Episode 11: Ian Morrison

Using inserts to build a £25m ecommerce business with Ian Morrison from Donald Russell and Flavourly

Ian Morrison is an expert on inserts (leaflets), using them brilliantly first at Donald Russell and then at Flavourly.

He starts by explaining what inserts are, how to buy them, tips for insert design, offers, a testing strategy and how to achieve huge efficiencies with swaps.

We cover everything you would need to know to get started using inserts to drive sales in your ecommerce business.

Here is an example insert produced by Ian, along with my comments.

Also available on:
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Andrew Veitch: Welcome to the Joy of Marketing with me, Andrew Veitch. This week I’m joined by Ian Morrison, who taught me everything I know about inserts, and much more besides that. He was the marketing mind behind Donald Russell’s direct butchery business, which he took from almost zero to £25 million. And he’s now the marketing director at Flavourly, a fast growing direct to consumer drinks business. And welcome to the show.

Ian Morrison: Hi, Andrew, thank you for having me on.

AV: So I know that you’re a particular expert in inserts, and I think this is something that a lot of the listeners aren’t familiar with. So maybe we just start by explaining briefly what inserts are.

IM: Inserts are a piece of direct marketing in the form of a leaflet that’s tactically placed in offline media, such as magazines, newspapers, or pretty commonly in any of your online orders, product dispatch, or any, pretty much any other third party that you can think of. And it’s that piece of paper that drops out that, of course, everyone thinks nobody ever looks at or uses. But we know because we record the data, that they work very well. So the marketing aim of that is to target consumers that purchase that product, or requested the magazine or bought the newspaper. So it’s definitely looking at a piggyback effect here. And because of that we can be pretty targeted about the people that actually receive our marketing message. And it’s important to point out that when we discussed inserts as a channel, there isn’t, isn’t actually a barrier in size or format, if it’s an A4 40-page catalog that falls out of the Sunday Times or a small voucher that comes with your online delivery. From a marketing channel perspective, these are all inserts. So it’s a third party of a package that’s been paid for requested and they are selling space to target their customers.

AV: Yeah, but I guess the bigger the insert is, probably the more expensive it’s going to end up being.

IM: Exactly. Exactly. And that’s two clear costs that we have. When you’re working out your marketing inserts, it’s your media cost. And also your print costs, you always have to remember these two things.

AV: And that’s something I completely didn’t understand when I first did inserts. Because I thought the quote for the media was all I was going to have to pay and then got a bill for roughly the same amount again.

IM: Yeah, absolutely. You can learn as you go along. It’s important from marketing perspective as well, that these are this is really about direct response as well. It’s not so much about brand building. It’s very much sales activation, and it’s under the umbrella of direct response. It’s a direct marketing function.

AV: Yeah. So basically, it was called an insert because it was a leaflet that was inserted into something then, I guess.

IM: Absolutely.

AV: And something I did hear is that you know, the one thing with 100% open rate is the box that you send the goods out in so you are at least guaranteed if it’s in the box, that at least the box has been opened.

IM: Absolutely.

AV: Okay. So I love the idea. How would I go about buying them?

IM: Right. That’s a good question. So strictly speaking, there’s nothing to stop you going directly to any newspaper or magazine, or any third party phoning up their media department and asking to make a booking. A lot of magazines and journals will have their own advertising sales team. But I think if your listeners are looking for tips, the more typical way is to get advice and book through a media planner, your standard advertising media planner will be able to help you out with that. Anyone who buys sort of any advertising for you, it may be that they outsource it to more dedicated person or dedicated agency. So it’s definitely worth having a bit of online research to find out who the channel specialists are. But there’s a few reasons why I like to go through an agency one, they will have specialist knowledge, they’re also gonna have greater purchasing power. So they might be booking lots and lots of inserts with the same media. So you’ll be able to piggyback on that even though you’re going to pay them a commission. And, and they can analyze your results and help you find new sources of customers. And I think also importantly, is the takeaway a lot of the you know, the rather stressful work of logistics of getting the emails booked and delivered can be quite a headache when you do it yourself and let’s you get on with running the business.

AV: Yeah, I completely agree because you really do not want to get involved in arranging for printers to deliver something by a specific deadline and then the printer is late and before you know you’ve been billed for the insert but you’re not actually able to send them out. So definitely pay that extra few percent to have somebody else take that hassle away. So we obviously just dive in on the analysis of inserts, obviously, as the CEO of Machine Labs, I will say that the ideal product for analyzing the performance of your inserts as of course, Machine Labs, you don’t need a media buyer for that.

IM: Of course.

AV: But, yes. Okay, so we’ve got, I suppose the other big component then, after having arranged media, and and again, on that media buyer thing. I mean, when I’ve seen the options, I think the last time I asked a media buyer for full options, I think, was something like 200 or 300, product dispatch options with different retailers, and many hundreds of press options. And there was still one or two statement inserts, for the odd business that’s still sending out paper statements to people, you know, credit cards or store cards, but I think I do think that statement side is probably more or less drying up now isn’t it?

IM: Yeah, I think there is so much available with product dispatch now. Because as we’ve seen this big, almost dump of new customers have come onto the market. And it starts, the actual channel starts to grow itself. Because the more people that you can recruit online from things like inserts, the bigger the market comes so more people get used to it. And now we’re seeing much greater ability, availability in product dispatch.

AV: Although the one complaint I think I certainly had about product dispatch was in the days where you could put inserts in Amazon product dispatch there was just millions and millions of wonderful volume there but of course, sadly, Amazon have decided that’s too good to sell and are now using their product dispatch volume themselves. Although I think if it’s a marketplace seller on Amazon, you might well be able to buy their volume if they’re actually dispatching it themselves.

IM: I just completed a test with Amazon and absolutely nailed a great control just before they closed it. So it’s a bit of a heartbreaker that one when they closed it down.

AV: Cool. So again, I’m sold on inserts, I know how to buy them. So what would be a good offer to put in my insert?

IM: Right. That’s an that’s an excellent question. You’ve probably got another hour for that. But I’ll try to be quick. So just remembering a tactical, everything links its way ultimately back to what you know our objectives are. So a good offer, we always have to remember that links in, so it might be that we want to, say, recruit 1000 new customers as cost effectively as possible. So I might decide I want to get them as cheaply as possible. So I discount heavily to recruit the customers, I kind of, well, what’s to lose type of offer, 80% discount, massively increase my database. Well, the problem with that, and the mistakes I’ve made before is that often too aggressive an offer, you can recruit the wrong type of customer, or rather, customers who only want that first order, but don’t see any value in subsequent orders. And so in times like this, it’s important to really remember or measure that retention value of the customer going forward. So you need to get that knowledge. So a good offer is an offer that recruits the right type of customer, but within what we call an allowable marketing cost framework. So to get there, you have to test.

AV: Yeah, I think it is worth remembering there are these three variables isn’t there, you’ve got the cost of acquiring a customer, in terms of the marketing cost, you’ve got the discount, and then you’ve got the quality of the customer, which I guess you’d measure by the lifetime value of the customer, it is one of these, you know, choose any two that you want to maximize. Okay, so we’ve thought through our offer, I mean, what are your thoughts on actually the graphic design or the design of the insert?

IM: It’s a question that I’m asked quite a lot. And I always have to remind people that well, I am not a designer so these are only tips. So if you look at all the different types of marketing messages that we can have one end of the spectrum, you might have brand advertising in a cinema, where the consumer is sitting comfortably in a dark room, staring straight at the screen. I think it’s safe to say that inserts are the other end of the spectrum. This is real kind of selling. This is sales activation. And one of the things I think we’ve discussed before Andrew that this is about selling, but selling quickly, it’s very much a sprinter of a media channel. So you have to, think that, that insert in the following way, think about it in the following way. As soon as it’s discovered, it’s on route to the bin. So you probably have 30 seconds to get the consumer’s attention before you’ve lost them. So there’s a couple of things you need to be, get right away. So in that design very, very quickly, you have to see what is it that your company does? What are its products and services? And is it clothing, is it food or is it beer? And then very, very quickly, what is the offer, so you really, really need to get that across and you need to get you almost need to push back on your designer’s idea to make something look beautiful. We want it to look great as well and be on brand, but it has to sell. So from a design point of view I like and we know the AIDA model, which is an advertising and selling idea, which is, it’s a simple higher hierarchy of effects model, which implies that consumers go through a series of stages. So you start off with attention, that’s the A, then interest, then desire, then action. And we can apply that to almost any selling process. But very, very importantly, we’ve got another process in our selling and design, which is conviction. So we need to give guarantees and courts and TrustPilot scores and social proof. But things that we need to do within the design are things like pull-out buttons, so any sort of features and benefits, they have to be pulled out and shown in corner flashes and buttons, making sure that people, we know that people are going to read these first before they read the body copy. And that has to be part, it’s integral to the design of inserts.

AV: Great. And I think there’s a couple things that again, I’ve sort of noticed, I mean, one is with an insert, you’re printing, obviously both sides of the leaflet, you don’t actually know which side the consumer will see first, and they’ll probably make the decision on whether to read it further. They’re not going to turn it over and look at both sides. So you probably can’t really think of it as a front or a back. It is kind of two fronts. sides, both sides have kind of got to do the job.

IM: Yeah, it’s making sure your designer knows. That’s a great point, Andrew, it’s got to sell on both sides.

AV: And another classic one that I see quite a lot of is making the insert look like money. So it kind of almost looks like a check or it looks like a voucher. But it’s kind of been almost designed to almost look like a pound note or something. The cash value, you know, this is 30 pounds. And it’s obviously just doing everything possible. Because psychologically taking, you know, 30 pound, 30 dollar voucher and throwing it away, it’s quite a hard thing to do.

IM: Yeah, I mean, I don’t think either of us have actually been involved in wine businesses, but I’ve seen them try to test that voucher so many times. But ultimately, they come back to that great sort of 60 pound voucher or 30 pound voucher, really emotive really all the right touch points, here’s some cash, off you go.

AV: So what I will do, actually, because I love your original Donald Russell insert, I will link to that in the episode description. And I will show both sides of that insert along with a few of my notes on why you did such an amazing job on it.

IM: Obviously, always a collaborative thing. But as you know that piece was tested and tested and tested to get there. So good.

AV: Fantastic. Okay, so I just wanted to ask you about your experience of swapping. [Laughter.] Sorry that sounded different in my head. Could you tell us about how insert swapping works?

IM: Yeah, so it’s just a great idea. And just always remember that your customer will buy, or a typical online or direct to consumer customer will buy from lots and lots of different companies. So there’s a real opportunity to be collaborative with like minded businesses that have similar profiles of customers that like, you know, your products and other people’s. So what we tend to do, is we started off by through a process of collaboration saying look we’ve got a media cost here, why don’t we take the media cost out. If you put out 10,000 of my inserts, I’ll put out 10,000 of your inserts. So what you get, is you get these super cheap customers that come in, that are actually often of great value, because all you’ve got is a print cost. And as your business becomes bigger, you have more space to swap. Se almost, we had a sort of hierarchy within our, our insert channels or insert media, swaps were always at the top, because we found that that was the lowest cost of recruitment. But the type of people that wanted to swap with us had customers that were really similar. So classic with food would be wine. So if you buy food online, you’re very, very likely to buy wine online. So that sort of stuff. And whenever you can, you can hand that insert over, you can also or you can swap that insert, you could also take up two, we think up to six inserts in your own product dispatch. So think about, if you’re dispatching 10,000 a month, that gives you, you know, 60,000 potential swaps that you can do, and it’s the first thing you should really do. It’s a really, really important thing to do. So swapping with like minded businesses 100%.

AV: Yeah. And actually, one thing that massively improves the swap, or actually, indeed, improves, really any insert, I guess, is if you can get a special offer for customers of, and then the logo of you know, whoever that company is, because you’re then almost getting that implicit recommendation of who is that they’ve bought from. But yeah, I mean, the swaps, I think when I mean, I think I’ve seen recruiting a customer for I don’t know, one pound to two pounds, I think, from swaps. And then if you then look at the average cost of insert recruitment, and you’ve got, you know, thousands coming in at maybe one pound, two pound level that can really drop that average way down.

IM: Absolutely.

AV: So I know that your real passion, which I’ve heard you talk about a lot is testing.

IM: Uh huh. Right.

AV: I know, I know you love a good test.

IM: I love a good test. Well, we all love a good test. I think the first thing to remember that testing is part of your marketing plan. So really, make sure it’s part of your tactical armory, it should always relate back to your objectives. So it’s not just testing for testing’s sake. So I’ll give you a couple of examples. So we’ve got a business or situation analysis showed that last year, we recruited 10,000 customers at 20 pound cost of acquisition. However, this year, we think we can do better. So one objective might be, we’re gonna get 10,000 customers at £10 CACS the same amount of customers, at half the cost. Or we could have another objective, which might be, we want to get 50,000 customers at say £25 pound CAC, we want to go for a growth strategy. So whenever we look at these objectives, we have to see at that point that testing is part of our tactical plan, you’re not going to get it right, right away. So you have to think about a sort of test and learn cyclical process that you use to meet these objectives. So the first stage is always what I call just establishing a control. You know, this isn’t of course, this is the same for same testing process for every marketing, communication, not just inserts, but the thing about inserts is really easy to do. So I then divide each marketing communication into six variables I talk about and they would be typically the product that you’re selling, the offer that you’re selling, is it 25% off, the audience who are what’s the media that’s being sold to, a creative message, the best steaks you’ve ever tasted, the best wine you’ve ever tasted. The format, in this case, definitely inserts. And then the timing, because we know that we have, particularly in seasonal businesses, we know there’s a change in response depending on the time. So the great thing about inserts is, if it’s an off the page, you might have an opportunity to do maybe just an A/B test. But in an insert you could do maybe, let’s say if you had 100,000, you could do five 20,000 tests. So it’s a really, really good way to test in any sort of customer recruitment. But using those six variables, product, offer, audience, creative message, format and timing. And crucially, as all scientists will know, that you can only test one variable at a time.

AV: Yeah. So every time you do a test, the control should be present in that test.

IM: Absolutely. Yeah.

AV: And I think that is actually one of the rules I see people breaking on a very regular basis. Because then of course, they just got no idea what’s what’s actually happening.

IM: Yeah, I think testing is important, it’s not doing lots of stuff and that isn’t testing. And it’s really, you’d be amazed at the sort of the beauty of it when you sit with a, you know, a really tough challenge with one of your objectives, and just calmly use that single variable testing, to test yourself out of sort of choppy waters. It’s a great way of doing it, you just need patience. And you have to follow that process.

AV: And I would say, in very general terms, and this just could be my experience, but I would say of the things you’ve mentioned, generally offer, and media were probably the two biggest things when I’ve tested them that have really moved the dial.

IM: Yeah, definitely. They’re the places you go looking first, I would also say as well, sometimes you’re tempted into testing everything, but you really want to test the big things. So I’m glad you brought that up, offer, an audience, offer and media, they’re right at the top. And that’s where you get your big wins.

AV: Yeah. And again, I’m like you, I am a big fan of doing my testing in inserts, and then taking the lessons and applying it to off the page, TV. And you know, a lot of these other channels, because generally, if you’ve learnt a lesson in inserts it’s probably gonna apply in other channels.

IM: Absolutely. And that’s why I think so many people you know, even in the sort of in the digital world, inserts are still loved, it’s just as you’ve said, the rules are the same for other channels. So it works really well as a testing platform for all recruitment.

AV: Thank you very much Ian that was absolutely fascinating. And again, as ever, I certainly learned a lot. So I always like to end just briefly talking about Machine Labs. One of the things I thought was really missing in ecommerce marketing software, is offline marketing. And offline marketing is absolutely huge. And because of the huge price inflation we’re seeing, with everyone piling into Google and Facebook, I think that doing offline is something that can allow you to create a lot of customers at a great price. One of the features Machine Labs has, which I believe is unique, I have not seen anyone else doing it, is helping you with that offline marketing, including inserts. So if you’re wanting to use inserts or offline marketing on Shopify, please do install Machine Labs from the App Store. So thank you very much again, Ian and I look forward to seeing you all next week for another episode of the Joy of Marketing.

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