In a recent issue of his online newsletter, marketing expert ER wrote:
“I marvel at the business people who patiently spent tens of thousands of dollars on direct mail for years to develop a customer base, but who give up on social media after a few months. Social media, like any other kind of marketing, takes time to be effective.”
His statement, aimed at yours truly and others in my school of direct response, displays some impressive ignorance about marketing that I want to correct here.
To begin with, not all marketing “takes time to be effective.” Well, social media and branding may … if they are even effective at all.
But direct marketing of any kind generates an immediate and tangible response that can be measured down to the penny.
Any marketing guru who sells you “any kind of marketing takes time to be effective” doesn’t understand direct response in general and direct mail in particular.
We direct response guys are anything but, as ER seems to think, patient: Either the campaign makes money from the get-go, or we dump it and test something else.
In direct mail, the result is immediate: within a few weeks of the mailing, we can count up the checks and credit card orders and know exactly how much money we made.
So let me educate ER on how direct mail effectiveness is measured so accurately and so fast:
The benchmark of direct mail success is called the “break-even point” — the response rate at which the number of orders produced by the mailing generates net sales sufficient to pay the entire cost of the mailing.
If your mailing generates revenue below the break-even point, you lose money.
If your mailing generates revenue above the break-even point, you make money.
How do you know what response rate will generate break-even for your direct mail piece?
I have created a free online tool, the DM ROI Calculator, which does it for you:
http://www.dmresponsecalculator.com
It’s simple to use. You click on the link and enter your e-mail address and name to gain free access to the calculator.
It brings you to a simple online form that asks you to enter the key facts about your mailing — basic information any DM user must know about his campaign.
These are:
>> The list price of the product you are selling.
>> The cost of goods per unit.
>> The cost in postage per DM package.
>> The printing cost per thousand pieces mailed.
>> The mailing list fee per thousand names rented.
>> The “letter shop” fee — cost per thousand packages to assemble the components, affix labels and postage, and bundle for the post office.
The software then instantly calculates two numbers:
1–The total number of orders you need to break even.
2–The percentage response rate at which your direct mail package will break even.
How quickly does direct marketing work?
** With print direct mail, we collect the bulk of our money — and can tally our results — within a few weeks of the mailing date.
** With print ads in monthly magazines, we know within a few weeks whether it worked. With an ad in a daily newspaper, we know in a day or so.
** TV and radio spots generate the lion’s share of their sales within 24 to 48 hours.
** When you send an e-mail marketing message, you have a good indication within a few hours of distribution whether it is working — and you have accurate data within 24 hours.
And there you have it. No patience required, my dear ER. No “give it time.” Direct response sells. And those who know how to use it best can grow rich beyond the dreams of avarice.
Sincerely,
Bob Bly
P.S. The mantra “marketing takes time to be effective” or “you need 7 touches to make a sale” is chanted by ER and other branding and social media mavens — mainly I suppose to comfort themselves when their marketing makes no money for their clients. They tell the client: be patient.
Direct response marketers laugh because while the social media and branding guys are chanting and waiting, we are making money hand over fist.
As the great Drayton Bird notes on Facebook, the big advertisers can get away with murder regarding their advertising ROI: If their ad campaign doesn’t increase sales, they say, “Be patient; it’s branding.”
If you use direct mail, use my free DM ROI Calculator to find your break-even point:
http://www.dmresponsecalculator.com
The calculator works for direct mail that is “one-step” — meaning it generates a direct sale.
The break-even formula is modified for two-step direct mail, which generates leads, a percentage of which convert to sales down the road.
You can read about calculating ROI for two-step DM in my out-of-print book, “Power Packed Direct Mail,” published by Henry Holt & Co. and available on Amazon right now for as little as a penny – if you act now:
http://www.bly.com/PowerPackedDM
