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June 9, 2005 http://www.thecompetitiveadvantage.net
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Lake Group Media helps companies develop new customers through direct and interactive marketing services. We assist clients interested in creating and executing targeted direct mail efforts, e-mail campaigns, telemarketing and online lead generation programs. Our comprehensive one-stop services including targeted list selection, merge purge, printing, and mailing. Our list management division also helps companies monetize their customer list asset. Clients include Harvard Business Review, American City Business Journals, American Bar Association, The Economist and Crain's NY.

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CONTENTS:

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Top Ten Tips for Sales Letter Copywriting
By Larry Chase

In my business, I see what works in ad copy and what doesn’t. One thing that works very well is stand-alone e-mail mailings using direct sales letter copy techniques. Hereunder are some observations and experiences, and effective practices I’ve noticed, along with time-honored practices that I've gleaned from DM copy masters such as Mac Ross, Dan Kennedy, Robert Collier, Ted Nicholas, Eugene Schwartz, Jay Abraham and David Garfinkel:

1. Testimonials: This may be the most powerful tool in your copy toolkit. Why? Because other people can say things about you and your products/services that would sound bombastic if those words came from you directly. Give the full name, title and company of the person who says nice things about you. Also, let them be very specific as to why they think so much of you and your products. Truth lives in the details. For examples on how I've used testimonials and case histories from WDFM advertisers, visit http://wdfm.com/sponsor.html#test.

2. Talk To Me, Not At Me: Your copy should be in dialog with the reader. Most copy I see out there talks at the reader and is insulting to read. Empathize with the reader.

3. Must-Read Headlines: The job of the headline is to get the reader so intrigued that he or she has no choice but to read the first line of copy. The job of the first line of copy is to get the reader to read the second line of copy, and so on. This isn't accomplished with clever word-plays or acrobatics, but rather a direct appeal to the hot buttons within the reader which you've previously identified. That reader, all readers, all people, operate out of their own self-interest. Appeal to that self-interest.

4. The Offer: Make your offer so good, so juicy, that your readers are going to feel awful if they don't pull the trigger and buy what you are offering.

5. Act Now or Forever Hold Your Peace: Give believable incentives as to why the reader should act, right then and there. Make it so there isn't a second thought: your reader should stop what he or she is doing and go pell-mell to buy your product/service. If he or she puts it aside for later consideration, you've probably lost the sale.

6. Use Action Words: Make your copy exciting and sizzling with immediacy. By this I don't mean you should throw hyperbole at them -- quite the contrary. State of being, or passive verbs, lose a sense of urgency.

7. Use a P.S.: After the salutation, the P.S. is typically the most read element of a sales letter. I notice the most amount of clicks from the Johnson box (see below) at the top of the sales letter, and the line in the P.S. at the bottom. The P.S. usually restates the entire offer and maybe throws in some added incentive to take action now.

8. Write For the Want, Not For the Need: Even in B2B marketing, people buy on emotion, and use the logical arguments to rationalize the purchase later.

9. The Shape of the Offer: Many DM'ers agree that the most important elements in order are the selection of the list (i.e. the choosing of your marketplace), then your offer, and then your copy. So, while many people spend all their time honing their copy, they spend little or no time fashioning the actual offer. It's a good idea to state crisply the value proposition: Exactly what your reader is getting for the money.

10. Johnson Box: This was an invention of the late Frank Johnson of Time Inc. It's a pithy paragraph or two in a box at the top of a sales letter that states what the offer is and the call-to-action. I sometimes call this the "Give-It-To-Me-Quick" box. In a solo e-mail blast, the Johnson box should fit nicely into the confines of the reader's auto-preview box, so that if they scroll no further, they've got your offer.

11. Bonus Tip: People love the "fun stuff," that is, what they get for free. I've found they often read the free bonuses before opening and inspecting the core product they've bought. It helps if you make the perceived value of those bonuses equal to or more than the cost of the core product.

For more articles by Larry Chase, or to subscribe to Web Digest for Marketers, go to LarryChase.com.
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The Do’s and Don’ts of Multicultural Marketing
By Thomas MacDonald, TeleTech

For the past few years, the marketing industry has been buzzing about multicultural marketing – what it means, who’s doing it and how to do it right. With the multicultural population reaching nearly 100 million in the United States alone, and the combined buying power of African-American, Hispanic and Asian-American markets at more than $1.3 trillion, companies must incorporate multicultural marketing into their business plans simply to be competitive. These days, it’s not enough just to employ a multicultural marketing strategy. Instead, companies must implement a well-researched, comprehensive, high-level multicultural marketing campaign to reach and retain customers around the globe.

Why is multicultural marketing such big business? One major reason is that multicultural markets are largely underserved, especially in areas like financial services and insurance. In the United States, there are major discrepancies between the general market and the multicultural market for bank accounts, credit cards, insurance and home ownership.

Smart marketers know it is their job to proactively reach out to multicultural consumers and make it simple and appealing to use their company’s services. This means marketers must enable culturally relevant communication at every touch point – online, over the phone and through direct mail, statements and advertisements. They must not only communicate with multicultural consumers, they must find a way to attract and keep their business long-term.

THE DONT’S
Effective multicultural marketing is about knowing and understanding your target market along with the ins and outs of their distinct cultures. What do these consumers really care about? Do they make decisions based on money, family or religion? There are several common errors companies make, causing the loss of resources and potential customers. Here’s a short list of what not to do:

Don’t Skip the Research:  Many companies start the process with poor market intelligence.They begin by targeting the wrong demographic, basing their campaign solely on last names or other superficial information. It’s important to conduct comprehensive market research to ensure you are targeting the appropriate people with your carefully crafted messages.

Don’t Overlook Infrastructure: Another common mistake companies make is devoting significant budget and resources to acquire multicultural customers without having the customer-care infrastructure in place to support them. It’s imperative that once companies acquire multicultural customers, the customers can easily and conveniently conduct business in their native languages online, over the phone or in writing.

Don’t Rely on Direct Translation:  Finally, one of the most common mistakes is translating advertisements or marketing messages directly, without taking into account context or cultural nuances. Multicultural marketing campaigns can be rendered ineffective by even the slightest translation error. To ensure accuracy in translation, partner with a translation services expert – a company that specializes in knowing the languages, customs and distinctions of cultures around the globe.

THE DO’S
Now that you know what not to do, let’s discuss the things you should do to ensure your multicultural marketing strategy is successful. 

Do Your Homework:  The research step, though time consuming, is the most critical if you want to reach your target demographic effectively and keep these customers happy. Part of your market research and strategy development should be understanding every demographic and culture that you intend to reach. Learning how potential customers communicate and do business, who the decision-makers typically are, times of day when businesses are closed and many other cultural nuances is imperative. Marketers also must consider colors, numbers and images before implementing them into online or written forms of communication. What’s considered a positive color in one culture may be incredibly offensive in another.

Do Know the Language:  Companies must be meticulously familiar with the language – both spoken and written – as well as contextual variances and slang terms.  Studies have shown that when customers are able to communicate in their primary language, customer satisfaction and retention levels increase.

Consider Hiring the Services of  an Expert:  Services such as in-language telemarketing, localization, translation and over-the-phone interpretation are readily available and easily accessible to companies around the world.

As the need for multicultural marketing increases over the next several years, companies that don’t respond appropriately will miss out on these viable, quickly growing consumer audiences. Companies that are serious about serving consumers worldwide and dedicate the time and resources to develop and implement a multi-faceted multicultural marketing campaign will see their customer base and profitability grow exponentially.

Thomas MacDonald is executive director of marketing for TeleTech In Culture, a business unit focused on providing multicultural marketing solutions. He can be reached at (303) 397-8288 or ThomasMacdonald@teletech.com.
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Drilling Down Deeper for Profits
by Gino Morelli

Most companies have a clear idea of their overall profitability, and can drill down to determine the profitability of individual products as well. But many miss out on one of the most valuable ways to analyze their operations – the channels used to get their product to the end user.

Some product may be sold through a channel that includes direct salespeople who sell to retailers or end users. Other product might move through agents or brokers, through mail order or newer technologies including the Web and online auctions such as E-Bay.

But as an old-style retailer once remarked, “I know that half of my advertising budget is wasted. I just don’t know which half.” Many companies find that their channels form a “black box” and they can’t see inside of it.

Why would this matter – and do we really need yet another way to slice a company’s numbers? Here’s why.

Consider an imaginary company that sells two main product lines, A and B, through three channels – a direct sales force, third-party resellers who buy in bulk and distribute, and small-volume independent agents.

Determining the direct cost of serving each of these channels can be relatively straightforward. Salespeople will be paid a salary, commission and perhaps some benefits. Resellers likely will receive a discount on the product, which needs to be factored in along with the cost of any company staff dedicated to their support, but they may command a high level of volume. Agents will likely pay a higher price for the product, driving higher profitability for this channel, but the cost of shipping many small deliveries to them may eat into that profitability.

In some cases, allocating a fair share of overhead expenses may make this analysis a challenge; our experience is that these numbers are easiest to develop through an activity-based costing approach.

It is also necessary to factor in the opportunity costs in considering a channel’s profitability. Determine the capital and staff used to serve the channel, and factor in the costs of having them not available to serve other company needs, including the cost of capital.

While this “first-level” channel profitability analysis can be fruitful, the real value lies in going one level below this – to the sub-channel, which considers individual customers or types of customers.

In this, we might find that “Product A” sells well to “Customer 1,” which is where much business analysis would stop, in the belief that all is well. However, channel analysis might indicate that while all three channels compete in this segment, only direct salesforce and resellers are profitable. Although the Resellers channel is more cost efficient than the direct salesforce (lower costs/sales ratio), the low sales volume of Resellers indicates that selling Product A to Customer 1 probably involves extensive customer service. Therefore, a Direct Sales Force may be a better channel for this segment than Resellers.

Identifying the reasons for differences in channel performance leads naturally to making business decisions that can improve overall profitability. For example, we might consider:

Other potential factors influencing a channel’s performance are competition, market conditions, product life cycle, customer needs, channel capacity, operational efficiencies, conflict between channels (such as Agents and Direct Salespeople both calling on the same customers) and incentive or support issues.

Determining the different levels of profitability among customers, and seeing the sometimes dramatic differences, can be a powerful incentive for digging deeper to find reasons for the difference. This can lead to significant changes – for example, the company may decide to eliminate its Agents as these are not profitable, or perhaps understand that the Agents are profitable – but only with certain customers; with the others they create a loss.

It could also be that better training for Agents will pay off dramatically in higher sales, better retention of Agents, and higher morale.

In some cases, your analysis may lead you to a new sub-channel. For example, you may find that Resellers have proved their worth selling Product A, so what could they do if you permit them to carry B as well?

As with all business analysis, crunching the numbers is only part of the process. The rest comes from taking action on what you find, to build higher profitability for the company as a whole.

Gino Morelli is the president of IF Consulting Inc., based in the firm’s Boston USA office. Reach him at gmorelli@i-fconsulting.com.
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Sales Reps Facing Higher Quotas

In an effort to boost salesforce productivity, U.S. employers are raising the bar when it comes to performance goals and quotas, according to a new survey by Watson Wyatt, a leading human capital consulting firm. At the same time, a growing number of employers are pushing performance-based pay programs deeper into their sales organizations.

According to Watson Wyatt’s survey of 186 companies with more than 100,000 sales professionals, 75 percent of companies have increased the 2005 performance goals and quotas that sales representatives must achieve to earn a commission or bonus. Twenty percent of companies left their quotas unchanged, while only 5 percent decreased them.

Watson Wyatt also found that employers are expanding their salesforces at the highest pace in nearly five years.One of three employers (33 percent) plan to increase the number of sales team staff in 2005, while 62 percent say they will maintain their current staffing level. Meanwhile, the percentage of companies that reported difficulty in attracting key sales force talent increased from 82 percent in 2002 to 92 percent in 2005.

“After several sluggish years, many salesforces are now poised for a period of growth,” said John Bremen, national practice director for sales force compensation at Watson Wyatt. “With this growth, however, managers are seeking to drive their sales reps to higher productivity levels by ensuring that their pay is tied to their individual performance. In essence, employers are seeking to grow revenues by increasing both salesforce size and salesforce productivity.”

The survey also found that more companies are using performance-based variable pay programs to compensate a larger share of their salesforces.The number of employers that are using variable pay programs among their lowest paid sales representatives soared to 92 percent in 2005 from just 49 percent in 2002. Furthermore, the use of performance-based pay for sales support and administrative positions increased 15 percentage points over the past three years.

“The emphasis on variable pay programs as a way to motivate and compensate workers while keeping fixed costs under control will help companies position themselves for growth,” said Bremen. “The winners will be those employers that are able to optimize business growth and sales force productivity at the same time.”

Copies of the 2005 Sales Force Pay and Performance Survey are available at www.watsonwyatt.com.
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Help Your “B Players” Raise Their Performance

Companies too frequently overlook the average performer, or “the “B player,” when searching for ways to maximize sales performance. Average performers represent up to 80 percent of a company’s sales force and have great potential, yet most reward programs are focused only on the “hot shot” performers.

According to a recent Maritz Poll, 52 percent of employees in top performer incentive programs feel they have little to no chance of earning an award. Based on the sheer amount of people in the middle tier, a small improvement within this group will yield a significant sales increase. Consider these strategies for improving performance of the majority in the middle:

Adapted from “B Players Can Do More – Maximizing Sales Effectiveness,” Mark Peterman, www.maritz.com, reprinted from “Competitive Advantage” newsletter, Briefings Publishing Group.
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Ask Your Customers “Why?”
By Paul Squires and Arturo Coto

While much attention has been placed on selection and installation of customer relationship management (CRM) systems in order to bolster customer acquisition and retention efforts, an equally important question has gone unanswered.Why?Why has a customer chosen to do business with you, or equally as important, not chosen to do business with you?

Although CRM solutions are adept at delivering valuable quantitative data that helps an organization characterize a customer and answer questions such as who, what, when, where and how much, these solutions are incapable of providing insight into the ‘why’ of the relationship. Without understanding ‘why’ a customer chooses to do business with your company, it is virtually impossible to know what keeps them loyal to you and what needs to be done to garner greater profits from them.Therefore, organizations are turning to online surveys as a cost effective and immediate way to ensure that the data on ‘why’ customers have a relationship with them is current and up to date.

Web-based surveys play an instrumental role in the customer life-cycle process regardless of industry as it enables companies to gain valuable feedback and hear the “voice” of the customer. While traditional research methodologies have provided this “voice,” a new dimension in efficiency is achievable by simply integrating Web survey technology into the existing CRM and HR information systems infrastructure. While technology simplifies this process, it does not guarantee success and does not create a corporate-wide “feedback culture.”

Best Practices for Online Surveys—A Five-Step Process
Creating a survey that provides an organization with quality and accurate information to make sound business decisions is more difficult than most people realize.Typical questions an organization faces when embarking on a survey tend to fall into five areas, with each step being critical to the success of the project:

1. Determine the Business Process
The survey designer is faced with many important questions that need to be addressed about the content and design of the survey and require consensus from all members of the team prior to execution. So, before embarking on the survey design, users need to determine the business objectives and answer questions such as:

These questions are important to the design of any type of survey, whether it be a customer satisfaction survey, a product evaluation survey, an employee attitude survey or a program evaluation survey. Determining who the key stakeholders are if a similar survey has ever been conducted before and how the results will be used are questions that should be asked well in advance of the survey design as they will be key to determining the business purpose.

2. Design the Survey
The most important part of the five-step process is designing the survey. Good survey design ensures that you are able to get the results your organization needs. Some of the steps, although simple, are overlooked which results in significant reductions to response rates. To be successful, users should:

Another factor in designing the survey is to determine a rating scale. Scales are critical to the success of your research. Well designed scales are easy to understand and accurately represent the respondent’s true attitude, preference or opinion. However, two- or three-point scales traditionally are not distinct enough to rate the importance of various attributes. For instance, scales with 4 to 8 points provide far more insight into the subtle distinctions and value of an attribute.Clear and well thought out rating scales, as well as clearly defined instructions, are key to minimizing rating errors.

3. Select the Sample
A sufficient sample size is an important requirement for a successful survey. If the sample size is too small, erroneous conclusions are possible. For example, a researcher may make a conclusion that no differences between groups exist when in fact they do exist but were undetectable from the insufficiently large sample size.

4. Implement the Survey
Response rate is the single most important indicator of how much confidence can be placed in the results of a survey. A low response rate can be devastating to the reliability of a study; therefore, testing your survey is essential.What may seem obvious to the survey author may be completely unclear to the typical receiver. Or worse, a difficult question will be misunderstood or skipped and a difficult-to-understand survey is most certainly destined to be thrown away.

So how does one go about increasing these rates?One of the most powerful tools for increasing response rates is to use follow-ups or reminders. Traditionally, between 10 and 60 percent of those who are sent questionnaires respond without follow-up reminders. However, these rates are too low to yield confident results, so the need to follow up with targets is imperative to the success of the survey.

Other things to consider are cost elements such as incentives, technical and telephone support, analysis and the distribution of the final report. Online surveys are gaining in popularity because they decrease some of the more costly elements such as consulting fees and data entry. \They also provide a way to eliminate interviewer bias, often associated with phone or in-person surveys.

5. Analyze and Report the Results
The analyses of the survey responses should address two concerns -- the validity of the survey questions and the substantive business issues that were the purpose of the survey. The validity of the questions can be assessed by examining the number of respondents who chose each response option.No single option should have more than 85 percent of the responses and none less than 5 percent.The business issues can be assessed by examining responses to individual questions and groups of questions on a single theme that are treated as separate measures. The inclusion of key demographics provides valuable opportunities for insightful subgroup analyses.

6. Reap the Benefits of Asking Why
While CRM systems can get an organization 90 percent of the way towards reaching its CRM objectives, the systems do not answer the key question of ‘why.’ By taking the time to ask yourself the reason you need an online survey and by following the five simple steps mentioned above, you will be well on your way to answering the most crucial question of any CRM initiative - ‘why’ your customers do business with you and ‘why’ they choose to be loyal.

Dr. Paul Squires is president of Applied Skills & Knowledge and an industrial psychologist with 20 years of experience. E-mail him at Paul_Squires@AppliedSkills.com. Arturo Coto is CEO at Inquisite, an Austin, Texas-based provider of online survey technology. E-mail him at acoto@inquisite.com.
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