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Testing




Australian Direct Marketing Association
What is testing?
 Testing is a marketing experiment in a live environment:
 •  Observing what customers actually do rather than
    what they say they are going to do
 •  Monitoring how results vary as various components of
    a campaign are altered.
 •  Using the results of testing to:
      –  predict the outcome of future activity.
      –  Improve our marketing performance



   Australian Direct Marketing Association
3 approaches

                                                   1.  Test on a small scale
                                    Roll-out           first then roll-out
 Test


                                                   2. Do testing on a portion
                               Live campaign          of a live campaign
                            Test


                                                   3. Same approach to all
                               Live campaign
                                               ?      then analyse results among
                                                      different segments to spot
                                                      variations

 Australian Direct Marketing Association
Summary of testing options
Test the important things…..

Message components                          Delivery components
•  Product                                  •  Targeting & segmentation
•  Proposition                              •  Communication channels
•  Offer                                    •  Format
•  Creative                                 •  Timing
•  Call to action




  Australian Direct Marketing Association
Testing case study

               •  Two simple objectives
                       –  Improve response rates
                       –  Increase amount donated



             •  Understanding donor segments
                      –  Relationship to disease
                      –  Value




With permission from Salmat

                 Australian Direct Marketing Association
Test different propositions for each segment
               •  Relationship to disease
                        –     Have the disease
                        –     Parent of someone with the disease
                        –     Relative / friend of someone with the disease
                        –     No relationship to the disease




With permission from Salmat

                 Australian Direct Marketing Association
Personalisation case study
             •  Value
                      –  Variable donations boxes based on last donation, increased in
                         increments of 20%




With permission from Salmat

                 Australian Direct Marketing Association
Testing case study




With permission from Salmat

                 Australian Direct Marketing Association
Example: Landing Page Test Options

                                           Page components
                                           1. Headline
                                           2. Secondary Headline
                                           3    Body Copy
                                           4    Social Proof
                                           5/6 Call to Action
                                           7  Navigation
                                           8  Image
                                           9  Above/below the Fold




 Australian Direct Marketing Association
Guidelines for accurate testing
• Ensure you always have a “control”
  – So you have a benchmark for comparison

• Have a big enough sample to test with
  – To produce reliable results

• Ensure your test sample is not skewed at all (compared to
  control)
  – Use a randomly-selected sample

• Decide how you are going to measure performance:
  –The measurement chosen must prove/disprove your hypothesis


  Australian Direct Marketing Association
The importance of a control

               Offer test                            Here there is no control:
 Response
   rate
                                                     - A separate offer has been
                                                       run in each month
                  New offer A

 Standard offer                        New offer B
                                                     - Offer A appears to have out-
                                                       performed the current offer

                                                     - Offer B appears to have
                                                       performed worse

                                                     = Offer A appears to win
               May         June          July



    Australian Direct Marketing Association
The importance of a control

              Offer test                             Introduction of control:
 Response
   rate
                                                     - The current offer has been
                                                       run in each month as a
                  New offer A                          benchmark
 Standard offer                        New offer B
                                                     - Offer A did not perform as
                                                       well as the current offer

                                                     - Offer B performed better than
                                                       the current offer
              May         June          July
                                                     = Offer B is the real winner

   Australian Direct Marketing Association
The “significance” of a test result

Response
  rate                                        The test out-performed the control by 0.3%
                           1.7%
            1.4%
                                              Should you adopt New Offer A – or could it
                                              be just a chance result?

                                              We need to know whether these results are
                                              likely to be repeated if we ran the test again


         Control New Offer A




    Australian Direct Marketing Association
Having a Big Enough Sample

• In direct marketing, your sample is




                                              Required Sample Quantity
  typically a subset of your customer
  base or contact list
•  In digital, your sample is typically the
   volume of unique visitors or unique
   impressions accumulated over a
   period of time
•  You need a quantity of sample that
   reflects your desire to detect even                                   50%$   60%$   70%$   80%$   90%$   95%$   99%$
   small differences between your test
   and control groups                                                             Ability to Detect Statistically
                                                                                    Significant Differences




   Australian Direct Marketing Association
Not Just Statistical Significance

Do a sense-check when interpreting results:
• What was the competition doing when this test was running?
• Just because this worked in one location does it mean it will work in
   another?
• The offer was successful in Summer – would it still work in Winter?
•  Were there any other abnormal factors in the marketplace which
   might have affected the response?




  Australian Direct Marketing Association
Not Just Statistical Significance

Did we make money?
   When we balance the costs of a campaign against the
   incremental volume of sales – was it worth it?

What should we test next?
  e.g. offer A performed better than offer B, what will beat
  offer A?




  Australian Direct Marketing Association
Measurement




Australian Direct Marketing Association
Tracking the customer journey
A buyer typically
goes through several
stages before they buy

                    Awareness                Interest        Desire   Action


…which means we should have
measures to track
performance for each stage


                       Reach                     Influence            Closure



   Australian Direct Marketing Association
Example: eCommerce

 Awareness                                       Daily	
  Unique	
  Visitors
                                                                           	
  


        Interest                                  Product	
  Page	
  Views
                                                                         	
  


         Desire                            Completes	
  a	
  Registra:on	
  Form	
  


        Action                                         Purchase	
  


 Australian Direct Marketing Association
Tracking issues

 How do you match response to source when:
   –  Your campaign runs in several channels
      simultaneously
   –  Your product is sold through a third party sales channel
   –  Your product has a long consideration period




 Australian Direct Marketing Association
Common tracking options

Outbound Channel                            Response Channel


     Offline                                              Unique campaign and
                                            Call-Centre   comms channel
    Broadcast
                                                          specific phone numbers

          Mail
                                                          Unique redemption
                                             In-Store     codes
      Display
       Media
                                                          Specific Search Call to
                                             Website      Action




  Australian Direct Marketing Association
Indirect sales – a missing link

                          Browse                            Known

                                           Clicks/visits

                            Buy                            Unknown



                                             Sales

                       Enquire                              Known



                                              Calls

 Australian Direct Marketing Association
Long sales cycles
        Sales




                                                 Time

 What does this response curve look like for your product?
 •  Track enquiries & sales over a long period
 •  Establish a pattern
 •  Create a rule of thumb

   Australian Direct Marketing Association
Rule of Thumb Approach

•  Can be used for indirect sales as well as an ‘early read’ for long
   campaign cycles
•  Typical approach:
    1.  Establish a ratio for website visits or calls to reseller enquiries/
        sales
    2.  Establish a pre-campaign baseline for calls and website visits
    3.  Measure the uplift in calls/visits during and following the
        promotion
    4.  Extrapolate to sales using typical ratio



  Australian Direct Marketing Association

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ADMA Video Testing and Measurement

  • 2. What is testing? Testing is a marketing experiment in a live environment: •  Observing what customers actually do rather than what they say they are going to do •  Monitoring how results vary as various components of a campaign are altered. •  Using the results of testing to: –  predict the outcome of future activity. –  Improve our marketing performance Australian Direct Marketing Association
  • 3. 3 approaches 1.  Test on a small scale Roll-out first then roll-out Test 2. Do testing on a portion Live campaign of a live campaign Test 3. Same approach to all Live campaign ? then analyse results among different segments to spot variations Australian Direct Marketing Association
  • 4. Summary of testing options Test the important things….. Message components Delivery components •  Product •  Targeting & segmentation •  Proposition •  Communication channels •  Offer •  Format •  Creative •  Timing •  Call to action Australian Direct Marketing Association
  • 5. Testing case study •  Two simple objectives –  Improve response rates –  Increase amount donated •  Understanding donor segments –  Relationship to disease –  Value With permission from Salmat Australian Direct Marketing Association
  • 6. Test different propositions for each segment •  Relationship to disease –  Have the disease –  Parent of someone with the disease –  Relative / friend of someone with the disease –  No relationship to the disease With permission from Salmat Australian Direct Marketing Association
  • 7. Personalisation case study •  Value –  Variable donations boxes based on last donation, increased in increments of 20% With permission from Salmat Australian Direct Marketing Association
  • 8. Testing case study With permission from Salmat Australian Direct Marketing Association
  • 9. Example: Landing Page Test Options Page components 1. Headline 2. Secondary Headline 3 Body Copy 4 Social Proof 5/6 Call to Action 7  Navigation 8  Image 9  Above/below the Fold Australian Direct Marketing Association
  • 10. Guidelines for accurate testing • Ensure you always have a “control” – So you have a benchmark for comparison • Have a big enough sample to test with – To produce reliable results • Ensure your test sample is not skewed at all (compared to control) – Use a randomly-selected sample • Decide how you are going to measure performance: –The measurement chosen must prove/disprove your hypothesis Australian Direct Marketing Association
  • 11. The importance of a control Offer test Here there is no control: Response rate - A separate offer has been run in each month New offer A Standard offer New offer B - Offer A appears to have out- performed the current offer - Offer B appears to have performed worse = Offer A appears to win May June July Australian Direct Marketing Association
  • 12. The importance of a control Offer test Introduction of control: Response rate - The current offer has been run in each month as a New offer A benchmark Standard offer New offer B - Offer A did not perform as well as the current offer - Offer B performed better than the current offer May June July = Offer B is the real winner Australian Direct Marketing Association
  • 13. The “significance” of a test result Response rate The test out-performed the control by 0.3% 1.7% 1.4% Should you adopt New Offer A – or could it be just a chance result? We need to know whether these results are likely to be repeated if we ran the test again Control New Offer A Australian Direct Marketing Association
  • 14. Having a Big Enough Sample • In direct marketing, your sample is Required Sample Quantity typically a subset of your customer base or contact list •  In digital, your sample is typically the volume of unique visitors or unique impressions accumulated over a period of time •  You need a quantity of sample that reflects your desire to detect even 50%$ 60%$ 70%$ 80%$ 90%$ 95%$ 99%$ small differences between your test and control groups Ability to Detect Statistically Significant Differences Australian Direct Marketing Association
  • 15. Not Just Statistical Significance Do a sense-check when interpreting results: • What was the competition doing when this test was running? • Just because this worked in one location does it mean it will work in another? • The offer was successful in Summer – would it still work in Winter? •  Were there any other abnormal factors in the marketplace which might have affected the response? Australian Direct Marketing Association
  • 16. Not Just Statistical Significance Did we make money? When we balance the costs of a campaign against the incremental volume of sales – was it worth it? What should we test next? e.g. offer A performed better than offer B, what will beat offer A? Australian Direct Marketing Association
  • 18. Tracking the customer journey A buyer typically goes through several stages before they buy Awareness Interest Desire Action …which means we should have measures to track performance for each stage Reach Influence Closure Australian Direct Marketing Association
  • 19. Example: eCommerce Awareness Daily  Unique  Visitors   Interest Product  Page  Views   Desire Completes  a  Registra:on  Form   Action Purchase   Australian Direct Marketing Association
  • 20. Tracking issues How do you match response to source when: –  Your campaign runs in several channels simultaneously –  Your product is sold through a third party sales channel –  Your product has a long consideration period Australian Direct Marketing Association
  • 21. Common tracking options Outbound Channel Response Channel Offline Unique campaign and Call-Centre comms channel Broadcast specific phone numbers Mail Unique redemption In-Store codes Display Media Specific Search Call to Website Action Australian Direct Marketing Association
  • 22. Indirect sales – a missing link Browse Known Clicks/visits Buy Unknown Sales Enquire Known Calls Australian Direct Marketing Association
  • 23. Long sales cycles Sales Time What does this response curve look like for your product? •  Track enquiries & sales over a long period •  Establish a pattern •  Create a rule of thumb Australian Direct Marketing Association
  • 24. Rule of Thumb Approach •  Can be used for indirect sales as well as an ‘early read’ for long campaign cycles •  Typical approach: 1.  Establish a ratio for website visits or calls to reseller enquiries/ sales 2.  Establish a pre-campaign baseline for calls and website visits 3.  Measure the uplift in calls/visits during and following the promotion 4.  Extrapolate to sales using typical ratio Australian Direct Marketing Association