If You Want To Grow Your DTC Business, Try This
Plus: Some more perusasion magic from The Great Cialdini
Many years ago, an infomercial star hired me to help him fix his new campaign. His problem wasn’t getting attention or generating response. By that time, he was a minor celebrity coming off one of the best-selling campaigns in DRTV history. His problem was on what we call “the back end.”
Recall Jay Abraham’s maxim:
There are only three ways to grow revenue: increase the number of clients, increase the average transaction per client, and increase the number of transactions per client.
My client’s problem was that second part. For his project to survive, he needed to increase the average transaction, or what DTC marketers today would call the “average order value” (AOV).
After preparing a break-even analysis and thoroughly analyzing his phone and Web upsells, I made a suggestion that was so counter-intuitive to him, he thought I was joking. I proposed that instead of offering one unit for $19.95, he offer two units for $19.95. The client just couldn’t fathom how this could possibly improve the economics of his campaign.
Now, there are two things you need to know about this — if you don’t know them already. First, it wasn’t an original idea (even back then). I had already witnessed the power of BOGO (buy one, get one) offers on multiple occasions. Second, a DRTV BOGO includes a charge for the second unit, which has been disclosed in various ways over the years.1 Through some quirk of psychology, that charge is all but invisible to prospects when they are making the decision to respond to the offer. Just like we tend to ignore digits on the right when evaluating prices, it seems we also tend to ignore the fine print when making an impulse purchasing decision.
TV BOGOs are also great because they allow for downstream revenue-boosting tactics, such as asking customers if they’d like to upgrade both of the units they’ve ordered at the same time, instantly boosting the conversion of your deluxe upsell. The end result is more revenue and more profit even though you are giving people what feels like “two for the price of one.” You can play with the numbers yourself if you don’t believe me. Or you can just watch a few DRTV commercials and notice that everyone uses this type of offer.
Back to my story, my client was still having a hard time understanding how the offer worked. To his credit, he went ahead and took my advice anyway. I had established trust and authority with him, so he was willing to give it a shot. And guess what? It worked. He was able to roll out, and the project became his second most successful campaign of all time.
This brings to my point and the payoff to today’s headline. If you want to grow your DTC business this year, my #1 piece of advice is this: Ditch the doubt, and test it out.
This doesn’t just refer to doubts about good advice you may have received from a brilliant consultant. 😉 It can also refer to nagging doubts you may be experiencing internally. Is my offer really the best offer? Might my competitor’s offer be better? Why wonder? Test it out!
There are so many methods available to you, from simple A/B testing to more sophisticated approaches such as multivariate testing. In fact, testing has become such an ingrained and accessible part of marketing that using what a Google engineer once dubbed the “HiPPO method” (highest-paid person’s opinion) is what’s actually crazy nowadays.
On a related note, cost doesn’t have to be a barrier, either. My client had money and was so bold that he once spent $100,000 on a TV test just because he believed it would work. (That’s 10 times what we normally spent on tests.) But my allies and I didn’t have that kind of cash (or brass), so we worked together to create what was originally called “virtual sales testing” and later became known as “Web testing.” Using microsites indistinguishable from a fully operational DRTV website plus cheaper email media, we were able to drastically reduce the cost of testing new creatives and back-end designs. With this method, split testing (e.g. A/B testing) also became much easier to execute.
Today, social media has made trying new creatives and offers online even easier. So take my advice: Ditch the doubt, test it out and watch your business grow!
Exciting New Offer!
Last week, after revealing three common mistakes video advertisers make, I introduced a new service I’m calling the SciMark “Video Doctor.” If you have an ad that is underperforming and would like a thorough diagnosis, I’m open to reviewing your ad and providing an analysis with suggestions for possible cures.
As of right now, I’m pricing the service at $199 a pop and giving premium subscribers a 50% discount. Simply email me at jordan@scimark.com to get started. For that price, even if you don’t have an underperformer, it couldn’t hurt to get a second opinion!
Not a premium subscriber? Click below to upgrade and get all the perks plus this new 50% discount.
News(letters) You Can Use 📰
In the latest edition of Why We Buy, Katelyn Bourgoin shares some more persuasion magic from The Great Cialdni. She begins with a discussion of the “foot-in-the-door technique” — i.e. “why agreeing to a small request makes us more likely to then agree to a second, larger request.” Dr. Cialdini had documented the effectiveness of this technique, Bourgoin explains, so “in 1975, he decided to test the opposite of it.”
Research assistants asked college students if they’d volunteer 2 hours a week for 2+ years as *unpaid* counsellors at a juvenile detention center.
Everyone said “hell no” to the extreme request.
Then they were asked if they’d serve as unpaid chaperones for the detention center kids during a 2-hour zoo trip.
Half said yes to the smaller-in-comparison request.
Cialdini calls this change of heart Reciprocal Concession.
We believe the person making the request has compromised by coming down to a “smaller” one.
So we feel the need to reciprocate that compromise by accepting the request.
Playing off the “foot-in-the-door,” Bourgoin dubs this the “door-in-the-face” technique. She offers three ways to apply it:
Present your highest price first
Make the affordable alternative easily accessible
Offer customers a free trial
Her full newsletter gives examples for each of these. Of course, all three are often employed by DR advertisers. Present the highest price first? Check. We use value comparisons and slash our prices/payments during the buildup to the final offer. Make the affordable alternative easily accessible? Check. That’s what the “poor man’s version” DRTV strategy is all about!
Finally, while Bourgoin uses software as her third example, direct marketers practically invented the 30-day free trial for products. We’ve even evolved past free to the impulse price 30-day trial.
Bonus Knowledge 🧠
If you’re a premium subscriber, it’s a good time to take advantage of your special privileges and access The Library of DRTV. Last month, I archived six new commercials, and I just added another one this week. Find out how today’s top direct marketers are making boring items like pill organizers and rice cookers seem exciting and new. Don’t have access yet? Upgrade below.
Here is the evolution of BOGO charging language in roughly chronological order: “free, just pay shipping,” “just pay S&H,” “just pay processing,” “pay a separate fee.”
Great article and the advice was spot on. "Tried and true" is an old adage but in many cases the old becomes new again. Terrific job.