by Aaron Hale

Yesterday in Part 1, we looked at new ways of prospecting and opening the "dialog of discovery" with the prospect. This included critical solutions-based selling techniques of proof of concept, shifting the prospect’s "Cost Per Piece" to "Cost Per Sale," establishing their need for change, demonstrating ROI, and the importance of good data." Today we take a look an effective pricing strategy for MCM services, view a real quote based on "Golden Rule #2" and finally the follow through - measuring results.

"OK, I’m sold, so how much does this cost?"

Those are the words you want to hear, but they can also be ones you dread because now you have come up with a price that works for you and your customer. And in the brave new world of multi-channel marketing pricing is anything but cut and dried.

The Pricing Equation

Quoting a VDP / PURL multi-channel campaign is very different from the typical transactional type of service. Applications such as offset printing, fulfillment, mailing, etc. have a cafeteria or tiered style of pricing, so if a customer wants 20,000 4/4 flyers with aqueous coating on 100# text paper matched and inserted into a form letter mailing, you simply plug in the data into your estimating system, or if done manually, cross-reference a pricing matrix and there’s the price.

In the multi-channel solution there are a few items such as the digital printing, price per PURL, mailing costs, and postage that are relatively fixed, but that’s where the similarities end. Much of the pricing is assessed by how much time it takes and how much that time is worth (i.e., $100, $125, $150 per hour). Ultimately the price quote is driven by the initial discovery conversation.

Ultimately the price quote is driven by the initial discovery conversation.

• Establishing the Value: A successful solution sale incorporates establishing the need for change; co-developing the solution with the client; establishing a budget; and articulating the benefit --the "what’s in it for me" element. This is the value. What do they stand to gain if you deliver? But value is tightly related to the goods and services being sold, and this directly affects what you can charge.
  For instance, a real estate company whose average sale is worth $250,000 versus a retailer whose average sale is $200 create quite different value propositions when you are talking increased response and improved conversion. Although it is all relative, the real estate campaign is more readily able to absorb a higher margin than the retailer. So the retailer might be charged $0.095 per PURL and the real estate company $0.12 per PURL, and so on.

• Campaign Goals: Depending on the client’s specific goals, the campaign could be a simple single segment type where they will only need one outbound creative piece; a single mailing; with one set of PURL landing pages.
  However, if they are savvy marketers, or are committed to achieving the highest possible response and conversion rates, a multi-segmented campaign with multiple creative designs, several versioned outbound mailers, complex list segmentation and VDP composition, and multiple staggered or simultaneous mailings significantly affect pricing.

• Level of Contribution: How much, if any will the client contribute in the way of campaign components? Do they have a creative designer? Are they capable of providing effective messaging? Will they write the copy for the outbound mailer and landing pages? Do they already have good data, or do they need to purchase a list?

Value is tightly related to the goods and services being sold, and this directly affects what you can charge.

Other Pricing Components

• Project Management & Administration: As the Campaign Manager, you will need to allocate adequate time for interaction with the client and all the contributing parties at each phase of the campaign (approx. 20 – 40 hours):
  • Discovery
  • Strategy (consultation with all client internal staff as well as third parties – can mean multiple sessions, live or remote)
  • Client pre-requisites – security compliance, special data needs
  • Proofing (print and landing pages)
  • Beta testing (assuring that PURLs and all related variables are functioning flawlessly)
  • Follow up (training the client to use and optimize the measurement, reporting and lead functions of the back office or dashboard of the campaign)

• Data Processing: This will vary greatly on a case by case basis. If the client has relevant data and a robust system that is cultivated on a regular basis, your input will be minimal. If not, you may be tasked to procure a list and perform services such as merge/purge, de-duping, proper casing (some lists come all upper case), NCOA, CASS/pre-sorting, adding custom segment elements, etc.
  To deliver maximum response and conversions you must employ some type of segmentation of the target audience. This is done through data mining and data profiling. If you are fortunate to have this skill set and technology in-house then it becomes part of the hourly factor, but if you will need to go to the outside to a trusted partner then you must include their fee.

• The Creative: The creative means not just the design of the outbound mailer and landing pages, but also the messaging and relevant content. The data profiling acts as a macro driver for the effective messaging and relevant imagery. Again if this is not an in-house core competency with an hourly fee factor then it’s an outsourcing charge.

• Production: The printing, VDP composition, and landing page construction costs

• Mailing & Postage: Fees associated with CASS/Pre-sorting and sort, tie and tray. The client’s preference for classes of mail (standard, first class, pre-sort first class, etc.).

Creative means not just the design of the outbound mailer and landing pages, but also the messaging and relevant content.

"Golden Rule #2"

Quote as a package price. This model supports the value proposition of both the delivered solution and you as the provider. If you sold your services under the moniker of MSP or Campaign Execution Provider (CEP) then the client tends to perceive you as an expert at handling multi-channel projects. They will trust your quote as accurate even though they may request you sharpen your pencil.

Quote as a package price. This model supports the value proposition of both the delivered solution and you as the provider.

If you present with a line item break out of each individual price component then you will be perceived as merely a vendor and you risk not only a margin backlash, but you may lose some control in the execution phase of the campaign. The client’s trust becomes watered down and may second guess your strategy and ability to deliver.

In any event the statement of work (SOW) will outline the features and services included sans price so that the client’s comprehension of the package is satisfied. There will inevitably be a buyer whose company policy mandates a breakout of all fees, but your initial presentation and resulting impression will prevail.

This is not a transactional sale. You are working to gain a client, not a single job

Example – How you get there:

Commitment to Process

You need to be careful in setting expectations with the client. Successful multi-channel and most targeted marketing solutions can take time to mature. What published case studies from PODi and technology vendors don’t tell you are how much testing and how many variations of the theme it took to get to that successful 25%+ response rate and the ensuing 25%+ conversion.

This is not a transactional sale. You are working to gain a client, not a single job. If you overpromise results on the first outing, you’ll get the job, but if the results don’t live up to the promise, or fall flat, you will lose the client. You will burn through your opportunities quickly leaving you in a constant state of prospecting rather than servicing and retaining an elite clientele.

Be sure early in the sales cycle that you communicate this and get their commitment to the process. They will appreciate your commitment to their success. One way to soften the cost of entry and establish trust is to put some skin in the game. Sell the first effort for cost with an understanding that if the campaign delivers the promised return that either you share in the profits, or the client to agrees to pay the outstanding marked up cost to you.

One way to soften the cost of entry and establish trust is to put some skin in the game.

Measuring Results

The measurement of the campaign is as important as any phase of the implementation. Assure your client that you will follow all the way through to assisting them with measuring the effectiveness of the campaign and then making adjustments as needed. Not only does this raise a customer's comfort level with the program you are providing, it gives you a way to analyze the data, provide proof of its value, and identify ways for later improvement. All multi-channel application software programs from MindFireInc, EasyPURL, XMPie, OpenBOX, etc. include a dashboard where both the provider and the end user have access.

Since 9/11, shrinking budgets and down-sizing have caused paradigm shifts in a lot of different industries and results measurement and ROI are ruling the day. If you are savvy enough to be selling into a Fortune 1000 company, they may have a sophisticated MPM (Marketing Performance Management) tool such as Aprimo, SAS or even OpenBOX’s MCM (Marketing Campaign Management). As your marketing services mature you may want to bring an MPM on board.

Summary

Here are the key points to remember:

1. Prospect smart
2. Sell the benefit NOT the technology
3. Demonstrate ROI
4. Consistent pricing strategy
5. Get commitment to the process
6. Measure results – follow through

In most cases, as an MSP or CEP you will be working with (or competing against) established advertising and marketing agencies with a great deal of experience and solid reputations. In spite of that, you have a tremendous advantage with a leaner infrastructure and have the tools at hand.

If you successfully connect the dots for your clients and prospects leading them into more effective and efficient marketing solutions then you have an even bigger advantage. The demand for results driven and targeted communications transcends all industries and if your company becomes know as a brand that gets it done without any heavy lifting, you will win the day.

Good luck and good hunting!