What are the first items to get cut from corporate budgets during an economic downturn?
Let’s ask one of the nation’s top business schools for the answer. According to Kellogg School of Management at Northwestern University, most firms cut travel and education, among other things. At least that was Kellogg’s experience when enrollments in its executive education program plummeted a few years ago.
Participant days, the metric by which Kellogg measures success, fell in 2003 to 50% of what they had been during the peak year of 1999. largely because executive education is “hypersensitive” to economic conditions, said Meghan Tracy, marketing manager, executive education, for Kellogg.
And that wasn’t the only problem. “At the same time, the marketing department had a huge turnover and a change in leadership,” Tracy added, speaking at the Chicago DM Days & Expo.
The first challenge faced by the new management team was to rebuild the department. Tracy was brought in along with a database manager and an electronic media manager.
That done, the unit started revamping its direct mail program. “We traditionally mailed brochures in number 10 envelopes without a cover letter, and blanketed executives everywhere without a lot of insight into who our target market was,” Tracy said.
The school redesigned all its print collateral materials so that they had a fresher look less copy. That entailed reducing the faculty bios—”a huge deal with anyone who works with professors,” Tracy laughed.
In addition, the school wrote personalized letters customized by program and target market segment. It included a call to action, and backed it up with customized applications and BREs. And it tightened up its targeting to make use of variables like SIC, size of company, revenue, geography and title.
Kellogg also studied “who the participants were, and which companies they were coming from,” Tracy said. It also wanted to know if people had attended more than one program, and to identify additional contacts within our top companies so it could “market deep.”
These changes worked wonders with a 50,000-piece mailing during the fall of 2003. The overall response rate to the house file was 2.88, compared with an industry benchmark of 2.58. The direct sales rate, or conversion, was .43%, compared with an historical rate of .10%. The return on investment was 34:1. However, the latter might have been inflated because “we focused on house file names for this campaign,” Tracy said.
But the changes didn’t stop with direct mail. Kellogg also signed on a new ad agency—Leo Burnett—and tried to get away from traditional school advertising that shows “smiling faces and ivy covered buildings,” Tracy continued. “Kellogg’s also known as a good marketing school, one of the best, and we felt that our advertising needed to stand up to that.”
One ad showed empty office cubicles with phones bunched up on one shelf. It was headlined “The Before or the After?” The copy in the purple box at the bottom explained it all. “Merger Week: Creative value through strategic acquisitions and alliances.”
“The payoff is in the purple box,” Tracy said. “It’s the name of one of our programs that addresses the issues raised in the headline.”
Another headline asked: “Motive or Mandate?” The payoff: “Energizing people for performance.”
Yet another asked: “Gold Mine? Or Land Mine?” It showed a picture of an annual report. The offering in the purpose box: “Forensic accounting for credit & equity analysts.”
The tag line said it all: “A program where the business world’s most courageous minds tackle its most challenging issues.”
The campaign was launched last May with half-page ads in the Wall Street Journal, Financial Times, BusinessWeek and Harvard Business Review. Each ad included a URL and a telephone number. Kellogg also changed its Web site to allow multiple brochure requests.
“On a tactical level, we hadn’t allowed people to request more than one brochure when they came to our Web site,” Tracy said.
The results? The effort generated a 52% increase in number of unique brochure requesters. In May, the campaign drew 2,844 hits to the Web site, 5,605 in June, 1,230 in July and 5,376 in August. In addition, it increased the overall traffic to site by about 16%.
The campaign also boosted the number of participants by 2%, and the number of program days by 3%. The only metric that fell off was the number of participant days, but that reflected a turn away from three- and four-week programs.
Since then, Kellogg has completed a “significant database cleanup project,” and has tested numerous rental files. It has also tweaked its creative, and added online sites to the BueinssWeek.com site it had tried in 2003. And it mailed 120,000 direct mail pieces, largely to rental lists, in the fall of 2004.
That mailing drew a response rate of 12.83% (to the house file) and a conversion of .41%. The ROI for the whole effort clocked in at 12.1. Tracy attributed the drop in ROI from the prior mailing to the cost of the additional list rentals.
And the overall campaign results? The number of participants increased by 16%, and the number of program days by 2% and the number of participant days by 20%. The school has also added new subject areas and a one-day program.
What’s next? According to Tracy, Kellogg hopes to put the old 80/20 rule to work.
“The top 100 companies supporting Kellogg Executive Education represent 25% of all enrollments and 21% of all brochure requesters,” she said. “We have to nurture relationships with those companies.”
Kellogg also wants to “turn our product and pricing to improve conversion,” she said.
Is Tracy pleased? While she acknowledges that “it’s still an uncertain market,” she adds: “These are good signs for us.”
