Question

Topic: Advertising/PR

Direct Mail Offer - Dollar Off Vs. Percentage Off

Posted by Jeff K. on 6/6/2005 at 5:57 PM ET 250 Points
I am working on a direct mail (door hanger) for a closet organizer busines. They want to offer an incentive for prospects to place an order. We have two options, with two questions:

1. Offer a percentage off their order. Is it better to offer a percentage off the total order, i.e. 10% off your entire order, or is it better to offer a dollar figure, i.e. $100 off? Which has the biggest response rate, percentage or dollars?

2. The other option is to do a cross promotion with another local company, like a day spa. The majority of the closet companies clients are women. Would it be better to offer a $100 gift certificate to a day spa with purchase of a closet organizer or discount on their order as mentioned above?

Any and all help/advice is welcome!
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RESPONSES

  • Posted by Pepper Blue on 6/6/2005 at 6:26 PM Member
    Hi jdkauzlaric,

    All 3 are good offers, and to complicate it further another option is the 2-for-1 with a minimum purchase. Buy "X" size closet organizer, get another "X" size for free. Free is a magic word.

    Have you thought of or is it practical to develop separate door hangers with all 3 calls-to-action and deliver them to a geographic area, then measure the results and implement the best performing one full on?

    Marketing is all about testing and fine-tuning so if you can find a way to do this it will probably be worth it in the long-run.

    I hope that helps.
  • Posted by mgoodman on 6/6/2005 at 7:14 PM Accepted
    My experience has been that a dollar amount beats a percentage amount, unless the percentage is greater than 50% (in which case you also raise the question of why anyone would discount so heavily).

    The broader question, of course, is "Why would you discount at all?" Discounts tend to cheapen the product, service, or company image. If you can find a non-price promotion -- say a premium item -- that's much better.

    Tie-in promotion is a great idea, but (a) it should be related to the promoting product, and (b) the perceived value of the gift should be greater than the cost to the promoting brand. (If people think the day spa is worth $100 and it costs you only $50, it's a good deal. If it costs you $150, or even $100, it's not such a good deal.)

    Caution: My experience has been mostly in consumer packaged goods, so be careful about extrapolating it to your business.

  • Posted by Jeff K. on 6/6/2005 at 8:49 PM Author
    The separate door hangers with different incentives is an interesting thought. I'm currently printing a small quantity using paper direct products, so it would be possible to do that.

    I hadn't thought about tying it in with a clothing or shoe store. Most stores are national chains and probably wouldn't consider co-op marketing, but maybe I can find a local store that might.

    What about cross promoting with a high-end restaurant and tie in something like "To celebrate your newly organized life" or something like that? I like the cross promotion idea, but don't know if it would be effective.

    The point that giving a percentage off is some what lost when the prospect has no idea what it costs is absolutely true. 10% of $10 is nothing, but 10% on $1,000 might be enough to cause a response. However, offering $100 eliminates the math and might catch more eyes!

    All very interesting comments! Thank you!

    Jeff
  • Posted by Pepper Blue on 6/7/2005 at 1:58 AM Member
    Hey Jeff K, previously known as jdkauzlaric:

    Looks like you like particpating in the KHE forum with 1 question and 2 answers today and one before probably under your previous alias.

    Advice: Take the wraps off, open your kimono and don't be shy about who you are and what your background is all about.

    Fill in your profile and join the club, screen names only won't carry you very far here.

  • Posted by Jeff K. on 6/7/2005 at 2:21 PM Author
    Pepper-

    I will fill in my profile. I haven't spent the time to read all about this forum, as I just found it yesterday. I'm assuming that it is okay for me to answer questions, correct? What I've seen so far on this forum, it is certainly the best marketing forum that I've been involved with.

    Thanks,
    Jeff
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