To: ODV
Here is the response to Marty’s questions from Bob Inderbitzen and Diane Petrilli.
73, Harold Kramer, WJ1B
ARRL Chief Operating Officer
860 594 0220
From: Inderbitzen, Bob, NQ1R
Sent: Monday, February 14, 2011 2:29 PM
To: Kramer, Harold, WJ1B
Cc: Petrilli, Diane, KB1RNF
Subject: RE: [arrl-odv:19684] (no subject)
Harold,
It took Diane and I about 8 hours to prepare the analysis and final telemarketing report.
Our responses to Vice Director Marty Woll’s questions are included below (in red).
Bob
From: Marty Woll [mailto:n6vi@socal.rr.com]
Sent: Thursday, February 10, 2011 11:08 AM
To: Kramer, Harold, WJ1B; arrl-odv
Subject: Re: [arrl-odv:19684] (no subject)
Hi, Harold.
Thank you for providing this write up. After reading it, I have a few questions and observations. Please understand that these come not from a marketing expert but just a retired CPA.
1) I recall from earlier discussions that the target list consisted of members who had lapsed more than six months ago but less than two years ago. Is that a correct description of the population? If not, can you please describe the population selection criteria?
The list included lapsed members no greater than 18-months expired, and at least 2 months expired to help minimize the influence of 4th and 5th renewal notices.
2) Were the direct-mail campaigns used for the cost comparison on page 2 directed to a target audience with the same characteristic as the telemarketing trial's target audience? If not, how did the direct-mail audience differ?
The comparison used large direct-mail campaigns with mailings lists of expired members--though, because of the different economies of scale, the mailing campaigns include an even deeper penetration into our lapsed member data. We also conduct many smaller, highly targeted mailings…but even these have lower response rates by comparison.
3) Did the telemarketing firm identify for us which calls got which "not interested" responses? I would hope they did, in which case it would be helpful for Division or Section leaders to know who was "upset with ARRL". Since the lapses are relatively recent, it's possible that the source of dissatisfaction is also recent and can be addressed. Also, did staff check to see that those who claimed to have already renewed actually did? I could see that response as being a call-ending tactic that may not be truthful.
The firm tracked and reported trends, and did (today) return individual responses to us. Such a level of service is not typical in telemarketing (vs. a telephone survey).
It is always possible that a renewal can occur after a direct marketing list is pulled and before the campaign (mail, email, phone) is completed.
4) I gather from the cost per 1,000 calls and the number of calls dialed that the telemarketing fee was $3,500. Multiplying the average cost per sale by 80 sales gives a total cost of $3,711. Subtracting the fee leaves $211 as the cost of premiums, an average of $2.64 per sale. The report states that the premium was a three-month extension of membership. That's less than $1 per added month, yet I recall you telling me several years ago that the cost to print and mail a copy of QST was just over a dollar, and paper and ink prices have risen considerably since then. How was the premium cost determined?
Yes, the fee paid to the telemarketing firm was $3,500.
The present average direct monthly expense for fulfilling QST to domestic members is .88/month (postage and printing). This is based on a typical 164 page issue with no special insert or tear-out. The incremental cost for special issues is offset by additional advertising in the same issue.
5) Here's how this exercise appears to pencil out:
57 two-year memberships plus 23 one-year memberships plus 80 1/4-year extensions works out to 1,884 months of membership benefits. Even assuming the cost to print and deliver one copy of QST is only $1.00, that's a direct cost of $3,500 plus $1,884, or $5,384, assuming that there were no other premiums involved.
Gross revenue = $5,229 less direct cost of $5,384 yields a loss of $155 before considering the staff time spent negotiating the trial and providing the target telephone numbers to the telemarketing firm. To the extent the fulfillment cost of one issue of QST is higher than $1.00, the loss would be higher. If the reacquired members purchase publications or services that they otherwise would not have, the loss would decrease by the margin on those incremental sales.
With the exception of our smaller cost for domestic QST fulfillment, we concur with your calculation of direct costs.
5) The "Recommendations" section of the report mentions following the reacquired members for the next six months. Unfortunately, it will be two years or more before we know whether they renew on their own or with normal mail prompting, and only that information, it seems to me, will reflect "long-term value and loyalty" of the group.
In our experience, ARRL membership retention rates are generally very good, and even higher among multi-year members.
“Where” telemarketing ultimately belongs in the retention process will require much more substantial testing—though this recent trial gives us a first benchmark from which we can further hone lists, scheduling, appeal, and incentive.
It can also be noted that organizations that use telemarketing as part of an integrated direct marketing strategy will often use the same marketing channel for future renewal requests. For instance, those members that joined ARRL following a telemarketing campaign would be phoned for their subsequent renewals.
73,
Marty
Marty Woll N6VI
Vice-Director, ARRL Southwestern Division
Ass't DEC, ARESLAX
BCUL 15 & Training Officer, LAFD ACS
CERT III