Do a "reality check" BEFORE you test

It’s surprising how many marketers don’t bother to run projection scenarios before they test.  Before you test?  Yes!  This is a valuable “reality check” on your test ideas.

You know more than you think you do.   This exercise will prove it and can save you from making a costly mistake.  This is an example where a little bit of homework goes a long way.

The key is getting a handle on costs.  You may not know what your results will be, but you do know how much it will cost to find out.

Before you test, map out the alternatives and costs involved for your control offer and for each test idea. You’ll want to run scenarios for your test quantities, but most importantly for your roll-out projections.  It’s good to do scenarios at different quantity levels.  Be sure you get costs from your vendors at different levels so you can see where the optimal cost breaks are.

Fill in as many blanks as you can with all the costs you will incur:

• Design/copy
• Printing
• List costs
• Data hygiene
• Letter shop

Don’t forget to include your creative development costs.  They can be amortized over the expected life of the promotion.  

The next step is to map out the projected results for your control and each test idea to see how they compare.  Start with your control and fill in all the metrics you use to evaluate your results: 

• Percent Response
• Conversion Percent
• Projected Net Sales
• Projected Net Revenue
• Return on Investment

Your control campaign is the benchmark you will measure against.  You know from experience what you can expect in percent response and conversion percent from your control offer.  You know the profitability you can expect.

Fill in everything you DO know for your test ideas.  Then begin to fill in the blanks, like percent response and conversion percent, to achieve the same or better ROI for your test offers.

This is your “reality check.”  Are the results you need to achieve for your test idea to win realistic?  If you’re testing a new mailing package and it needs to achieve an 80% lift to win, is that really likely?  If you’re testing a more economical format, you need to consider the downside.  Your new format may be more economical and profitable, but it may lower your total sales.

Running projection scenarios takes a bit of time, but doesn’t cost a thing.  It can help you see where your leverage points are so you can create even better test ideas.  Working with suppliers to get updated cost information creates a closer partnership for them to help you with the latest ways to improve your marketing program.

In today’s economic world, many of the old formulas are changing.  Rising postage costs make it more important to invest in data hygiene and developing customer portraits to reduce wasted expense on printing and mailing.  Personalization using variable data printing has the ability to dramatically improve results.  Email, particularly when integrated with a direct mail plan, can help you test new ideas and enhance your results.

But don’t rush ahead with new ideas until you’ve given them a “reality check.”

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