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Join Our Research Team at DMA 2014
Nov 08, 2002
Case Study

How to Succeed in CPA Advertising and Convert 30% of Samplers to Buyers - the TrimLife Story

SUMMARY: Disclaimer: CPA advertising does not work for everyone and should not
be relied on unless you are a direct response marketer with a
proven sales conversion process and an extremely wide appeal.

That said, this Case Study is inspirational and contains great
hands-on practical knowledge of how to run CPA advertising
properly. If you run an affiliate program, you should also check
this story out: TrimLife has come up with a strong-minded tactic
to ensure their partners never ever spam in their name.
CHALLENGE

Three years ago, the TrimLife weight-loss supplements
business was owned and operated by a couple working out of their
basement. Michael Taylor Alvarez, Director of Advertising, says,
"They sold maybe one or two bottles a day."

They may have been tiny, but they fervently believed in their
product and finally convinced Gary Galin, an experienced CEO, to
join them. However, there was no marketing budget as such.

Galin began by running strictly CPA advertising online.
Publishers and list owners who ran the ads were paid only after
TrimLife got cash from a paying customer.

The offer was simple: Ads offered consumers a free sample (plus
$1 shipping & handling) of a week's worth of TrimLife
supplements. Then after 15 days, if the consumer had not
cancelled, their credit card would be charged for a $30 monthly
supply. The email list or Web site which was credited for the
account got their commission, a slice of the $30, after that.

Despite the sagging economy, most sites and list owners were not
interested in running CPA ads like this for an unproven site.
While TrimLife made $600,000 in sales in one year, it was not
the millions they had hoped for.

Galin needed to find a way to get aggressive. He knew he could
raise sales immediately, and possibly even save on average
acquisition costs, by switching to buying CPM media. CPM
had two drawbacks:

1. People time: When you buy media outright, you have to
spend a lot of time selecting just the right sites and lists
to run on. Then you need to analyze each buy's results
carefully to decide what to buy next. Galin wanted to focus
his limited resources on other things, such as ensuring that
more TrimLife buyers converted to long term customers.

2. Wasteful tests: So many low-quality lists have flooded the
market in the past 18 months that while CPMs are at an all-
time low, so are results. Many lists are misrepresented,
pounded with too many offers in a row, or sold under multiple
names. In mass-B2C listing buying it is definitely buyer-
beware.

Galin did not want to use up in-house time and cash resources
testing all the possible lists just to find the few good ones.
CPA was the easier way to go, if he could make it work.

CAMPAIGN

Galin decided to change CPA offers. Instead of
paying for buyers who converted from the sample, he switched to
paying for every single sample taker. Publishers no longer had
to count on him to convert clicks to buyers.

Plus, he shortened the payment cycle from monthly to weekly.
Alvarez says, "It's all about money, all about having publishers
see results and get paid as soon as possible."

Galin figured out how much to pay by looking at the previous
year's buyer conversion rates and working the numbers backward.
He ended up with a minimum of $6 for each sample request a
publisher generated. Publishers whose lists either generated
sample-takers who converted at a unusually high rate so TrimLife
made more money, or who generated an unusually high number of
sample takers each week so TrimLife's set-cost fulfillment
operations were more profitable, got an even higher commission.

“If brokers were confident of their list and had done due
diligence in removing people who wanted to be removed, then we’d
let them promote our product and pay them for every successful
transaction,” Galin explains. “In order to get better
compensation, they’d be more involved rather than just bombarding
people on the Internet.”

That means TrimLife takes a risk multiple times of what they
charge in order to acquire a customer. If the customer cancels
before the first bottle can be shipped, TrimLife is left at a
loss nearing or exceeding $15. They owe the publisher,
manufacturer, and costs for shipping and staffing 50 employees.

At the end of the day, it is worth it explains Michael Alvarez,
TrimLife Director of Advertising, “The law of averages, from
cancels to conversions proves positive in the long run and makes
up for this risky campaign. That’s because it’s up to us to turn
these sample leads into existing clients and we place that
responsibility squarely on our shoulders.”


-> Convincing publishers to work on a CPA basis:

Some publishers jump on board when they see the performance of
the ads, Alvarez says. “When we first launched with our TrimLife
free weight-loss sample promotion our email campaigns performed
at an effective CPM higher than $5. The word spread quickly and
many of the large publishers jumped on board.”

In general he says, “If you have a product that performs in the
range of $1 to $5 CPM you literally have a gold mine. All you
need is one large broker who will take it on a CPA basis and the
word of your offer spreads like wildfire. Soon everyone will run
it because it’s such an incestuous community.”

Many publishers run a test on their own dime to one million
emails or more.

For those sales people that are not allowed to test CPA’s on their
network Alvarez tells publishers two things:

1) He has no way of knowing if their email list is not burnt
out by sending immense amounts of advertisements to their
lists that kills conversions.

2) That they have had too many instances of big promises and
under delivering.

“I let them know we are a sales driven company and not brand
conscious,” says Alvarez. “They know by the end of our
conversation that it is all about the sales and not about
branding.”

Others require pre-payment for conversions. For those brokers
TrimLife sticks to a strict pre-payment policy:
- Credit check D&B number, list of references, and bank
account
information
- Payment by company credit card
- Delivery of agreed sales within 30 days or less
- Sales not delivered within the agreed term will require full
restitution in the form of sales or refund within an
additional 15-day period

“It is a cut-throat industry,” says Alvarez. “In CPA advertising
you pretty much take anything you can get but it is best to stick
to the brokers that prove their honesty and integrity.”

To establish a good reputation, TrimLife follows a set pricing
structure. There is a determined Master Broker Rate, Broker
Rate, and Publisher Rate where the Master Brokers (those who have
a large network of Brokers they can distribute the deal to)
usually get the most.

“It is important that these become the quoted ‘street prices’ and
that they don’t change,” Alvarez says. “If you give a publisher
or broker a higher bounty the word will get around and it will
slowly deteriorate your room for growth.”

To preclude publishers who might try to go around a Broker or
Master Broker without their knowledge, TrimLife keeps their
database of accounts current.


--> The creative TrimLife gives publishers:

“The ultimate goal is to come up with creative that performs
upwards of $5 CPM so that the word will spread of how great it is
working,” says Alvarez. “After the word gets out, of a well
performing campaign, we are swamped with Insertion Orders and
creative requests.”

Publishers have their choice of an assortment of banners, email
ads and solo email creatives, each with different pitches,
formats, and target audiences. (Link to samples below.)

One email might focus on the free sample to attract people who
like a good deal while another might highlight the health
benefits. A pitch to a businessperson might include more
literature or an email can be geared towards women or overweight
people specifically.

All HTML emails use bright colors and urge people to “Start
Today, Click Here” for a free sample. Emails include a picture
of a TrimLife bottle, as well as photo of a smiling person or two, sometimes it’s a customer service representative (“you’re never
on your own with this program”), a before and after photo, or a
woman measuring her waist.


TrimLife has tested two types of landing pages (link to samples
below.) One requires as few clicks as possible. The pitch is on
the left side and the order form is on the right hand side of the
page. The visitor never leaves the landing page to order.

The other features a questionnaire that visitors can fill out to
receive a free health report. The questions are pointed,
personal questions such as medical history and medications,
goals, waist size, ideal weight, and bone structure.

Both landing pages share an unusual element that we have not seen
in many other CPA landing pages: A special hotlink to report
spam violations. Most of the pages of TrimLife's main site also
feature this button.

Alvarez explains, "It's really important. We work through a lot
of brokers or agencies that broker out deals. They may sometimes
get a publisher on board who does s^pamming. We are very anti-
spamming."

"As soon as we get a complaint, we follow up on the link to find
the exact company that sent it, and give them a warning. If they
don't comply, we delete the link." That is right, even if orders
are coming through, TrimLife will not accept them from a
spammer.


--> After the lead comes in: TrimLife's conversion process

“Offering a free sample is extremely risky,” Alvarez says.
“There is a gigantic drop off from people that take the free
sample to the people who actually stick around to become full-
fledged customers.” TrimLife depends on three factors to convert
more samplers to buyers:

1. Daily follow-up emails

Five days after the sample goes out in the postal mail, TrimLife
begins sending daily emails to customers.

These upbeat letters from Kris Richter coach customers through
what they should be feeling with tips on taking the pills and
advice on what to eat. “We are here to help you every step of
the way,” she writes and includes progress reports and a personal
health form customers can submit.

Every letter is signed, “Wishing you continued success! Your
partner in weight loss, Kris Richter.” There is also detailed
information on how to reach customer service toll free and a link
to email feedback. (Link to sample emails below.)

2. Weekly newsletter

Each newsletter features an article from Richter, usually a
personal anecdote or experience, plus recipes, healthy habits,
and success stories.

Customers also have a chance to compete with Richter, fill out a
personal health report, as well as a chance to win a prize by
forwarding the article to a friend.


3. A trained customer support staff of 50

Alvarez says the 50 people who make up the support staff the most
important aspects of separating TrimLife from “fly-by-night”
weight loss companies. “People can see that we’re a real company
and that there’s a real person there to talk to them.”

Customer service hires are trained by a health science specialist
so they will know how TrimLife products work, what could
potentially take place and how customers should be feeling.
TrimLife also holds weekly meetings to offer employees incentives
based on completing certain levels of a product knowledge test.

The website features a photo of some of the support staff, as
well as this emphatic note:

"You know it's sad but some businesses try and hide from their
customers and website visitors. Not us! We love to interact
with our customers. That's how we improve what we do. And we
know if we get better at what we do, we'll attract, and
more importantly KEEP, new customers who will rave about
us!"



RESULTS

After a year offering a faster, easier CPA commission
sales skyrocketed from $600,000 to $8 million. Galin
projects the company will almost double in size in 2002, making
over $15 million.

It is worth noting that all of this growth is predicated by
brokers and publishers being willing to help. It is up to them
whether they will run the ads or not.

Alvarez notes that the Company's weekly payment policy has proven
to be a great competitive stance as more sites launch CPA offers.
“Brokers don’t have to invoice us. They can go in any time and
see the number of sales on the offers they’re presenting. And as
competitors try to enter your space, brokers will be more likely
stick to the sure thing."

"Even if sometimes we don't perform as another company, brokers
are willing to run us because they know we will pay. It gives us
the edge."

Some metrics:

- Depending on the creative and how clean the list it is,
TrimLife gets a 3% to 22% clickthrough from stand-alone emails,
and the sample acceptance rate from there ranges from 1% to 7%
depending on how targeted the ad is.

- Banner ads have typically gotten 0.02% click throughs, but
about the same 1-7% sample acceptance rate once people get to the
landing page.

Banners that concentrate on simple four-word statements like “I
want to lose” and “Eat and be thin” tend to get slightly higher
clicks.

Alvarez attributes their performance to a small scroll on the
banner that appears to make them interactive by suggesting that
customers can scroll to the amount of weight they want to lose.
Mostly though, he says, “It depends on getting lucky and picking
the right words.”

- The questionnaire landing page has worked consistently better
for more than a year now. Alvarez says, "It's usually a
percentage point higher than results from the other landing
page."

However, he continues to offer publishers their choice of both,
because publishers like to test these things for themselves.

- Lists the perform highest tend to be either more targeted
and/or lists which are not mailed offers more frequently than a
couple of times a week. Lists that have been pounded on stop
responding.

- An average of 30% of sample-takers end up sticking with
TrimLife, converting to becoming paid month-to-month buyers for
at least their first $30 month.

Links:

Samples of TrimLife creative, emails, etc.:
http://www.marketingsherpa.com/trimlife/ad.html


TrimLife home page:
http://www.trimlife.com
See Also:

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