Overcoming the Syndrome
By: Andrea Bell |
06.07 |
It’s that time of year again when many companies establish
budgets for the upcoming year. Late summer
to early fall, marketing executives and managers review the previous
year and current status to make projections for next year's budget.
As you review your budget to allocate dollars for marketing, you
are looking at a grand total to divvy across multiple disciplines and
channels. Like others in the market, you are looking to gain the most
return on the dollars invested in marketing your product or service.
Once your budget is established and you start to allocate dollars to
specific initiatives, I urge you to stray away from the “how
much is it gonna cost” syndrome.
Too often we get hung up on the total cost of a campaign or promotion.
So you have $10,000 to spend. Before
you jump into what that $10,000 can get you, consider your objectives
and critical success factors. Are you trying to acquire prospects,
leads or sales? Perhaps you want to generate traffic or build a database
of prospects. Once that has been defined, you can move on to what would
make your campaign or promotion a success. This is the point where
you overcome the syndrome.
Start thinking in terms of “cost per acquisition” or “cost
per lead.” This type of thinking will help you better evaluate
current and future marketing opportunities
for your company. To illustrate, let’s compare spending part
of your budget between two different
initiatives. The first is a data-driven,
highly personalized direct mail piece
to a targeted audience of 8,000. The
second is a standard buck slip insert into a co-op program with an
estimated circulation of 15,000. The total cost of the first promotion
option is $10,000. The total cost of the second promotion option is
$4,000 less at $6,000. If you succumbed to the syndrome, you would
have already signed the dotted line for the second option because,
it’s saving you $4,000
and you are reaching a larger audience
of 15,000.
| |
Promo 1 |
Promo 2 |
| Circulation |
8,000 |
15,000 |
| Est. Response |
3.40% |
0.80% |
| Leads |
272 |
120 |
| Promo Cost |
$10,000 |
$6,000 |
| Cost per Lead |
$36.76 |
$50.00 |
Take a closer look at the illustration in the table above. The total
cost per lead for the first promotion option is $36.76 compared to
$50.00 for the second promotion. Your company will be spending $13.24
LESS for each lead brought in the door. Because the first promotion
is targeted and highly personalized, we can expect a higher rate of
response compared to a standard buck slip insert.
So, by overcoming the “how much is it gonna cost” syndrome
in the illustration above, your company gained more then double the
leads for your sales team. If you needed the same amount of leads and
you succumbed to the syndrome by choosing the second promotion, you
would have spent $13,600 or $3,600 in additional cost compared to the
first promotion. Now, put this into practice for your company and overcome
the syndrome.
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