AFTERMARKET SALES & STRATEGIES
“The best customer you will ever have is the one you
Every bit as important and vital as your front-end sales, the initial, direct contact DRTV sales, are the back-end or aftermarket sales. In fact, your aftermarket sales will very often determine the success or failure of your long term goals.
Before we look at the back-end, let’s talk for a moment about the final step in the front-end sale: the upsell. To maximize this initial sale, the upsell serves as a powerful telemarketing strategy which allows your new customer to purchase additional products or services during the first phone call, or initial visit to the website. To illustrate: if your product is a widget that has an optional video or DVD for sale, or you have an instructional video that’s an excellent adjunct to your product—something valued at $50 but being offered during this phone call for only $25—then you would ask your potential buyer if you may include it with their order.
From my own experience, I know that, many times, the revenues generated just from the upsell, can make the difference between profit or loss. My recommendation is that you identify several potential upsells early on, when you are first developing your Marketing Plan which includes your “product offer.” Since you already know who your primary target market is, you can select products that they would want. You can test each product and varying price points during the initial media test. The daily reports from the telemarketing company will clearly show you which product delivers the best returns on your investment. You can expect an average 15 to 30% of your new customers to buy an additional product as long as it is: (a) something they want or need, and (b), something they deem very affordable (good value, good buy). Dr. Robert Cialdini, who has researched the cost of generating new customers versus “after-market sales” from an existing customer base, has found that it cost 300% more to sell to a new prospect than it does to an existing one. I’ve seen other research data that reports this to be 600%! Thus, developing a strong relationship with your buyer begins the minute your prospect becomes a new customer. But it certainly doesn’t end there.
THE ALL-IMPORTANT BACK END
Since the average “run” of a DRTV campaign is probably eight to 18 months, it makes sense that the long-term viability of any product or service, is based on sales “outside” of television. In other words, those products and services that are offered to the new customer after they have received the product advertised via DRTV in their home. Once they have the initial purchase, your after-market opportunities begin. Within the packing of this first product, there should always be a brochure, catalogue or re-order form, along with a direct request to buy additional products or services. Naturally, this is based on the assumption that the customer likes the initial product, therefore, it’s reasonable to expect that they can be sold “additional unique products”, particularly when offered just to them, and at a special discounted price.
I cannot emphasize enough the fact that an effective after-market strategy can result in higher profits than those generated at the front end. In fact, many of the major Infomercial companies project that 30% or more of their total net profit comes from the back end. And this does not include retail mass merchandising sales which can account for 10 to 20 times the total sales of a DRTV program which can be generated within a few years. This substantial increase in net profits not only keeps the company more solvent but these added sales can actually keep the DRTV and Infomercial campaigns “on the air” for the optimum length of time.
KNOW YOUR CUSTOMER
Since the goal is not to sell just one time, but to make many sales throughout your relationship with the customer, and extend the longevity of that relationship, you need to understand your customer base, and how to position new products and services to these buyers. You will need to survey the customers in order to determine their overall needs, the satisfaction rate of their initial purchase, and whether they felt that the promise made by the offer was delivered. Your after-market selling will be dependent on a high rate of customer satisfaction and your ability to tie in enhancements to the original product. Your choice of what services or products will be offered later on is going to be contingent upon this survey stage of your strategy.
Let’s say, for instance, that you have a buyer satisfaction rate of 75%, or even more. This gives you the potential for a very good list of future buying by these satisfied customers. You would, therefore, want to design your after-market selling in accordance with the price-point, demographics, type of product category, and the availability of specific products, of this initial survey. Many products are even created just to specifically support these sales. Particularly in the case of cosmetics, skin care and motivational-type products, you will want your DRTV campaign to include additional products and services for that satisfied customer.
And remember: There are two types of customers, one who buys and one who does not buy (inquiries).
The Continuity option involves developing a program in which additional product, information, services or goods are delivered to your customer on a monthly or quarterly basis. The most crucial criteria of a Continuity offer is that, in a timely manner, it meets the needs and preferences of the customer. It allows the buyer to choose the product and the timing of the shipping of that product. Certainly with skin care and cosmetic products, as well as the motivational programs, the usage rate absolutely determines how often that product should be shipped.
The reason the Continuity options are so important when it comes to profitability, is because they result in an increase in the lifetime value of a customer over a period of time, while minimizing the cost of the sales of the continuity products. Your marketing costs can be as low as 10% over the lifetime of an average customer. With a bulk sale program, the cost of a sale may be as much as 30% Of course, in order for continuity sales to work, you have to retain that customer and this is dependent on the service, the benefits of having a continuity “membership”, i.e. the additional products and services that accrue to a customer as part of their membership.
For every person who calls to order the product you’re offering, you can anticipate an equal number of calls which are strictly inquiries. The caller may have tuned in the DRTV spot or Infomercial too late, and now he or she needs additional information about the product. Or has seen the entire commercial but still isn’t quite “sold” and needs more assurance, coaxing, etc. Or perhaps the person wants to have the website or the address (since all they took from the screen was the phone number) of where to send their check or money order. Often it will be someone looking for an alternative method of payment rather than the one provided for by the DRTV spot. (i.e. they prefer to order COD or send a check, or use a non-conventional credit card). The point here is that even the skeptical person, who decides not to purchase the product at all, still remains a prospect for you to mine. Inbound telemarketing operators are trained to capture that non-buyer’s name, address and telephone number. They will, invariably, give this information freely and, therefore, become part of your customer database—someone to be contacted at another time. They have become, in effect, a “lead” generated by your use of an Infomercial or DRTV spot.
Up until a few years ago, most direct response companies did not see the non-buyer as a potential profit source, but rather as a cost of business. But the development of proactive programs, these customers now actually result in increased profits on a per-name basis exceeding, in many instances, the cost of obtaining a customer (as well as product costs and related services). The non-buyer can no longer be perceived of as a negative or loss factor.
“INQUIRING MINDS WANT TO KNOW...”
How do you get the non-buyer converted to a buyer? The conversion rate is determined by a number of aspects: product, price point, methods used to change the person’s mind, and the means by which to service the prospective customer. Basically, the higher the price point of an offer, the higher the inquiry rate will be—the more people are going to pay for something, the more they want to know about it. And, typically, these higher-priced offers will have lower conversion-to-sales rates.
MAXIMIZING THE INQUIRY
Many companies still feel that since they are paying for the initial call, they don’t want the added expense of capturing the prospect’s vital statistics, i.e. his or her name, address, telephone number, email address, and whether they intend to purchase with a credit card. But, since it has now been proven that the additional expense (which is a relatively small amount of money) is well worth it in the long run, companies should make optimum use of the inquiry in order to obtain valuable, pertinent information. For example, an inquiry allows you to pinpoint any weaknesses within your DRTV campaign, in terms of answering specific questions or how well you are selling the benefits of the product or service to the customer.
DOING THE TWO-STEP
First comes the direct mailing piece, which can be a personalized letter, with four-color inserts providing product information and a means of responding and placing an order. What I prefer and heartily recommend is using Direct Video DVD which can offer the customer the most comprehensive understanding of the benefits and features of the product. I have successfully used Direct Videos to help sell dozens of different products—everything from financial and motivational products to craft, health and fitness and skin care products and services. To illustrate: In one of FMS Direct’s DRTV campaign for Omni Worldwide, which involved an investment opportunity that Omni was offering, we sent direct videos to 30,000 qualified prospects. In each case, the prospect had called and asked us for the Free Special Report (a direct video) which we had created and titled: “Wall Street and the U.S. Economy.” In just two months we generated over 8,000 names. Then we sent the Direct Video (essentially it was the half-hour Infomercial, an in-depth sales presentation on the investment opportunity offer), to this select group of 8,000 existing financial clients. Each of these customers were then contacted by the company’s account executives (professional telemarketers) via out-bound telemarketing. The direct mailing of the video, coupled with the follow-up sales presentation (telemarketing intervention), generated an astonishing 20% conversion rate and, in one month, the initial sales figures topped $l6 million! Omni World-wide generated $450 million in sales revenues over a four year period as a direct result of FMS Direct’s successful direct marketing, DRTV and Infomercial campaigns.
In the case of Edgar Morris’s skin care products and Numex’s Therapy Plus Pain Reliever, an instructional video was used with amazing results. Portions of the original Infomercial were included within the product demonstration video to remind buyers of why they bought the product. Since impulse buying is based on an emotional response to a commercial, we wanted to allow the consumer to “relive” that emotional reaction and affirm their buying as a logical decision to own the product. This positive reinforcement of the buying decision helps to dramatically lower the return rate and also maintains the best possible customer relationship by providing an in-depth sales presentation to make sure the new customer remains committed to the product or service. Bear in mind, you’ll never have a repeat customer if they don’t believe in the product or service the first time and enjoy the results or benefits. We also included a toll-free number and address for additional orders of the video because many consumers may want to show or send it to a friend. Thus, the Direct Video or DVD becomes an “electronic traveling salesman” for the company.
Overall, the impact of the Direct Video works to both increase the perceived value of the product on the front end, and to provide a fantastic additional selling tool for the aftermarket or back end potential sales. The creation of the Direct Video itself must be planned and budgeted for during the Marketing Plan development stages, and is absolutely worth the time, effort and capital that will go into producing it.
TIME IS OF THE ESSENCE
direct mail letter, email, brochure and/or four-color ad, timing is absolutely
crucial. The longer it takes to mail or email to these customers, the
lower the response rate will be. In other words, “strike while
the iron is hot” because each passing week means less response than
the previous week, until 30-day old names, generated as a prospect, will no
longer even remember calling in for information. Along with the pivotal
timing of the mailing, is the quality of what is being sent. Properly
servicing the customer’s request for information will become a direct
reflection on the product you’re selling. So develop this mailing
piece with careful thought, comprehensive information, and attractive design. It
must reflect favorably on the product, its promise and the company it represents.
A FEW OTHER FACTORS TO CONSIDER
The rate of turning inquiry leads into sales can be as high as 40%, but the same rate can also be as low as 6% when the product has high price points and is available in retail stores. But whatever you discover your conversion rate to be—obviously different with different products—the use of a well-planned back end sales strategy is a must. Know your customer’s specific needs, develop products they can afford, and offer products that provide a high profitability return per name generated from the front end offers.
“Aftermarket should never by an afterthought” says Jeff Glickman, President of First Class Marketing. It should be an integral part of your Marketing Plan and, when done correctly, will provide you with a customer database that can produce millions of dollars in revenue; money that can add additional profits to your bottom line when you have an effective Aftermarket program in place.
“Call Now 1-800 - How to Profit from Direct Response Television Advertising” Copyright 2006 Rodney H. Buchser
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