear of government, uncertainty and confusion in Washington, and information overload. Be sure to include testimonials--they help address market uncertainty.
5. You need terrific direct response copy. It needs to have a conversational, one-on-one tone. You take a look at a key theme--fear, greed, anger, safety. "That theme has to be distinct," Huey says.
You must turn features into benefits. Your reader is only interested in himself--money, comfort, enjoyment, appreciation, influence, popularity, security. He wants to know what your investment system will do for him: You must tell how your product will make your customer richer, safer, more profitable.
"In this market, you can't afford to have mediocre copy," Huey says. "What worked in the boom won't work today. You need one primary benefit followed by secondary benefits: 'How to Turn $10,000 into $20,000 because ...'. Most of your copy should talk about your primary benefit."
Also, be specific. "Specifics sell, generality kills. Instead of 100,000 investors, say 100,252 investors." Make your copy easy to read--short paragraphs, short sentences, no more than four or five lines in a paragraph. Put it in 14 pt for online, because most investors are over 40 and it must be easy to ready.
Huey's a belief in long copy. "Most copy is anemic. It's too short," he says. "It needs to be long enough to attract my attention, and to inspire a response."
6. Cut your costs. The same things that are making life misterable for magazine publishers can work for you. Negotiate lower printing costs. Radio/tv advertising costs are down 30% to 50%, and the lower prices will stay in place, even after the recession. "Media costs are a bargain right now," Huey says. List owners will make deals. And the U.S. Postal Service just announced it is holding the line on prices for next year.
7. Make your offer preemptive. Look at your premiums: They should be an offer to take action. For example, a four or five page report, "3 Post-Crash Low Price Stocks That Could Give an Unfair Advantage in a Recession." Look at your guarantee. And look at your price:
"Marketers have to decide between a price that gets the highest revenue or a price that gets more readers," Huey says. Why would a marketer opt for more readers rather than the most cash now? "Perhaps they will sell investment management services to their readers," Huey says.
Look at your call to action. "Download Free Report Now" is more effective than "Click Here for Your Free Report."
8. Create a professional direct response conversion series. When a lead comes in, they should automatically get an e-mail, then direct mail, then e-mail, then direct mail. "I'll be back with you in a few days to get you started. But first I want you to know that in the next few days you'll get a packet from me. ..."
9. Don't Neglect Prospecting. Enough said.
10. Revise your website strategy. "Corporate sites are obsolete. The trend is to microsites and landing pages," says Huey. "Anybody who's going to do business with you is going to look at your landing page. If this isn't trying to sell and follow direct marketing rules, you're hurting your response." Don't use reverse type. It cuts response 70%. And be sure to put your URL on direct mail. It boost response.
11. Revise your shopping cart. The shopping cart is where the greatest loss of orders occurs. Keep the shopping cart simple. Make it easy to order. Make sure your shopping cart includes sales copy. And don't make it a multistep process.
12. Market globally. "If you can market globally, you ought to do so," says Huey, "especially with SEO bringing people in from all over the world."
14. Rules of e-mail are changing. People are looking for reasons to delete without reading. "Reading your e-mail is something you have to earn against with each message you send," says Huey. "People will read just 16 nonpersonal/nonbusiness emails a day. If you're ever put out of that 16, you'll probably never get back in."
Every e-mail must be relevant, have readability and bring value to the customer. "If your email is just selling, you're hurting your marketing," Huey warns. How you write your subject lines is important.
15. How can you integrate video into everything your do? A text testimonial increases response 25%, while video in a test increased response 201%.
16. Consider direct response TV. There are new opportunities: CNBC, Bloomberg, Fox Business News. "With these, you're going to active investors," says Huey. "Thirty-second spots for lead generation and 120 seconds if you're selling a product." Use one spokesman.
An on-air personality reading your commercial will get better results than with a prepared commercial. This works best on news and talk shows, Huey says. Things like "1-800-dentist" are easy to understand. But on tv, have the numbers displayed.
17. Some marketers are disappointed with paid search. To improve your results, review your keywork strategy. Use logical terms, short phrases of up to four words. Test headlines and ad copy. "Without good headlines, the ad will fall apart." And use a separate landing page, now a corporate page.
18. Direct response display ads are doing well. The traditional mantra among newsletter publishers was the only direct mail (and in more recent times, e-mail) worked well. But some marketers built successful companies with display ads. The key is the size of the market. Some markets require careful targeting. But large markets, such as for health and wealth letters, can do well with display ads. An ad in USA Today costs only $32,000.
For a broker, Huey tested headlines and found "Why In The World Would Any Trader Use a Deep Discount Broker in Omaha" pulled better than "3 Cents Per Share!"
19. People who think direct mail are so very wrong. Direct mail is still the core in any direct marketing campaign. You can pinpoint the investor with the right mailing list. Least effective: Postcard mailings. Bookalogs are great ways to build credibility, Huey says, and Magalogs still work well.
20. Best response comes from envelopes with precanceled stamps. And metered envelopes get better results than those with indicia.
Some Investment Newsletters Recover Losses
Newsletter deliver for readers. That includes financial newsletters, several of which have said the value of their portfolios have topped the levels where they stood in October 2007, when the stock market peaked. And Mark Hurlbert of the Hurlbert Financial Digest says 16% of the newsletter portfolios he follows are worth more than two years ago.
Would an investor be better off with a mutual fund? Lipper, which tracks mutual funds, says just 1.2% of nearly 7,000 mutual funds have managed to recover.
There are reasons for this, of course, including the fact that many investment letters can "go anywhere" to ideas, where many mutual funds are constrained by investment critieria, such as all large cap stocks. But many investment letters also are constrained: Those pitching safety for retirement investing, for instance, can't take a flier on some high roller stock.
Nonetheless, we think the evidence is clear: Newsletters work for their readers, and deliver real results.