How do You Generate New Customers? Do the Math First! Part 2
* Conversion rates — the ratio of leads to orders.
* The return on investment (ROI) that new customers generate. How slowly or quickly do those new customers pay back their media costs? The same as a typical ROI payback analysis, including how many catalogs are mailed to this customer?
* The lifetime value that customer generates, starting with single- to multibuyer ratios. Do you get a lower or higher percentage of second orders from this two-step program over other programs? Over list rentals?
In the basic two-step lead generation model, all expenses are factored into the P/L. The print/media costs are added to catalog mailing expenses to get a true read of customer acquisition costs.
Next week, in the third part of this series, I’ll dive into each media type, discussing some of their strengths and weaknesses. In future parts, I’ll examine how to construct your creative approach and execution, and the strategy/psychology behind how and when the creative is built.
If you have any questions on the math, e-mail me at firstname.lastname@example.org or post a question/comment below.
Speak to you next week.
Jim Gilbert is president of Gilbert Direct Marketing Inc., a full-service catalog and direct marketing agency. His LinkedIn profile can be viewed at www.linkedin.com/in/jimwgilbert or you can post a comment here or e-mail him at email@example.com.
Jim Gilbert has had a storied career in direct and digital marketing resulting in a burning desire to tell stories that educate, inform, and inspire marketers to new heights of success.
After years of marketing consulting, Jim decided it was time to “put his money where his mouth was" and build his own e-commerce company, Premo Natural Products, with its flagship product, Premo Guard Bed Bug & Mite Sprays. Premo in its second year is poised to eclipse 100 percent growth.
Jim has been writing for Target Marketing Group since 2006, first on the pages of Catalog Success Magazine, then as the first blogger for its online division. Jim continues to write for Total Retail.
Along the way, Jim has led the Florida Direct Marketing Association as their Marketing Chair and then three-term President, been an Adjunct Professor of Direct and Digital marketing for Miami International University, and created a lecture series, “The 9 Immutable Laws of Social Media Marketing,” which he has presented across the country at conferences and universities.