NASE News

Will Direct Marketing Work for My Business?

Read this article in PDF form here.

By Terrie Turner

Have you wondered what “Direct Marketing” is and if it would work to help grow your business. Maybe you’ve asked these questions:
 

What type of advertising will work for my business?

How often should I advertise?

Where should I advertise?

How much should I spend on advertising?

And, the big one—How will I know if my advertising is working?

Direct Marketing could work for your business—and when it’s done correctly, it’s measurable so you can know if it’s working.

Direct marketing can take many forms: direct mail, direct response television, print, billboards or even your website. Direct Marketing asks your prospect to take action, such as call now, bring in this card, or log on and register.

But, will Direct Marketing work for your business? Here’s a simple formula.

What is your average profit per customer?

How many prospects become customers (what is your conversion rate from lead to sale)?

How many prospects can you expect to generate from an advertising campaign (Often the media sales rep will be able to provide you with some ‘industry standard return percentages’.)? 

Here’s an example:

If your average profit
per customer is $500

And you convert 30%
of your leads to sales

Your advertising
cost $10,000
(including creative)

You generate
102 leads

102 leads convert
to 30 sales

30 sales
x $500 profit
= $15,000

$15,000
- $10,000 ad cost
= $5,000 net gain

 

But, how do you know how many leads you will generate from your direct marketing efforts? This is always the million dollar question! Excellent creative and media placement are key to the success of any campaign. Make sure you work with someone that has experience in direct marketing—ideally in your industry with creative, and media placement. Look at what others in your industry do consistently. And, commit to testing to continually improve your Return on Investment.

Everything you do depends on what you’re selling and your target market. If a shoe store had great success with a postcard, it doesn’t mean that will work for your insurance agency. The target market may be the same, but the product is very different.

Keep this in mind when choosing media:

1.       Broadcast – Television and radio generally reach a very large geographic audience. Unless you have multiple locations you will be reaching and paying for many people that are not potential customers.

a.  If you have multiple locations and broadcast makes sense for your business, make sure you have adequate phone lines to handle calls – and be prepared to have the phones answered when the commercials run.

2.          Newspaper – This is a media that is not as viable as it once was, however it can still be very effective with the senior market, especially in rural areas. However, this is not specifically targeted, so you will pay for circulation to people that are not your target customer.

3.          Direct Mail – Solo mail can be specifically targeted. You can rent a mailing list by zip code, age, household income and many other factors. Shared mail, mail that is in an envelope with many other companies, is less expensive but generally has a much lower response rate. Although shared mail can work well for multi-location service providers such as dry cleaners or oil change establishments.

What should my Ad say?

1.   Call to action – Make it strong and repeat it.

2.   An Offer – Look at what is common for your industry,
and then do something
bigger and better.

3.   Testimonials – If you have
a satisfied client that will provide a testimonial, this
can be very effective.

4.   Essential Information – include your phone number, web address and social media information
as well as your address—and
if appropriate, a map

Direct marketing can be a great way to grow your business. While this is a thumbnail sketch of a few foundational aspects of direct marketing, it’s a good place to start.


Terrie Turner
is a Direct Marketing professional with more than 25 years of experience. Terrie is the President of Sunbelt Advertising.