10 infomercial facts you need to know By Jeff Glickma

To cultivate a successful infomercial it is imperative to gather as much hard data as possible. This data can be used to promote customer satisfaction, develop…1. Industry Average of Orders to Inquiries:With each airing of an infomercial, you get two kinds of responses at the Inbound 800 Center: Credit Card buyers and Non-buyers (excluding customer service calls). Non-buyers are considered Inquiries and consist of people who want more information as well as those who say they will send a check, but never do. We have determined that there are many factors that effect the ratio of sales to inquiries, and these variables are as follows:a) Price point: The higher the price point the higher number of Inquiries.* For products less than $100, the ratio can be as good as 3 orders to 1 inquiry.* For products between $100 to $300, the ratio approaches 1 to 1.* For price points above $300, the ratio can be as low as l order to 2 inquiries (to 1:5 with $500 plus).b) Product category: The Inquiries can vary, depending on the product category:* For motivational and for fitness products the Inquiry rate is higher rs. orders compared to other categories.* For beauty and cosmetics, the Inquiry rate is lower than that seen with fitness, but is higher than kitchen products.* For weight loss, the Inquiry rate is lower than that seen with beauty products.* For kitchen products, the inquiry rate can be the lowest. The exception would be juicers, when the market had so many to choose from.c) Show Frequency and Age: During the initial airLugs of a new show, the Inquiries are at their highest rate, but decrease with the frequency to which you run it. Show Frequency and Age: During the initial airings of a new show, inquiries are at their highest peak. Inquiries will decrease as the frequency the show is run increases. The following graphs show the effect time has on the inquiry/sales ratio.Note:Motivational and fitness products maintain a higher Inquiry rate versus orders, compared to other categories.d) Infomercials with same Product Category:The number of Inquiries will increase as the number of similar products marketed by multiple infomercial companies. The best example is the effect of having 5 steppers on the air at the same time, or the effect of 7 juicers. The effect of these competitive offers increases the inquiry response as the consumer tries to understand the differences between the various offers.e) Product Category Frequency and Retail:The Inquiries increase when the product category is available through retail, either as an alternative back-end promotion for the same product, or as a product category. The consumer wants to know the difference between the retail products and the product available on the infomercial. The number of total calls for customer service also increase with retail availability, especially if the product is priced significantly less than the infomercial offer.Therefore, Inquiries can vary with the type of product, number of competitors, retail availability, price point, and the demographic nature of the respondents.2. Banking Of Credit Card Types Used by the Buyers:The primary aim of any infomercial that is selling a product is to obtain credit card orders. There are many types of credit cards available, and a recent survey of these infomercial product purchases indicated that a majority prefer VISA and MasterCard over other cards, with at least 85% to 90% using these cards. VISA tends to be a more popular card than MasterCard, while American Express and Discover account for between 10% to 15% of the orders. The Discover Card is increasing from a low of 5% a year ago to around 10% of orders today. For smaller direct response companies. the use of American Express is on decline, and the loss of orders is minimal since most credit card customers who have American Express, also have VISA and MasterCard. Many marketers feel that offering the American Express option, increases the credibility of the offer and their company. American Express, however, has a higher discount rate, and its chargeback procedures are the least supportive of the marketer.3. Avenges for upsell price to main item sold, average number purchased at different price points . . .Inbound callers present an excellent opportunity to offer additional products while they call in for your primary television offer. This offer of additional products or services is called an upsell. The number of people accepting the upsell is a function of many factors, including:* order of upsells* number of upsells* price of upsells compared to the front-end offer* the degree of similarity of the upsell product category to the front-end offer* the incentive and or perceived discount given with the upsell* the length of the upsell script* the performance of the Inbound OperatorIt can be seen that, as with any rules, there are exceptions. The following 10 rules are good guidelines in the design of the Inbound Upsells:Rule One: Inbound Upsells that convert multi-pay to full pay, when placed first, will always reduce later upsell conversions.Rule Two: The doser the product is to the original offer, such as a deluxe or complementary upsell, the higher the conversion.Rule Three: The conversion rate increases with higher upsell discounts and better incentives.Rule Four: The lower the upseli as a percentage of the front-end price point, the higher the upsell conversion rate. If the upsell is more than 75% of the front-end offer, the upsell rate will drop to the one digit level. When the upsell product is between 60% and 75%, the rate of conversion goes above the 20% rate, and when an upsell offer is below 50% of the original purchase, or equal to one payment of a payment plan, the rate of conversion can exceed 30% to 50%. Additional supplies of the same product at 50% off have done as well as 50%, depending on the product category.Rule Five: The greater the difference between the product offered as an upsell and the original offer, the lower the conversion rate.Rule Six: The longer the length of the upsell and the description of the offer, the higher the conversion. Do not try to save money by using short and incomplete upsell scripts, the results can double with effective scripting.Rule Seven: Test, Test, and Test various offers.Rule Eight: Never give shipping and handling free on an upsell when you can reduce the offer price the same amount. The results of upsell conversion are always higher for upsells where the price is lowered compared to the free S&H.Rule Nine: With multiple upsells, always upsell the most related product first, then go to the least related. Conversions always decrease with each sequential upsell offer.Rule Ten: Never believe in rules. Upsell conversions are dependent on the nature of the front-end offer, product category, the price discount or incentives, the order they are presented, the media market you are in, and finally and most importantly, the training and performance of your inbound center. Therefore you should test call your inbound center, and provide them with adequate notice and training support for inbound upsell programs.Note: The percentage of upsells for related products, i.e. deluxe or complimentary products, at a discount of 25% to 50%, will produce conversions of as high as 50% or more.4) Industry Average of Single-pay versus Multi-pay:The use of multiple payments with the infomercial offer has now become an important factor in maximizing response. The success of this marketing tool is dependent on the type of product and its price point. We see payment plans from 3 payments of $19.95 to 10 payments of $49.95, for everything from juicers to fitness centers, and the programs have played an important role in the ability of the infomercial to feature higher price products.The number of single pay programs versus multi-pay programs, with front-end offers featuring this “lower entry” price point, has increased from 20% of the infomercial offers to almost 70%. It is now standard policy to develop offers in excess of $49.95, with three or more payments. The higher price point programs, like fitness products over $150, all have longer payment plans of up to 10 months, and are considered successful. The average increase in net profits from the use of payment plans exceeds 15% for most programs, after adjusting for all related costs and bad debts.5) Industry Average Multipay Price Point:The average of multi-pay price point is $29.95, although we are seeing more in the $39.95 to $49.9S price point, when it comes to the larger, more expensive packages.The rules of multi-pay are simple:1 ) Never have the pay period exceed the usage rate of the offer. For example, if your skin care product is a two month supply, your payment plan should be the same.2) Never have a payment plan that has a monthly payment in excess of $ 59.95, when you have three payments. Go to four payments and reduce the payments to $39.95.3) Always charge a payment plan fee, not to exceed $3.00 per month, or 10% of the original full purchase price. The average is $2 per payment.4) When doing a spot commercial, multi-pay price points are lower, and $19.95 for three payments has worked effectively for well promoted product categories.6) Conversion of Multi-pay to Single-Pay:The conversion of Multi-pay to Single-pay is now a standard inbound offer. There are some easy rules to follow:The rules of Conversion to full-pay are simple:1 ) Conversion to full-pay is an upsell, therefore, if you attempt conversion to full-pay before product upsells, product upsell performance will drop significantly. You must decide between full-pay and upsells as the priority, and then design the scripts accordingly.2) Conversions to full-pay vary from product price point and category. With products over $100, the percentage of full-pay drops 10% per $ 100 increment down to 30%.3) If you offer an incentive, your full pay conversion can go to over 90% of orders.The following outlines the percentage of full-pay conversions by type of incentive offered:a) Just by asking if they want to pay full-pay, 50% will say “yes”, unless the price point is over $200.b) By adding a savings of the billing fee, the average conversion to full pay will exceed 65%.c) By adding a savings of the billing fee, and the use of free gift as an incentive, the conversions to full-pay can exceed 65% to 90%.d) By adding a savings of the billing fee, and the use of priority processing as an incentive, the conversions to full-pay can exceed 65% to 90%.Note: The use of incentives to get the conversion will work better for low price than for high price point product,7) Continuity and the factors related to the customer re-order performance.Continuity, the ability to send a customer additional product on an ongoing basis, has been the cornerstone of success for such companies as TimeLife. With today’s infomercial programs, the design and integration of a continuity offer is critical to the overall profitably of the program. In many cases, the “aftermarket” to the leads generated from direct response, can generate even greater revenue than the front-end offer.There are many factors involved in determining the continuity conversion rate of customers. The conversions depend on the product category, and relate to the benefits being offered to the customer in a tangible way. Catalogs, direct mail, outbound telemarketing, and the nature or type of continuity being offered, all have an impact on the performance of the aftermarket to these customers. The average beauty program, with catalog insert and outbound telemarketing to offer the club, will create about a 5 0% to 60% re-order rate, with half the orders being continuity. Once continuity “kicks-in”, the actual income generated by the continuity customers can exceed the re-order performance by over 100%. Re-orders and continuity offers, must be lower than the front-end offer, except in entertainment promotions where the program is really a qualified lead generator (i.e., Time-Life). The upsell rate to re-order customers can exceed 50%, with proper incentives, for most product categories.The continuity conversions depend on the satisfaction level of the consumer. The initial package must deliver the promise made on the initial show, with such factors as product quality, packaging, timely delivery, and usage rate being the prime determinants in the ability to convert the customer into a continuity program. The next factor affecting performance is the continuity offer itself. This conversion is dependent on the ability to provide the customer with options that best meet their needs. These continuity variables include variation in product selection, package pricing, delivery schedules (monthly vs. 2 month rs. 3 month), and the continuity or dub benefits. The continuity bulk sales conversion for motivational programs may be 65% of the level achieved with weight loss or beauty product categories.8) Effectiveness of Cross-sell, direct mail, and outbound:The cross-sell is usually thought of as the offer of non-related products, to the customer list. We can use either direct mail, package inserts, or outbound telemarketing to reach these customers. The effectiveness of cross-sell promotions to a list of infomercial customers is dependent on four basic factors:1 ) How close is the cross-sell to the category of the original offer. For example, the selling of nutritionals or a cookbook to a fitness and health purchaser works much more effectively than the offer of a discount purchasing club or insurance product.2) The Price Point Factor can directly effect the conversion to sales, if the offer exceeds the original offer, or the payment plans are greater than the original purchase. This is an important factor in overall effectiveness, but various price points should always be tested. In addition, list conversion for high price cross-sells may be low, but the offer may be profitable because of the overall production per hour of telemarketing.3) The offers must be incentified, either with a discount or additional free gift. The conversion of a contacted customer into a sale varies with the amount of discount, and depends on the product category and price range. The more the offer is related to the original purchase, the greater the effectiveness of the discounts.4) In addition, effectiveness of cross-sell programs are directly effected by the depth of the offers, and the availability of both upsells or downsells to increase overall conversions of the list.Direct Mail effectiveness is covered by the same principles as the telemarketing to the same list, but the combined effect of mail and calling can increase overall performance by as much as 50% or more for cross-sells that are in a different category of products.Conversions of lists to cross-sells can vary from 2% to a high of 50%, depending on the price, incentives, guarantee, and the salesperson. One of the most important factors related to the performance of any program to a list is the quality and service the customer received with the original order. If the customer is unhappy, there are innovative ways to create additional sales, but overall, the effectiveness of direct mail and telemarketing is very low under these circumstances.9) Other Statistics i.e. ReturnsThe return rates for the sale of additional products to your customer list, via telemarketing, can vary from 2% to as high as 20%, depending on the nature of the offer. Ira free 30 day trial is used to close the sale, the returns are always on the higher side, when the offer exceeds $40, especially for offers over $100. The return rates for aftermarket sales can be reduced by monitoring sales techniques, requiring the sales representatives to ask for the credit card for each order, and by doing 100% verification of orders.10) Infomerciais and Retail, StatisticsThe effect of retail on infomercial aftermarket can be negative, if the retail product is available at a reduced price in excess of 15% to 25%. This was a problem for juicers, as well as fitness products. The increase in retail buyers as a result of running the infomercial is well documented by the juicer experience, as well as the fitness product category, with 7 of 10 purchases of the product being generated in the retail marketplace. Another major opportunity that the retail distribution of product provides with the capture of the retail consumer names, is the ability to promote upsells and additional products. We have the ability to develop these “Outreach” programs which offer specific products, proven successful with the direct response customer, to these consumers. The success rate is enhanced even further when the buyer is incentified with coupons for retail distribution of other products. This method of promotion is effective in the motivational, houseware, and fitness markets, and generates a 15% to 30% conversion ratio with these pro-active programs.Since 1987, when Mr. Glickman rounded First Class Marketing, Inc., he has served as owner and President First Class Marketing, Inc. is engaged in Direct Response aftermarket sales and currently has over 150 employees, in three locations. FCM handles mail and outbound telemarketing sales programs for major infomercial marketing companies, including American Telecast Corporation. Guthy-Renker Corporation, Media Arts International and many more. From 1985 to 1987, Mr. Glickman served as Executive Vice President for a major Direct Marketing company and was responsible for the development of aftermarket programs for entertainment, health and nutrition products. Mr. Glickman was responsible for overseeing the development and testing of new products and marketing programs. From 1980 to 1985, he served as Marketing Manager for Syntex Pharmaceuticals, and was responsible for overseeing the development and application of marketing programs for new pharmaceutical products. Mr. Glickman holds a Bachelor of Science Degree from McGill University of Montreal, and a Masters Degree from that same institution. In 1980, he successfully completed his studies for his Doctorate in Philosophy from the University of London. He currently has 16 publications and abstracts to his credit in the field of endocrinology.Copyright Adweek L.P. (1993)<