Brief
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We all have email inboxes littered with subject lines like the headline above. If they inspire any action, it’s usually to hit the Delete key.
Companies spend huge sums on direct marketing to acquire or retain customers through email, direct mail, catalogs and other tactics. Yet the return on investment (ROI) is often poor because the response rates tend to be very low—usually less than 5% and often less than 0.5%—and rates have been declining. Many organizations still use the traditional champion-challenger approach, also called A/B testing, to test new offers, because it’s relatively easy to execute and can be scaled up quickly. However, it has severe limitations: Only a few offers can be tested at a time, the variance is low so regression results are not meaningful, and one cannot identify which individual variables cause consumers to respond. Experimental design offers a better approach. In Bain & Company’s work with clients, we’ve seen experimental design-based multivariate marketing campaigns increase consumer response rates by three to eight times, adding hundreds of millions of dollars to the top and bottom lines. |