#84 Bob Hacker: Direct Marketing Wizard

Issue #84 — February 18, 2020

http://dennyhatch.blogspot.com/2020/02/85-bob-hacker-direct-marketing-wizard.html

Posted by Denny Hatch

Bob Hacker: Direct Marketing Wizard
Who Had the Best Job in the World!

As editor of the cranky newsletter WHO’S MAILING WHAT!—and later, Target Marketing Magazine—invitations poured in from local direct marketing clubs, conferences and Expos. They were desperate for out-of-town speakers.

      Ever on the hunt for contacts, subscribers, freelance clients, story ideas and—above all, advertisers—I readily agreed. I was on the road a lot.

     It was at the Seattle Direct Marketing Club meeting many years ago that I first encountered the big, bombastic bearded dude—now retired—shown above.

     Bob Hacker, founder of the HackerAgency, was a mesmerizing speaker. He knew his stuff and made sure everyone in the place knew that he knew his stuff. His long suit: data-driven campaigns based on proprietary, highly-complex testing techniques with one ultimate goal: coming up with a satisfactory ROI and constant refinements until business became hugely profitable cash cows.

Hacker was also a rara avis who had the cojones to fire clients. Some of his reasons for doing so:

   

• Abusing my staff.  You start yelling and swearing at my people you get one warning. If it happens again you’re done.

  • Not paying their bills on time. We had 30 day terms.  Clients expected us to drop mail on time. We expect them to pay on time. 

• A pattern of not allowing us to do our job.  As an aside, we only proposed things we knew would work since we’d already tested these ideas time and time again.  Why would somebody with no or little experience not follow our lead? When the client dictates dumb ideas, you’re gonna get fired anyway, so let’s get it over with.

 

 In short, the title of Hacker's book sums up his business philosophy:

Hacker on the Speaking Circuit

    During that period, I was on the program committee for Direct Marketing Days New York—the very best industry expo then and better than anything since. I told the directors about this dragon killer I met in Seattle who deserved more exposure than could be had in the boonies of America’s 129^th city in area and 18^th in population.

    He came. He saw. He conquered.

   Within a couple of years Hacker became a sought-after speaker on direct marketing show circuit, where he kept audiences rapt with his rapid fire delivery and memorable bon mots. He filled the largest auditoriums with his slide show and take-no-prisoners approach.

     At the end of his presentation he would invite the audience to give him a business card and receive his latest free special report. 

     Whereupon he always left the room with pockets stuffed with business cards (a.k.a. client prospects). 

A Sampling...

• If you outsource, one of the most important decisions you’ll make is hiring the right resources to help you. General agencies and design firms can’t do direct marketing when return on investment (ROI) is the prime criterion for success. ROI means by-the-numbers program development, measurement and control.

• Truth be told, general agencies and design firms don’t want to be measured objectively—they prefer subjective judgment. And they’re almost proud of their organizational anarchy, which works OK in advertising creative development, but can kill you in direct marketing program development and management.

• Unless an agency thrives on tight control and objective measurement, it shouldn’t play the direct marketing game at all. Most general agencies we run into will tell their clients, “Yeah, we do direct,” even if they don’t know a good offer from a box of rocks.

• Advertising people hate being held accountable for sales. Good direct marketing people insist on it.

• Direct marketing is copy-centric. Advertising is more often driven by design.

• I was once showing a piece of work to a brand new client. “Gawd, that thing is ugly,” said the client.

     “Thank you.” I said, “We had to send it back to the design team three times to make it ugly enough to hit the response rate targets. Thanks for noticing—most clients miss it—I’ll thank the team for you.”

     He was flabbergasted, to say the least. But he also approved the work.

     Was the program ugly enough? You bet. We had to generate 3.3 percent to hit target. The program did 5.4 percent. From then on, he demanded that every program had to be “at least as ugly” as the first one we did.”

• It’s amazing how good numbers can change people’s attitudes about good vs. bad creative.

     

Memorandum

From:  Robert Hacker

To:      Denny Hatch

Date:  Feb. 11 at 8:38 PM

Here's another one. You could make a

Harvard Business School case out of this. 

It was back during the dotcom craze.  I got a call one day from a new startup that was selling jewelry over the internet. They wanted to spend $500,000 in the next quarter on direct mail and wanted our help.  The objective was to drive traffic to the website and make sales with a marketing cost-per-sale no higher than 21%. 

     I set a meeting, got a lot more information, and went back to the office to do some research.  About a week later, I sent the prospect a four page memo.  In it, I respectfully declined the work.  Here why:

1. When we reviewed data sources, we could find enough highly targeted prospects to test, but not enough to give us rollout potential.  If there’s no rollout potential, why test?

2. We showed her lots of math.  When we worked backward from the cost-per-sale target and ran models based on current internal conversion rates the cost-per-click couldn’t be more than $3.50.  To hit that target, we’d need to pull an initial response rate of over 14%.

3. Given the data, product and price point of those products we didn’t think that we, or anybody else, could hit a 14% or higher response rate.   In addition, refer back to ^#1 above

4. So we respectfully declined the work and recommend that the money be reallocated.

     I emailed the memo at 10:31. My phone was ringing at 10:33. 

     “What do you mean you won’t do the program?”

     “I think the memo says it all," I said. “We think it’s too risky and not a good use of your money.”

     “But you don’t understand,” she said, “The Venture Capitalists are telling us that we HAVE to spend the $500,000 next quarter.” 

     (An aside here: VC’s are some of the worst marketers I ever worked with, right up there with lawyers and accountants.)

     “It’s too risky,” I told her.

     “We have to do it.”

     “Show them this memo and then ask them again.”

    “I can’t. They’ll think I’m weak.”

     We both took a breath.  “What if I can show you how to do direct mail next quarter AND reduce risk at the same time?

     “Do it.”

     So I wrote a recommendation.  In essence it reiterated all the risk analysis of the first document and concluded that because the risk was high we should test first.  I proposed testing an 18 way split test and a $100,000 budget.  Then, after we read the results we could rollout, re-test or reallocate the funds.

     I sent the recommendation over.  Got an immediate callback.  “MAYBE YOU DIDN’T HEAR ME, WE HAVE TO SPEND ALL $500,000 NEXT QUARTER, RISK BE DAMNED!”

     I can take a hint, we did the test.  To reduce risk we mailed 6 different packages with multiple offer splits for each package, thus testing 18 offer/creative executions.  They all bombed.  We all got fired.  

     Quelle surprise!

     The big lesson here is, if you have a highly experienced agency or vendor that tells you “don’t do it." don’t.

P.S.  After our client got fired, her boss waited about three weeks and then called to chew me out.  I asked him if he had ever read our initial analyses and recommendations.  He said “no”.  I told him to cool his jets and I’d email them right over.  I did.  I got a call back.  “Why didn’t she send these on to me and the board?”

     “You’d have to ask her, but she sounded scared to death of you and your board.”

Takeaways to Consider

• Check out Issue #23: “DOWN-‘N’-DIRTY, QUICK-‘N’-CHEAP: Bob Hacker’s Revolutionary New Testing Technique.”

• "Ugly works!" —Bob Hacker

• Why in the subtitle of this post do I suggest Bob Hacker had the “best job in the world?”

• It’s an old joke. A crusading journalist interviewed a prisoner in the county jail to see if he were being mistreated.

     The jailbird said he loved it. He had the best job in the world!

     “Describe it.”

     “They was like terrible floods last month and the sewage plant overflowed into the streets. We was ordered to make up a bucket brigade. I was the last guy, up to my waist in raw sewage filling my bucket dumping into the bucket of the next guy in line. He passed it on to the next guy and on to the next guy all the way to the first guy who emptied his bucket into the garbage truck.

     “You call that the best job in the world?”

     “Oh, yeah!”

     “How can you call that the best job in the world?”
     “Don’t you get, bro? I don’t take no shit from nobody!”

 

 About Bob Hacker

Over the years, clients such as IBM, Hilton, Hyatt, Symantec, AT&T Wireless, GNA, Airborne Express, Microsoft, Expedia, Oracle, Washington Mutual, and more, continued to help built the company.

     He and his wife and COO, Jo Anne, sold The Hacker Group to Foote, Cone & Belding (FCB) in 1999 and they continued to work for the new ownership for another three years, before retiring from the agency in 2002. After the second glass of wine, he’ll tell you about the four things he’s most proud of during The Hacker Group era:
• The agency grew every year, so he never had to lay off staff.
• The bonus program changed a lot of lives for the better.
• Turnover was low—under 5%.
• FCB had 205 offices worldwide. With a staff of only 85 in Seattle,  The Hacker Group generated more than 20% of FCB operating profit while Bob and Jo Anne were still involved. Within FCB at that time, The Hacker Group was called “The Cash Machine.”  
     When not relaxing at his home on Bainbridge Island, Washington, Hacker can be found fly fishing off the shores of the Yucatan Peninsula, Christmas Island or British Columbia.

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