Is direct mail A/B testing a gate-keeper to a new market?
Definitely, it can help. Whether you choose traditional, digital, or a PR-focus for your marketing mix, nothing connects with a prospective customer quite as personally as direct mail. Direct mail can also complement any marketing tactic and can be easily integrated into a marketing plan. Sending a strategically-designed direct mail piece can leave a lasting first impression, and also help you determine how to move forward in this new market.
When determining to move into a new market, there are many questions that need to be answered. The big ones are:
- Who is my target audience?
- How many of my target customers are in this new market?
- How should I approach my prospects?
By answering these questions, you had determined who your target customer is, how they behave and navigate through the word, as well as how your business can best communicate with them. You also discover the state of the current market in an attempt to see how your business can establish a niche. Once you define your target market and do some market research, you can utilize direct mail to test your market before jumping in with both feet.
Establishing a Buyer Persona
The 40/40/20 rule indicates that design, colors, and imagery will determine only 20% of your campaign’s success. The other 80% is determined by how well you have targeted your mailing list, and how relevant your offer will be for your prospects. That being said, knowing who your target customer is key to success.
Your business’ target market is the group of individuals that will most likely want to purchase your products. In order to conceptualize this group into an easy to identify persona, it is helpful to create a buyer persona profile. This profile includes psychographic, demographic and geographic information. It commonly includes age, income, gender, marital status, profession, buying behaviors, frustrations, goals, and needs.
To understand better your persona, talk to your existing customers, run surveys, interview your sales department or rely on stats, trends, and studies. Another great way to gather this data is by looking into the analytics of your website and seeing what types of users have been your best customers in the past.
By creating a buyer persona, you can more accurately communicate with your target audience. You will also be able to strategically purchase a mailing list, resulting in better quality leads.
Buyer Persona Gretchen
Gretchen is a stay at home mom who always buys organic, natural products for her home. She is a mom of 3 children, and her husband is the director of sales at a major local business. She enjoys spending time with her family but also likes to take care of her own health. Beauty products are important to her, as long as they are not harmful to her health and/or the environment. She is looking for a new line of cosmetics. The line of skincare and make up she had previously been using was not as eco-friendly as she originally thought. She is now on the search for a natural cosmetic line that is good for the environment and her health.
Age: Mid 30s
Family income: 150k+
Many cosmetic lines do not disclose their environmental impacts or list all of their ingredients.
Researching the Market
A quick, yet thorough, market analysis is key to establishing if there is room for your business in the market, or an opportunity to take a portion of the market share. Determine what competitors are out there, and estimate how many of your target customers are in the market. This will help you decide whether this market is large enough for your business and if there is a large enough audience that would be interested.
The best way to estimate your target market size in an area is to request a free marketing report from a mail house. This marketing report provides a precise estimation of how many of your targeted customers reside in the area.
Once you’ve established the targeted market you’d like to test in, it’s time to put your research into action and get some answers. Direct mail is a great tool for testing new marketing because it reaches users at their home or business, allowing your business to have a meaningful and personal connection with the right away.
A/B Test Segments of Your Target Audience
If you’ve got a product or service that appeals to several buyer personas, this is a great opportunity to see which type of customer is most likely to take action. When entering a new market, you’re starting with a blank slate. It is likely that none of these customers have any brand awareness of your product, making it a true A/B test based on the only variation being the type of customer. Identify 2 to 3 segments of your target audience, and send them exactly the same direct mail piece. If you get an overwhelmingly positive response from one segment, you’ll know to hone in on this persona in the future when you enter the market at scale. We recommend a test size no smaller than 500 prospects.
Example: One segment of your audience will be based on the persona, Gretchen, and the other will be based on a different buyer persona. Send the same postcard to both audiences and gauge the level of response.
Send an Offer to New Customers
Sending a coupon or free sample to a new customer can make a great first impression. Welcome the new market to come into your business or purchase your product at a reduced rate, or let them try it at home. Make the experience memorable so that they will return, tell their friends, and share it on social media. The hardest part of entering a new market is getting people to know who you are, and this is the perfect opportunity to introduce yourself in a way that is attractive to consumers.
Example: Send Gretchen a trial size of your sea salt scrub. While she likely isn’t one to use coupons, she would appreciate trying the product before jumping in and purchasing it outright, especially since she hasn’t heard of it before. Include a postcard with all of the pertinent benefits of the product, and why she will love it.
Test Your Price
Not sure which price is best for the new market your business is entering? Use direct mail to test your price by offering several price points to different segments of your target audience. Just be sure not to mail two different prices to neighbors on the same street, that could potentially cause some negative backlash. It’s best to segment your audience by neighborhood or town, depending on the size of your new market.
Example: Send Gretchen price A, but send another persona in your targeted audience price B. Surprisingly, sometimes a higher price encourages more sales. It’s important to test this so that you can find the ideal price point for your personas. If you want to learn more about the psychology of pricing, check out 5 Psychological Studies on Pricing That You Absolutely MUST Read.
Once you’ve sent out your test, it’s time to analyze the results. Make an extensive report on the impact the test made on your business. Which audience responded to your direct mail campaign? Which offer worked best? This knowledge empowers you to make educated decisions going forward. Ultimately it helps you determine whether to enter the market and what your approach will be.
In conclusion, there are a number of ways your business can test a new market using direct mail. It is important to test your market before entering a market completely. Testing your market helps you prepare for success, mitigate risks, estimate your business’ level of investment, and find also helps you test out your marketing approach. Direct mail offers you a unique opportunity to reach your target customer in their own home. Take advantage of this first impression by putting your best foot forward.