Chapter Synopsis of Direct Marketing Quantified:
The Knowledge is in the Numbers
Here you’ll find an overview of this how-to book that will help you identify how direct mail cost and direct mail response rates impact your success.
Phase 1: Establishing Your Course
- Marketing Portfolio Management
Sets the stage for the importance of marketing to provide a reasonable Return on Investment (ROI) and lays the groundwork for understanding low, medium, and high risk marketing investments.
- Allocating Your Sales Dollar
Establishes cost categories and profit a sales dollar must cover: cost of goods sold (COGS), fulfillment, overhead, marketing, and contribution to profit. Marketing expense definitions and considerations for how you look at marketing costs are outlined.
- Defining and Establishing Breakeven Tolerance
Defines four ways to view breakeven; guidelines for what length of time you should define as an acceptable point to breakeven.
Phase 2: Setting the Bar
- Allowable Marketing Cost
How to establish what response rate must be achieved to meet profit objectives if you must make money from your first sale.
- Lead Generation Allowable Marketing Cost
Understanding the response rate you must achieve when using a two-step marketing program to first generate leads and convert those leads in the second step. Also described is a step-by-step allowable marketing cost guide for use when developing a lead generation program for sales people.
- Forecasting Long-Term Sales
An essential model to create if you bring new customers on at a loss and expect those customers will become profitable at a future date.
- Forecasting Future Breakeven
How to use your Long-Term Sales model to project at what future customer contact you will breakeven.
Phase 3: Measuring Effectiveness
- Allocating Orders from Unknown Sources
Virtually every marketer has orders from unknown sources. This chapter explains how to allocate unassigned orders back to marketing programs for more comprehensive analysis.
- Drawing Lines in the Sand of Circulation Analysis
How to “draw the line” in prospecting circulation analysis when using weighted averages of cumulative sales, cumulative circulation and an allocation of unknown orders. This chapter reveals how you can determine the exact depth you can mail into rented lists without compromising profitability.
- ZIP Code Model Process and Methodology
After you have determined where to draw the line in your circulation plan, this chapter tells you how you can create a ZIP code model and apply it to lift response to under-performing lists, moving those lists “above the line” so you can mail them and achieve your profit goals.
Phase 4: Optional Extra Tools
- Building Response Projection Curves
A step-by-step guide to building a model that projects response rates based on the number of days after a program has been mailed. It also explains how to determine the date that is the midpoint in your response curve.
- Reading Test Results With Confidence
A description of how to use statistical confidence intervals to compare test results against each other and reliably know if the “winning” package beat another package. This chapter provides the formulas to calculate confidence intervals.
- Customer Segmentation and Analysis
Does the Pareto Principle rule — that 80 percent of your profits come from 20 percent of your customers — apply to your business? Learn how to segment customers into deciles and quintiles to determine which customers are most important to you.
- Square-Inch Analysis
Bonus chapter for catalog marketers: The how’s and why’s of developing an effective square-inch analysis for catalogs and multi-product brochures. Use this information to allocate space for your next catalog as well as to help paginate your catalog for better profitability.
- Taking Action
Final reflections on taking action to use these tools to devise and execute profitable direct marketing initiatives.