at Least in This 3-Part Series…
by Stacy Berver
DM360, Inc. (Stacy@DM360Inc.com)
Honestly, I didn’t want to title this article with what it’s really about, for fear of you running in the other direction. But really, do you have three minutes to spare? If so, then read on about…
Accurate Reporting & Detailed Analysis
Sounds boring (insert snoring sound here), doesn’t it? But, what if I told you that you could ruin your business if you’re not using some of the strategies I’ll suggest?
Or that in combination, these strategies could allow you to mail smarter, mail more and ultimately acquire more customers?
Before You Begin, Know the End
It’s like the chicken and the egg – most businesses who sell through direct marketing spend a great deal of time determining a process for marketing to their customers and just as importantly, designing a product line to ensure multiple purchases.
In a mature DM business, I know far more about my products and my customers than simply what and how many I might sell in my next campaign. I’m aware of the lifetime value (LTV) of each customer and have designed a strategy to acquire customers at a predefined margin to benefit from LTV (see Part 2 of this series for more information).
I also have an arsenal of products I might sell to them, beginning with “feeder” or low priced product and slowly escalating to high-end, high-priced VIP services. The progression from one price point to the next typically transpires with well executed timing through various marketing channels. Depending on my audience, I might (for example) utilize direct mail to acquire a name, but never “mail” in the traditional sense to that customer again – all of my follow-up marketing could be through email.
Success or failure? It’s all in how you measure.
Marketers like to create fancy names for measurement tools – moving from one company to the next you’ll find some similarities and some things that seem like differences, but are really the same tools with varying names. For the purposes of this article, we’re going to discuss four measurements:
ü ROI = Return on Investment or Breakeven. Gross revenue divided by costs, then multiplied by 100.
ü CPA = Cost per Acquisition. Cost divided by number of names acquired.
ü Response % = response rate. Number of names mailed to divided by number of names acquired, then multiplied by 100.
ü Gross $/Name = Dollars per name. Gross revenue divided by number of names mailed to.
As you can see the first two indicators above account for cost and the second two do not. In my experience, it’s wise to evaluate success or failure of your campaign using a combination of these indicators.
If you always evaluate using ROI, and you’ve tested a package that’s more costly than your control, you may discount it even if it pulls a higher response %. If your costs will come down as your mail volume increases, you could be making a short-sighted decision.
Conversely if you always use response % to make decisions, you’re overlooking the power of your costs to impact the process…
I Spent How Much?!?
The example below very clearly illustrates the power of controlling your costs in every campaign. A marketer making decisions on a campaign where they actually spent $0.09 per piece more than anticipated, will make more aggressive decisions than they should.
This spells trouble for the current campaign AND the future LTV.
How Do I Put All of This Together?
If you’re lucky, you have reporting tools within your database that tell you how a campaign is performing using a combination of the indicators we’ve reviewed.
But more than likely your system cannot:
ü Project cost fluctuations.
ü Predict response rate changes based on seasonality, creative changes or other factors.
ü Add LTV calculations into ROI analysis.
In these cases, savvy marketers create versions of reporting themselves. In my previous position we often downloaded our system generated reports into Excel and manipulated data based on various scenarios.
For this to work, you must know that your reporting is accurate from the start – accurate costs and detail on what you mailed and how many. You must also be savvy enough with the mailing data and understanding of the calculations to ensure that your adaptation is generating valid assumptions.
Don’t Underestimate Accuracy & Analysis
Have you ever heard someone say that most people spend 80% of their time doing 20% of their job? They rush through the important parts of the job because they’ve invested so much time on the other parts.
Marketers are no exception to this rule.
Don’t get stuck - planning without the right information or making decisions based on incomplete or bad data – campaign planning is a lengthy process that requires diligence and review every step of the way.
_____________________________________________________________
Stacy Berver is the president of DM360° Inc. After thirteen years as an international mailer she recently began DM360° (www.dm360inc.com), offering worldwide expansion solutions to mailers looking to take their businesses globally. As the president of International Marketing Solutions LLC, a division of Agora Inc., Stacy was responsible for the international marketing and distribution of over fifty newsletters, books and products. During her time at Agora Stacy spoke regularly at industry events as an expert on international direct marketing. She’s an active DMA International Council member and serves on the Council’s Operating Committee. She was previously a member of the Target Marketing Editorial Advisory Board. Stacy holds a BA in Communications with a specialization in Journalism from Loyola College in Baltimore, MD. She currently lives in Elkridge, Maryland with her husband, two sons and two dogs.