“Don’t put all your eggs in one basket.”
This idiom dates back to the 17th century, but it’s still relevant today.
It illustrates the risk created if marketers focus on a single acquisition or engagement channel when planning their marketing strategy.
What channel works best? There’s no single answer.
We get asked this a lot by our clients: “My budget is $XXXX. What channel should I spend it on to get the most bang for my buck?” There are several factors that play into the answer to this question, so let’s dig into them.
How do you choose between paid search, email, organic or direct mail?
The first place most marketers gravitate toward today are digital channels. Why not? Email marketing is relatively cheap. Paid search campaigns can also be cost effective and easy to dial up and down as results dictate (assuming you have a skilled paid media manager handling the bidding). Organic search is great and likely gives you the lowest cost of acquisition since those prospects found you without requiring you to pay to put a relevant ad in front of them.
A commonly overlooked (and undervalued) channel in today’s highly competitive acquisition world is direct mail. This used to be the Alpha dog but now is sometimes referred to as “old school” (ouch). It is also often thought to be too expensive (and depending on what types of direct mail creative packages you mail, it can appear to be costly when compared to digital channels). Consider that supply chain issues over the past 2 years have made materials a challenge to source, and the Alpha dog has now become the Omega dog.
But before you demote our old faithful friend, “direct mail,” to the low end of the pack hierarchy, consider these ideas:
- Different audiences are more receptive to certain channels.
- A combination of channels can be an effective way to increase your overall membership acquisition.
- Carefully and strategically interweaving mail and digital channels opens up more opportunities for your prospects to say “Yes.”
A few tips to help develop your own multi-channel marketing strategy
When determining what baskets (channels) to put your eggs in (budget dollars), there are a few questions to ask and answer within your own organization before you start doing any actual budget allocations and projections of return on investment.
Q: What are your cost per acquisition goals?
A: This is a measurement of how much you spend to acquire a new member. It’s generally a simple calculation:
Costs (paid media spend or direct mail print/production/postage costs) divided by
the number of new members acquired from that spend.
Understanding your CPA threshold is critical and the cost will be different for each channel. Here are a couple simple examples.
Example 1 Paid Search CPA:
You spend $5,000 in paid search advertising in Google.
You acquire 500 new members.
Your CPA = $10.
If the cost of your membership is $50, you are ahead of the return on investment game in this scenario.
Example 2 Direct Mail CPA:
You spend $50,000 to mail 50,000 direct mail pieces.
You acquire 1,000 new members (2% response rate).
Your CPA = $50.
In this scenario, if the cost of membership is $50 you are spending the equivalent of your first year’s dues to acquire that new member. But that’s still a good investment, because a portion of those new members will renew over and over again.
But don’t be tricked into thinking that because you achieve such a low CPA on paid search ($10), that it’s as simple as just throwing all your budget money at that channel alone. Because as your spend increases (and you encounter more competition in the marketplace) your cost per acquisition in that channel will also increase.
So how do you know how much you CAN spend?
Understanding spend levels in paid search and the impact to CPA is sometimes referred to as “elasticity” testing. Running these types of spend tests helps you understand how far to stretch paid media spend and still get an acceptable return on that investment for your organization. It allows you to understand if you have the potential budget dollars to spend in other channels (like email or direct mail).
Q: Is your prospect pool made up of different types of cohorts who are likely to respond to one channel over another?
A: Think of your prospects in cohorts like age, experience level with the product you are offering, and how they consume media (mobile or desktop). Then think about how these cohort groups interact with your acquisition channels, because understanding where your audience is searching for you is critical. What are their “trusted” channels? Are they on social media, or asking questions via a search engine, or reading what they receive in their mailbox?
Often it’s a combination of many touchpoints that collectively get your prospect to respond positively and say “Yes, sign me up!”
The “Marketing Rule of 7” dates back to the 1930s. It states that a prospect needs to hear (or see) an advertising message at least 7 times before they’ll take action to buy. This magic number of 7 might seem a little outdated in 2022 given the massive volume of advertising appearing before us these days, but the general idea remains the same:
You need to reach prospects with relevant, meaningful messaging, in a variety of ways, and connect with them often to get them to take action.
Q: Do you have channel specialists in-house to manage the marketing activities for each?
A: Each channel requires different marketing skill sets in order to: 1) effectively create the marketing messaging and creative elements for your offer, 2) deploy the campaign, 3) monitor results, and 4) develop regular and disciplined testing (offers, creative, copy) for continued learning and improvement.
Here’s how expertise by channel can benefit you:
- Paid search campaigns require a level of experience to create compelling ads (copy and imagery), set and monitor the paid media spend, and optimize and expand campaigns based on learnings.
- Email marketing campaigns require skilled hands at email creation and deployment, crafting effective subject lines (it’s all about opens, and there are lots of opportunities for testing here), and building compelling landing pages with strong calls-to-action that maximize conversions.
- Direct mail campaigns need their own level of expertise including: understanding your audience universe (be it house lists or rented external lists); writing persuasive messaging and design (believe it or not, oftentimes the uglier the package the better it performs); managing the data processing, print production and lettershop needs through a stable of reliable providers. Experienced direct mail production specialists have typically built strong and long lasting relationships with their suppliers that help get them the best pricing and service.
Each channel has its own call-to-action for the prospect. But they work together to drive interest in your offer. Often one channel (like direct mail) will catch prospect attention, but that prospect will take advantage of the ease and convenience of an online sign up option.
Because marketing channels build off each other, look at the whole picture for success.
Understanding by-channel performance on a multi-channel marketing strategy can be tricky in some organizations. If your attribution tracking within your internal database makes it difficult to tie conversions directly back to each individual channel source, you might have to get creative.
But remember: It’s not about “which channel wins”, but is more about the COLLECTIVE result of all channels, and how that combination of the messaging helped to drive the conversion.