Contributions to Profit: Plan for 2007, Part II
Last month in this column, I defined the basic psychological and behavioral groupings of prospects and customers as suspects, prospects, triers, buyers and advocates. Developing marketing plans with these groups in mind can increase your results and profitability.
This month, in the second of a three-installment series that concludes in the December issue, I’ll explore some strategies and tactics you can implement to accomplish this. For the purpose of this discussion, let’s assume that you’ve done a proper circulation plan and already know who you suspect will become your customers. Your suspects have become prospects by way of list research, and you’re ready to develop powerful promotions to move them up the food chain.
1. Convert prospects to triers using promotions. Promotions are a powerful way to acquire customers and offer something beyond merchandise to stimulate the first sale — and beyond.
Before you mail any new promotion or offer to acquire customers, always do your math up front. Ask, “What are the potential profit and loss ramifications of my offer?” Then calculate best- and worst-case scenarios in a spreadsheet. Look carefully at your offer’s initial return on investment. Just as important, project out these scenarios to the downstream lifetime value of your initial promotions.
Also, consider your brand and its image in your promotion and offer development. Ask yourself, “Do I want to be a promotionally driven company? How will my prospects interpret that?”
In the catalog business, merchandise often is the offer, especially in higher-end catalogs. The more promotionally driven you are on the front end, the more you’ll need to be on the back end. Customers who initially look for a promotion to try your products, could be looking for additional stimulation in the future. So your single to multibuyer conversion ratios need to be monitored carefully.
Jim Gilbert has been creating direct marketing programs that drive superior ROI for almost 30 years. Fluent in consumer or B-to-B, creative, operations, and analytics, he marries the strategic and tactical sides of direct and social media marketing in a seamless fashion that gets results. He's CEO of a multidiscipline direct marketing agency, Gilbert Direct Marketing, Inc., which focuses on direct mail, catalogs, DRTV, telemarketing, print, alternative direct marketing media and social media marketing. Jim has been involved in start-ups, expansions and turnarounds, and is an expert in helping multichannel marketers get to the "next level." He's a former adjunct professor, teaching direct marketing at Miami International University, and is President of the Board of Directors of the Florida Direct Marketing Association. Jim loves to talk direct marketing, and has done many lectures on direct and social media marketing.