Synopsis: Best practices explained for one of the most powerful components in messaging.


In this essay, a VERDI team member explores one of the “unsung heroes” of Direct Response marketing.

Whether online or offline, pre-search or post-search, Direct Response marketing by its nature is highly measurable. As a result of decades of data tracking, practitioners in this discipline have noted several important rules with respect to campaign performance. In fact, some of them can be counter-intuitive.

But the proof is in their results.

The “40-40-20 Rule” of direct response marketing says that the key factors most affecting a campaign’s performance are the target audience – having a 40% influence – and the creative being a 20% factor. What do you think accounts for the other 40%?

It’s the OFFER. The offer (not to be confused with the product or service offering) is basically an incentive for taking action. In the phrase “Do this and get that,” the offer is the “that.”


Offers are especially crucial in lead generation. And best practices require that a lot of thought, planning and creativity go into developing the Offer.

Interestingly, direct response differs from image advertising in that almost all design and copy are driven by the Offer.

So the Offer must be chosen with care. It has to reinforce the brand and positioning of the product or service being sold. For example, if you are selling home wireless Internet service, which incentive will perform best? A cheap trip to Vegas? Or an Apple iPad?

Of course it’s the iPad, because it reinforces all the great things the home wireless Internet allows you to do.


What about discounting? We typically advise our clients to use value-added offers and avoid discounts. The value-added offer is typically more powerful. For example, which one of these offers will respond best, a “FREE iPad” or “30% Off Your First Month’s Bill” or a “$50 Rebate”?

Yes, it’s the iPad.

It borrows on the brand equity of Apple. Value-added offers are more exciting to consumers and emotionally engaging than a discount. They’re a lot less costly for your brand. You can leverage its perceived value (retail) vs. what you pay for it (wholesale). And the complexity of a value-added or borrowed-interest offer makes it difficult than a basic discount for your competitors to replicate.


It is very important to choose each offer to fit the target audience. One of the major airlines launched a catalog targeted to its Platinum awards customers with promotional offers for home and kids products that they could buy with their accumulated points.

Performance was lackluster, and it continued until a colleague of ours analyzed the airline’s data. She found that most Platinum customers were apartment dwellers, single with no kids.

Of course this makes sense. These people travel 100,000+ miles a year.

Based on this, the airline changed their catalog content and offers appropriately. And the result?

The campaign performed a lot better.


If you have a luxury brand targeting highly-upscale buyers, you need to take a lot of care to balance the Offer’s immediacy and promotional nature with the need to reinforce the integrity of the brand.

It’s a bit of a paradox. More promotional offers draw a higher response. But too much promotion can deteriorate an upscale image. And you need to carefully structure the Offer so that it won’t produce a lot of unqualified leads.

Here are some ideas: Tone down the language. Remove superlatives.

Offer something experiential. Something the prospect “who already has everything” cannot get anywhere else. Like a private party catered by a renowned chef. Or a half day with a well-known golf pro. Or an intellectually stimulating, cultural tour with a respected local historian.


If you have a multi-step sales cycle, it is especially important to match the proper incentive with each step. There may be one incentive for the prospect to engage with the brand online, another one to convert/respond, another to attend a special sales event, and another to close the sale. And later there may be yet another offer for that buyer to refer friends or family.

Which incentives will be most productive for each step of the process?

The economics can get a bit complex. VERDI utilizes an Offer Development methodology that lets us monetize each possible incentive and examine its effectiveness based on when it’s offered within the sales cycle. Some incentives may be more effective driving one step vs. another.

Let’s say you are selling vacation real estate. The average sale is $100,000 and 5% of each sale is reserved for an incentive budget. Should you simply offer buyers a $5,000 discount to close?

Would the close rate be higher if instead it were a $10,000 golf cart, which you bought wholesale for $5,000? Or if you have a strong onsite sales team, maybe you can achieve the same sales results by only spending $1,000 on air fare to get high-potential buyers to visit?

Ideally, you build a “menu” of incentives and guidelines. This gives the sales team flexibility to use the funds where they will have the highest impact on each specific prospect.


In conclusion, the Offer or Incentive is unfortunately sometimes omitted from marketing communications altogether. Yet results prove that the Offer continues to be one of the most important factors influencing a campaign’s performance.

The most effective Offers require careful planning and measurement, but they can have an exponentially positive effect on your campaign ROI.