New Year's Recap: 19 Direct Marketing, Call-Center and Social Media Tips of 2009, Part 2
Continuing my review of the columns that appeared in this space in 2009, this week I present 12 more tips to help your business optimize profits this year. Direct mail marketing and analysis, call centers, e-commerce websites, and customer testimonials are all examined.
(For part 1, and tips one through seven dealing with social media, lead generation and Twitter, click here.)
Direct Mail Marketing and Analysis
8. Concentrate 40 percent of your efforts on lists. Spend an additional 40 percent on your offer. Tie it all together by allocating 20 percent to creative execution.
9. Calculating cost per acquisition (CPA) by incorporating catalog costs helps you understand the relationship between sales demand and the costs required to stimulate that demand. Many of the most successful catalog marketers use CPA as a regular way of doing business. CPA can do a better job of evaluating the true performance of customer results vs. prospecting results, which have different cost structures.
You can even better evaluate the use of co-op databases, which have different results and costs. You'd expect customers to achieve positive CPAs — i.e., profit — and prospects to generate negative or true CPAs. The formula for calculating CPA is as follows: (net demand - cost of goods - mailing costs) / number of orders.
10. I’m also nuts about other financial analyses, such as lifetime value, squinch (square inch for measuring catalog space usage), cash flow, balance sheets, etc. To this day, I'm amazed at how many people I work with, smart people, who still want to practice direct marketing by the seat of their pants.
Marketing just doesn’t make much sense without financial understanding. Too many direct marketing companies think they're brands. And too many direct marketers think they "know" what their customers want and, hence, perform no analysis.