How Much Did Your Savings Cost You? (Dallas, TX)

So you saved a nickel on your direct mail program, huh? You should be proud. You saved your company a little change and you deserve your kudos. Or do you?

Here’s the time-tested and proven facts:

• Color sells better than black and white.
• Personalization improves response rates.
• Data segmentation greatly improves response rates.
• Doing all of the above increases the size of the average purchase.
• It increases the frequency of purchases.
• And it improves market perception of your brand.

So you skimped on a few of these items. So what. Mail is mail, right?

Wrong. Do the math.

If the average sale you’re trying to make is $1500 bucks and in your haste to improve your company’s shareholders’ positions (that’s what you were thinking, right?) you knocked a percentage point or two off of the attainable return, well, depending upon how many pieces you mailed you probably only cost the company a handful of sales. Doesn’t sound like a big deal, does it?

Let’s see. You saved $500 dollars by opting for black on colored paper instead of digital color;  for no personalization instead of sending a “valued customer” message; opted for a cold approach instead of familiar and comfortable. Still, $500 dollars is a lot of money. The boss’ll be happy.

Let’s hope!

You mailed 5,000 pieces.  Done properly your mail-piece would realize a 3% response rate, that’s 150 responses. Your sales staff is average and closes 1 out of 3 responses so that’s 50 sales at $1500 each for a total of $75,000 in total revenue.

But you didn’t do everything you could to achieve the attainable return,  you opted for cheap to save a nickel. So you saw a 2% return. That’s 100 responses, 34 closes at $1500 each, netting revenue of $51,000.

Bottom-line: You saved $500 dollars and cost the company $24,000 in lost revenue. Still sound like you did the right thing for the company? Word of caution, don’t mention to your sales reps that your big savings just cost them the commissions on $24,000 of lost sales. They won’t see the wisdom in your savings initiatives.

So, are you going to tell the boss about your big savings now, or nervously hope he doesn’t “do the math”?

Phillip Crum is the Chief Idea Officer of MarketingMeasure and is committed to the idea of helping small business owners do a better job of finding their next customer or client. He and his two sons also own a Sir Speedy Printing franchise and employ those additional capabilities in the overall marketing services menu of offerings. Phillip can be reached at 214-213-7445, or pcrum@MarketingMeasure.com