Charles C Harmon Co
Helping
Small Business Succeed Online
775-832-2528
888-822-3410 toll free
Direct Mail Marketing, the Small Business Advertising Choice That's
Here to Stay
Direct mail marketing is not
going anywhere.
There
have been people predicting that email marketing is going to go away
because of all the spam issues.
I don't happen to think that's going to happen,
but we all have to cover all our bases so that in the event one part
of our marketing strategy fails, the others will keep us afloat.
Have you ever wondered why the government is so quick to jump on the
bandwagon and pass laws to restrict spam and telemarketing but no
law like that for junk mail?
I'll answer that question with a question..."Is
the government making money off of email or telemarketing?
If you answered "no" you might just be onto why direct mail
marketing isn't in any danger of being restricted or banned.
As long as the government is selling stamps and direct mail requires
paying postage, you won't have to worry.
I'm not sure that soliciting new clients by
direct mail will work for everyone.
I do know that it works for most businesses in
one form or another.
A good mail piece will return an average of 1
1/2% to 2% response.
If you mail 1,000 letters and keep costs down,
that's still a minimum of $ .50 to $.60 per letter mailed via first
class postage.
That means you are going to spend from $500 to
$600 minimum for 1,000 letters mailed and you should get 15 people
to buy from you.
If you only make $10 - $15 per year from each
of your customers, on average, it's going to take a long time to
recapture your costs and make a profit.
You need to know the acquisition cost of a new
customer and you get that by dividing your advertising cost by the
number of new clients you netted with those dollars.
So the formula we just covered would be 15
clients from $600 ad cost = $40 per new customer acquisition cost.
It cost you $40 to get the customer so it doesn't look like it would
be a profitable marketing venue for your business model.
Naturally, the bigger the ticket item you are
selling, the less numbers it takes to turn a profit.
Next, you need to consider the lifetime value
of a customer.
If you sell a product that only makes $15 per
sale in profit but your average customer buys 5 times a year for 5
years you can still make it work, assuming you have the capital
required to let the numbers work themselves out.
So, if it cost you $40 to do the direct mail
marketing campaign and your customer bought as above, you would be
in profit at the third sale.
After that you would be cutting the cost per
sale, for this kind of advertising, each time they bought.
You obtained a customer for $40 whose lifetime
value to your business is $375.
The nice thing about direct mail is that it's
relatively easy to test and track. This will tell you which
mailing piece is delivering the highest number of paying customers
for the marketing dollar.
If you'd like more information on how a direct
mail marketing campaign might work for your business, call me,
775-832-2528, my personal phone and I'll answer "Hello, this is
Chuck."
Let me know you're interested in chatting about
some marketing ideas for your business and I'll throw out some
things for you to consider.
Call me now, while you're thinking about it.
775-832-2528
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