Premiums are an effective way to increase your direct mail
response rates. Whether you are selling a product or service
directly through the mail, or whether you are using a sales
letter to generate leads, premiums can help you boost response,
increase conversions and motivate buyers to pay now rather than
later.
A premium is simply an item that you offer to your buyer to take
action. As Dick Benson has said, "a premium is a bribe to say
yes now."
Premiums are effective because, dollar for dollar, they are
better incentives than cash discounts. Given the choice between
receiving a free Apple iPod or a $200 discount on their order,
most buyers will opt for the iPod.
Here are some tips on using premiums effectively.
Aim for desirability over relevance
The key to choosing the right premium for your audience is
desirability. If the premium is related in some way with what
you are selling, that is great, but whether your prospect
desires your premium is more important than if the premium is
associated with your offering.
For example, a firm that manufactures heavy-duty fasteners could
offer prospective customers an oversize bolt in the form of a
paperweight, or they could offer a $200 gift certificate to Best
Buy (the home electronics store). The paperweight is relevant
but undesirable. The gift certificate is desirable but not
relevant to the firm's business.
The best premium, of course, is closely related to your
offering, is desirable, and makes your prospect look like a wise
buyer.
Choose premiums with high perceived value
You want your premium to look as though it costs more than it
does. A leather attaché case, for example, that has a high
perceived value but only costs you $30. Or a portable DVD player
that appears worth $150 but costs you only $40.
Test your premiums
What works for one business buyer will not work for another.
What works in one industry will not work in another. One
inexpensive way to test high-end, expensive premiums is to offer
them as "back-end premiums" that your prospects must request.
Segment your list into equal-sized groups, mail a different
premium offer to each segment, and then count your responses to
see which premium draws the best response.
Promote your offer, not your premium
Your premium is the bribe for saying yes now. It is not your
offer. And because you should only sell one thing in a direct
mail package, you should sell your offer and give your premium
away. You want your premium to be the incentive to act, not the
reason to act (after all, some people respond to direct mail
offers just to get the premium, then they cancel their order).
Check the law
Some industries (defence, for example), forbid their employees
from accepting gifts or premiums from vendors. So check before
mailing.
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