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The Short Guide to Building a Successful Performance Marketing Program at Your Company.

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A firm belief in and commitment to the idea of performance marketing is essential to the success of any performance marketing program. If you aren’t well armed with facts, you will waste money. An inadequately backed program will also be divisive and counterproductive.

It is necessary to generate excitement, enthusiasm and understanding with your staff as you help them to understand the company’s sales objectives and the performance marketing method of doing business.

Now here are some the key topics covered in this blog post:

  • How to instill commitment to performance marketing in your employees.
  • How successful performance marketing programs got that way.
  • How to build a long-term relationship with your customers the performance-based way.

Five Necessary Elements of Performance Marketing Success

Commitment

Success requires the full support of the executive staff and line managers of a company. Without such support, any performance marketing program is likely to fail. This commitment is fourfold: it requires money, time, personnel and back-up support.

Money

This is the first and most difficult commitment to make. This doesn’t mean appropriating money to do one Facebook ad or one mailing. It does mean committing sufficient funds to operate a program for at least two years to prove or disprove the viability of performance marketing as a valid and appropriate method of selling a company’s products.

Time

A company must allocate sufficient staff time to do a careful study and evaluation of whether performance marketing is an appropriate and necessary addition to that company’s marketing program.

This usually takes up to six months. If this initial evaluation indicates performance marketing may be a viable method of marketing your company’s products, then allow a minimum of two years (preferably three to four years) to develop, test, evaluate and fine-tune your program.

Personnel

If the decision is made to proceed, the company should recruit persons qualified to operate the program efficiently and effectively. At the beginning, it isn’t necessary to recruit a large staff.

Example: One company had only two people specifically designated to operate the company’s performance marketing program: the director of marketing and his assistant. The director contracted with a consultant and a performance marketing agency to provide their services to the company.

That company had an annual budget of over two million dollars dedicated to performance marketing. This small group wrote 60 percent of the company’s life insurance, and its share of the marketing budget continued to grow. That company had a salaried field force of over 250 sales agents.

The marketing director had limited performance marketing experience but was committed to the program. He retained a consultant with extensive experience in the insurance field. The agency likewise had experience with performance marketing and the insurance business.

Back-up Support

All operating personnel must be briefed on the project and instructed to provide all necessary support quickly and efficiently. Many potentially successful performance marketing programs have been destroyed by persons within a company because they were opposed to anything but institutional, slick advertising.

When you have these five elements in place, then you are ready to proceed with the development of your performance marketing program.

How Successful Performance Marketing Programs Got That Way

Nearly all successful performance marketing programs are the result of consistent and sustained planning and development over a number of years.

Success is incremental and achieved by following a well-thought-out marketing plan. Such a plan should be subject to frequent evaluation to meet the constantly changing needs of the marketplace. Never assume that a successful plan can’t be improved.

Always Plan Before Starting

Here’s what happens when a company starts a performance marketing program without adequate planning:

  1. The most frequent mistake most companies make when beginning a performance marketing program is to appropriate money to do a single Facebook, email or native ad effort or run a single magazine or newspaper ad and expect to make a fortune. It doesn’t happen that way.
  2. The second most frequent mistake companies make is failure to promptly fill all orders. This usually happens because the company has failed to plan for and procure the necessary supplies. Failure to promptly fill orders will result in substantially lower sales and a significant number of operating problems handling complaints and the possibility of a lawsuit by a disgruntled customer or by a consumer protection agency.
  3. The beginning company may also fail to train operating personnel on how the fulfillment program is to work.

First Year, Develop a Plan

It is necessary to have a good idea before embarking on an effort to sell it. But it takes lots more than an idea to create a successful performance marketing program.

Planning is the key. What follows is a step-by-step outline and timetable that should permit a reasonable amount of time to develop a program from the idea to a successful or unsuccessful conclusion.

The start-up year of a performance marketing program is perhaps the most critical because it usually is the time when decisions are made that actually determine the ultimate success or failure of the program. Foremost of the necessary decisions involved:

  1. Product Development. Product development includes choosing what product or products to create or to have manufactured.
    • If this is a new product, have any studies been conducted to see if there is any consumer interest or need for the product?
    • Is the product available but being inadequately marketed to a significantly large special interest group?
    • Is there significant competition selling the product? Is it readily available at many retailers? Is it competitively priced?
  2. Additional Sales Opportunities. Does the product offer additional sales opportunities or is it a one shot deal? Does the product offer “cross-sell” “upsell” and “downsell” opportunities?
    • Cross-sell or Add-on means an additional sale related to the initial sale.
    • Upsell means the sale of more expensive items in the same special interest product line, often directly related to the initial sale.
    • Downsell means the sale of a less expensive item in the same product line or special interest field.
  3. Promo Piece Development. This would include retaining the services of performance marketing writers and designers who have had experience creating performance marketing copy and design. If possible, retain three different teams of copywriters and designers to create at least three test units.
  4. Testing. Don’t put all of your eggs in one basket. Don’t do one Facebook ad or one landing page, don’t choose just one audience and don’t do just one mailing. Here’s why: Frequently one campaign will bomb while another will succeed. Nearly always, some audiences will work and others will fail. Certain selections within an audience or list will work while other selections in the same audience or list will fail. Mailings sent out one month will fail even though the same mailing dropped at a different time will succeed. Test each step of the way, evaluate each test then go with what works best and test it against any significant idea that might make it work better.
  5. Offline Advertising. The same rules apply to space advertising in magazines and newspapers. One ad may bomb while another may succeed. One magazine or newspaper may be a winner while another is a failure. In space advertising a headline, timing and position can make a world of difference between success and failure. This applies to bound-in, preprinted inserts and free-standing inserts also.
  6. Fulfillment. Don’t start a campaign knowing that all of the pieces are in place so that you can immediately:
    • Ship the product or service offered.
    • Do a proper billing.
    • Have adequate customer service available to handle reorders and answer questions and complaints.
    • Have vendors who can supply your needs promptly.
  7. Customer Satisfaction. Conduct a survey of customer satisfaction with product and service and make any adjustments indicated before doing a rollout campaigns.
  8. Internal Support. Review with individual department managers their specific responsibilities. Performance marketing is an unforgiving business. Departments failing to execute their responsibilities can destroy a well-conceived idea very quickly.
  9. Vendors. Make sure of your vendors’ ability to supply the company’s needs in a timely manner.

Second Year of Your Performance Marketing Program

From experience gained, develop a budget based on facts learned from preliminary test data. Don’t base it on assumptions or estimates. Foremost among the data learned should be:

  1. What product worked best (if more than one product was tested)? Can you make product improvements or refinements? Such refinements or improvements should be based on customer input including returned merchandise and customer complaints. Will the purchase of larger quantities of the product reduce cost and increase profit?
  2. Did any of the products provide encouragement that they could be made to produce a profit within your target date?
  3. How much money do you need to budget to make a sale?
  4. How many orders will you need to break even?
  5. Which landing page, mailing package or ad campaign worked best?
  6. Which audience or list and selections worked best?

If your test activities generated a customer database of several thousand buyers, consider performing an analysis of your buyer and leads files.

A properly performed analysis will break out lifestyles, demographic and economic facts. This analysis will materially aid you in understanding who your best buyers are. It will also help you to see why those persons who inquired failed to buy.

This information will help you target the best audience (both online via Facebook ads or Google Ads and offline via list and media brokers) and to know which specific market segments from any given audience are likely to perform best.

Remember, you can target almost any audience and fit nearly any economic and social status.

Once you have answers to all of these questions and if any of the products appear to provide an opportunity to make a profit, then and only then should you consider doing rollout campaigns. (A rollout is a large scale campaign which preliminary testing has shown to be the best promo piece and targeted audience or the most profitable ad run.)

Building a Profitable Customer

Use the upsell, downsell and cross-sell techniques to take full advantage of the propensity of persons to make repeat purchases from your company, once they have made an initial purchase.

To do so, most companies skilled in performance marketing strategies divide their customer database (their “house list”) into two principal parts.

Any person who makes a purchase goes into a buyers file. Any person who has inquired about the company’s product but has not yet made a purchase goes into the unconverted leads (inquiries) file.

The more sophisticated marketers will also tag each customer with information on age, how recently a customer made a purchase, the amount of the purchase, the frequency of purchases, product purchased and so on.

Use Upselling Techniques

After selling a product, contact your customers again and attempt to sell a more expensive item within the same product line. You can contact them through an immediate or planned in time phone call, a package insert, an email campaign, a retargeting campaign via Google Ads or Facebook ads, or direct mail etc.

Once a buyers file and unconverted leads file have been established, it is good business to have more expensive items to sell. That would also include selling ancillary items to supplement the value or usefulness of the initial purchase.

Use Downselling / Winback Techniques

After failing to sell the initial offer, contact your customers again and attempt to sell a less expensive product or give them a better offer.

If the inquirer fails to buy the initial item and it was priced at over $50, it is advisable to have a less expensive item to sell to non-buyers. The most important point of all is establishing the unconverted lead as a buyer. Future sales and profits are largely contingent on how effectively the buyers and leads databases are worked by the performance marketer.

Downselling low-priced items to the unconverted leads file is a good way to turn an inquirer into a buyer. Every inquirer you activate into a buyer has the potential to become a long-term customer of your product or service.

Also, remember that your cost per order to an inquirer usually will be far lower than the one generated by attempting to sell a cold prospect.

Use Cross-selling / Add-on Selling.

After selling the customer a basic product, start trying to sell them additional accessories or complementary products that will increase the value of the purchase.

Automobile dealers are masters of the add-on sale technique. You start with a basic machine and end up with sun-roof, premium trim package, leather seats and so on.

Now, see below the simplified flow chart showing how the upsell, downsell and cross-sell techniques were applied to a performance marketing program for an insurance company. The illustration is an adaptation of several programs, each of which has been used very successfully by my clients.

A simplified funnel for an insurance company and its performance marketing program.

Here’s the essential information illustrated by the flow chart:

  1. The first step is an introductory offer to identify a customer having a specific interest and to sell him or her a relatively modestly priced item with many upsell possibilities. In this case, it is a life insurance policy with the first 30 days coverage for only $1.
  2. +15 days from the date of initial purchase. Resells the individual on the decision to buy the product, thanks them for becoming a customer and asks for referrals.
  3. +20 days from the date of initial purchase. Customer converts to full premium mode of initially purchased life insurance policy.
  4. +30 days from the date of initial purchase. Converted customer continues on fast track. If he failed to convert he is shunted off to past due series (center column).
  5. +90 days from the date of initial purchase. Customer offered first upgrade of life policy.
  6. +180 days from the date of initial purchase. Buyer accepts first upgrade.
  7. +260 days from the date of initial purchase. Offered second upgrade.
  8. +365 days (Birthday Life) from the date of initial purchase. This upgrade is extended at the end of the insured’s first year. This continues until customer is insured to policy limits or declines further increases. He or she is then switched to another product offering similar sales upgrade opportunities.
  9. -30 days from date of initial inquiry. Past due notice sent.
  10. -45 days from date of initial inquiry (center column). “Last Chance” notice sent to no pay or returned offer. Telemarketing department attempts to resell product and find out why customer didn’t keep. If unable to contact, “Sorry I Missed You” letter is sent.
  11. -60 days from date of initial inquiry. Notice that policy has lapsed. Reinstatement application sent.
  12. -90 days from date of initial inquiry. Non-buyer later receives first down-sell offer, a hospital insurance product.
  13. -180 days from date of initial inquiry. Hospital insurance non-buyer offered second down-sell item, an accident insurance policy.
  14. -365 days from date of initial inquiry. Non-buyers offered for rent or monetized through affiliate offers.

Similar programs are used to sell everything from insurance to home study courses, to equipment to expensive travel tours. Each of these programs has distinct differences, yet uses an approach similar to the one shown.

Some do more follow-ups, some less. Likewise, the timing between follow-up pieces varies with the type of product and billing cycles used in a particular industry.

All of the successful programs are the result of persistence, experience gained from testing and fine-tuning. Nearly any company in performance marketing should have a similar plan of action, one adapted to its particular needs to build success.

The usual practice followed is to keep adding follow-ups as long as they make money. Once you reach the point where an additional promo piece doesn’t make money, stop. Abandon the loser, but keep pushing the winning sequence.

The follow-ups can have a form of:

  • email campaign,
  • direct mail campaign,
  • telemarketing campaign,
  • Facebook ads retargeting campaign (through pixel retargeting and email/phone targeting or matching),
  • Google Ads retargeting campaign,
  • SMS campaign,
  • package inserts.

And they all can be automated so no manual work is needed.

As you study this follow-up performance marketing program outline, please note the fact that such a program couldn’t operate with only one product. The company has a line of products designed to appeal to a specific market segment. This permits cross-selling those various products to the same market.

More prudent use of each cycle with expensive media (e.g. direct mail, telemarketing) is necessary on low margin products. Products having a larger margin and those that produce very profitable sales of ancillary items could still be profitable using a similar upsell, downsell, cross-sell strategies in every online or offline medium possible.

Case in Point #1

This client of mine sold a live business training for first-time managers (i.e. newly promoted to the managerial role). To increase sales and profit, the company designed a number of add-on products (manuals, checklists and cheatsheets, webinars, certificates, done-for-you-just-fill-in-the-gaps reports) to the basic training. These add-ons were then offered to the persons who had made the initial purchase.

This simple performance marketing program, which is very successful and continues to be used after many years works like this:

About 30 days after the initial sale is completed, the new client is placed in an add-on sales program. Each upgrade increases his capacity and ability to do more complex managerial functions. These are not low-cost tools.

The basic training starts at about $2,500.00. If the customer stays with the entire program he would spend over $6,000.00. Many do!

Please note: If this company had been interested in selling only the basic training they would have left potential sales of $3,500 to each customer on the table.

Case in Point #2

This one is a powerful, double whammy kind of a deal. First, you profit by selling the opportunity-seeking student a training course. Then you enhance your profit by selling the graduate additional equipment, supplies and add-on equipment.

This business sold home-study courses in a number of different fields such as locksmithing, small engine repair, upholstery and so on. They produced leads from space advertising in magazines (yes, they still work) and opportunity seekers via Facebook ads. The audience was blue-collar mixed with the opportunity seeker market. Opportunity seekers are persons who would prefer to have their own business or a personal source of income.

As soon as leads were received, they were placed in a performance marketing program to convert them into a customer/student of several online training programs.

All of the courses required the initial purchase of some basic tools from the company to successfully complete the online training.

When the student had completed the online training course he or she would then be sold additional tools to start a business practicing the trade for which he or she had been trained. When that cycle was completed, the former student was placed in an online “newsletter” (with the printed version in package inserts) program to sell him or her additional equipment and supplies for his chosen trade.

The company had a unique method of increasing readership and sales from its newsletter. This method not only built a solid base of ongoing sales but also a loyal group of customers that stuck with them year after year.

Their newsletter contained success stories about former students. These were supplemented by actual interviews. Interspersed with these stories was advertising of equipment and supplies needed by the various occupations they had trained.

These newsletters were also very effectively used to convert inquiries into sales of equipment and online training courses.

Later, after these former students became established in their businesses, they were spun-off into specialty groups and received regular special offers of equipment needed to stay in business.

None of these successes was a one-shot deal. They all required a firm, long-term commitment by management. The programs mentioned are all successful and profitable ventures.

Summary

  1. Without the commitment of money, time, personnel and back-up support from the management, a performance marketing program will fail.
  2. Develop a well-defined plan. Allow an absolute minimum of two years to get it operating.
  3. Have more than one product and one product line to sell. Use upsell, downsell and cross-sell/add-on sales techniques to develop a long-term relationship with your customers.

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The expert's thoughts on direct response - growth hacking - performance-based marketing activities - DIRECT MARKETING

About Me, Rafal Lipnicki.

the direct / performance marketing consultant with a strange sounding name

Who.

Not your usual "guru" but a real-world performance marketing & innovation consultant based in Europe and an experienced senior executive at leading multinational companies.

What and Where.

I am a consultant for hire, working remotely and on-site all over the world (but Europe is always preferred). See my consulting services page for details.

How.

Contrarian advice most of the time. Document-based audits, workshops, one-off projects, mentoring programs, and more.

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