Marketing MISTAKE #13 – Not Testing Your Marketing Strategies Or Using The Minimum Risk Formula

I have yet to come across a business that religiously tests their marketing campaigns.

Here’s what I mean…

Let’s say you decided to send a sales letter to your target market. You’ve bought a list that has 5,000 names on it.

You’re certain that out of 5,000 you’re going to get many orders, so even though sending 10,000 letters costs you well over £5,000 (£1 per letter including postage), you have to do very badly to NOT make a profit.

You then sit back and wait for your windfall. Unfortunately the response was just 0.1%. You received just 5 orders at £500 each, and each order has a 50% gross profit.

So you made £1,250.

That means based on this first order you made a loss of £3,750

Now depending on the amount of profit you can extract from these new customers over the lifetime of their relationship with you (lifetime value) this could be either awful or very good for you.

However, I’ve seen several businesses go out of business using this approach because they were so sure their product or service would be sold by the bucket load, only to find that people simply weren’t interested. This approach is very risky and will never yield the sort of results you can expect when you start TESTING.

This is where it gets interesting…

When you test you automatically apply what I call ‘The Minimum Risk Formula.’

That means you limit your financial exposure whilst maximising your return (isn’t that what we all want?).

Using the same example above, here’s how it works…

Instead of mailing everyone on the list with one sales letter, you mail just 2,000 people. And instead of using one sales letter you send 1 version to 1,000 people (selected randomly) and another version to the next 1,000 people.

You’ve now got 2 tests running against each other.

The key is this…

Since you know that a headline change can increase response by 500% or more, you keep the same letter except the headline is different on each version. Here are the results…

Headline 1: 1,000 sent. Response 0.2% (2 sales at £500)

Headline 2: 1,000 sent. Response 1% (10 sales at £500)

Now that looks better. Headline 2 returned 10 sales. This headline and letter now become your ‘control’ so you mail the last 3,000 names on the list and now here’s what you get…

Headline 2: 4,000 sent. Response 1% (40 sales at £500)

From the same list of 5,000 your testing enables you to generate 52 sales (2+10+40) generating a revenue of £26,000 and a profit of £13,000.

Also, let’s say that even after testing your figures looked awful – you made a loss. At least you can cut your losses right now. You’ll have saved 60% of the costs you would have spent if you’d mailed 5,000 people in the first place!

That’s what testing can do for you – it maximises your return and minimises your losses!

Here’s a true life example (these headlines were ones tested)…

Headline 1: Revolutionary Creasing Device Totally Eliminates Fibre-Cracking, And Takes Just Minutes To Set Up – Even By Inexperienced Operators

Headline 2: They Laughed When I Put The Tri-Creaser On My Folding Machine, But When They Saw The Results…

Headline 3: The END Of Cracking Problems

Which headline do you think pulled an extra 350%, and has been used in ads for over 15 years to generate millions?


What this shows is that if you don’t test you’ll never be able to get the best possible return on your marketing. Test your lists, headlines, and offers – these three elements will give the best returns.

Plus, by testing, you adhere to my ‘Minimum Risk Formula.’

Before you invest any significant amounts of time, money or effort in any marketing or promotional effort, you test the effectiveness of your campaign. That way, if it doesn’t work the way you thought it would or should, you haven’t wasted unnecessary resources AND WHEN IT DOES WORK, YOU DON’T HARM YOUR RESULTS EITHER!

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Alex MacArthur

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