Monthly Archives: July 2011
Advertising can be expensive, when it doesn’t work well.
However, when a campaign is successful, it won’t cost you money, it will make you money!
How can we improve the results of your next postcard mailing? By generating a bigger response. Well, it’s the message (or special offer) that makes people respond, right? So consider “Kicking It Up A Notch”!
Here are two examples:
A Pizza Shop Drops a Mailing of 5000 Postcards with the Usual Coupons
- ESTIMATED RESPONSE: 3% – Or about 150 coupons redeemed
- COST PER RESPONSE: Cost of the mailing $1798 divided by 150 = $11.98
- REVENUE GENERATED: Average sale $20 x 150 responses = $3000 – not too bad
What if we ”Kick It Up A Notch” and make a really remarkable offer:
“Try Our Pizza – Get a FREE Large Cheese Pizza, No Strings Attached”!
- ESTIMATED RESPONSE: An offer like that could triple the response rate to 9% or 450 coupons
- COST PER RESPONSE: Cost of the mailing $1798 divided by 450 = $3.99 (Much Lower!)
- ADJUSTED COST PER RESPONSE: Add in the cost of the “FREE” Pizza at $3.50 + $3.99 = $7.49
- REVENUE GENERATED: With a FREE Pizza, the average sale will drop to about $8 X 450 = $3600
But don’t evaluate the success of the mailing by only the revenue generated from the coupons.
Let’s say of all coupons redeemed about 30% were new customers.
- NEW CUSTOMERS GENERATED with the Usual Coupon Offers: 30% of 150 = 45 New Customers
- NEW CUSTOMERS GENERATED with the FREE Pizza Offer: 30% of 450 = 135 New Customers
Consider the “Value Of A New Customer” over the next year (or longer).
- How many times will he purchase over the next year?
- How much will he spend over the next year?
- How many friends or family members will he tell about your Pizza?
Maintaining regular customers by rewarding them with special offers and at the same time generating new customers… that is how to Grow Your Business!
In both examples, enough revenue was generated to justify the cost of the mailing without even taking into consideration the potential of future business from new customers.
The usual coupons or a very special offer? You decide how aggressive you want to be.