Home - Information - Dictionary - Articles - Video - Web

Break Even On Your Next Direct Mail Campaign...And Still Generate Huge Profits

With direct mail, you can break even and still claim success. The reason for this can be understood only when determining the lifetime value of each customer brought in and the likelihood of those customers responding to subsequent offers. Here is a concrete example to illustrate my point.

With direct mail, you can break even and still claim success. The reason for this can be understood only when determining the lifetime value of each customer brought in and the likelihood of those customers responding to subsequent offers. Here is a concrete example to illustrate my point.

Joe's Civil War Shop

Joe owns a Civil War souvenir shop. Yes, believe it or not there is a rather large market of Civil War nuts who collect anything from old bullets, to swords, to manuscripts written by confederate generals. Joe's sales have been slowing since he is located in Virginia, the capital of Civil War memorabilia because this market has saturated itself from having close local stores to buy collections from.

So, Joe decides he wants to sell nationwide through direct mail. He goes out and gets the best Civil War nut list he can find (no offence Civil War

...click on link for more information and related articles.

lovers...), hires the best copywriter he can afford and sets out on a little campaign of his own?a direct mail campaign.

His sales letter sizzles. Orders come in at a respectable rate, but after he tallies the results he discovers the cost of the mailing just about breaks even with the orders that came in.

My question to you is this:

Should Joe abandon this project or continue?

This is a big decision he has to make. What would you do?

Continue If Your Existing Customers Will Buy More From You

The correct answer is really very simple if you understand the lifetime value that each customer on average brings you.

Let's say, on average, Joe's customers pay around $65 for each order they make. But Joe knows Civil War nuts normally can't stop at just one item. Once Joe establishes a strong trust with his customers by shipping promptly, providing products that match expectations and satisfies the desires of his customers, then on average those customers are likely to buy 2, 3 or more times per year from Joe. So lets say on average a customer buys 3 times a year from Joe. This comes to about $200 a year.

Now after Joe "breaks even" a few times, he will have accumulated a good set of loyal customers provided he shipped on time, provided a great product, offered strong guarantees and gave prompt assistance whenever questions came up.

Now Dig The Gold From Your Loyal Paying Customers

Now, lets go back and see what happens when Joe sends a sales letter to ONLY his core customers that actually bought his products. What do you think his response and order rate will be? His customers already have shown to be hungry for his products. He has more to offer. If he throws in a special offer to his "best customers", his response rates could be 30% or more.

So by "breaking even" Joe has built a strong customer base loyal to him. Now I ask...did Joe really break even? Of course not, he will make more money later on reselling to the customers he captured on the break-even mailings. At this point he would be stupid to stop after the first mailing.

Does Your Customer Base Fit This Profile?

If you want to use direct mail to expand your customer base, keep this in mind and ask yourself:

"What can I afford to spend to bring in customers who will continue to respond and buy my products at a rate that more than justifies the cost of the mailings and brings a worthwhile profit. Each

Love is a condition or phenomenon of emotional primacy, or absolute value. Love generally includes an emotion of intense attraction to either another person, a place, or thing; and may also include the aspect of caring for or finding identification with those objects, including self-love. Love can describe an intense feeling of affection, an emotion or an emotional state. In ordinary use, it usually refers to interpersonal love, an experience usually felt by a person for another person. Love is commonly considered impossible to define.
...click on link for more information and related articles.

business will have different ways of calculating this?in Joes case I'll step you through it.

Let's Crunch The Numbers To See How To Profit

We'll use a starting 1000 mailing list as a base. Lets say it costs $800 for the mailing. $200 for copy

In economics, business is the social science of managing people to organize and maintain collective productivity toward accomplishing particular creative and productive goals, usually to generate revenue.

The etymology of "business" refers to the state of being busy, in the context of the individual as well as the community or society. In other words, to be busy is to be doing commercially viable and profitable work.
...click on link for more information and related articles.

writing, $100 for the list and $.50 for postage and cost of shipping. The total cost is $800 ($100 + $200 + ($0.50

1000)). Now to break even Joe would need to sell 12 products at $65. $12x$65 is approximately $800. That would be at a 1.2% response rate.

So Joe just broke even...now lets see what happens if Joe sends 3 mailings to those 12 customers at a 30% response rate...

30% is about 4 customers. If each order is $65 then 4 x 65 = $260. Now this time sending mail costs only $6. So this time Joe made $254 dollars mailing to only 12 customers!

Let's Try It On 10,000 Mailings

Once we use 1000 customers to find our winning sales letter that gets just a 1.2% response (of course a better response will mean more money), lets see what happens when we roll this out to a real list of 10,000.

With 10,000 mailings and 1.2% response, sales = $120

$65 = $7800. The sales letter has already been written, so no charge. Therfore, $7800 (sales) - $5000 ($.50 for each letter -- 10,000 letters) = $2800 in sales.

30% response on future mailings to 120 customers is 40, so 40

$65 = $2600 in sales! Subtract out the cost of the mailings of $60, then the final sales is $2540 from just 120 people! Now do this 3 times a year and you'll likely make $7620 or more extra per year!

Test, Decide, Profit

With a few test mailings to 500 ot 1000 people in your market, you can determine what your profits will be when you roll it out to 10,000. In this case, if you market is made up of 100,000 people, you stand to make $76,200 per year with this campaign. And let's say the average product is $130 dollars...you can make $152,400 per year!

I hope you can see the power of careful testing followed by controlled follow-up with your customers. Use the simple calculations I showed you in this example and see if they may work with your own products. Remember, test your first mailing on a small list of 500 or 1000. Do this until you get a response rate that justifies rolling it out to more people. Also, know your market. Calculate how much the average customer is likely to buy over the course of a year. If it all adds up?go for it!

Next article I'll show you another way to leverage your existing customer base to make even more money. Stay tuned.

(Disclaimer: The

Writing may refer to two activities: the inscribing of characters on a medium, with the intention of forming words and other constructs that represent language or record information, and the creation of material to be conveyed through written language. (There are some exceptions; for example, the use of a typewriter to record language is generally called typing, rather than writing.) Writing refers to both activities equally, and both activities may often occur simultaneously.
...click on link for more information and related articles.

information contained herein is meant for

Information as a concept bears a diversity of meanings, from everyday usage to technical settings. Generally speaking, the concept of information is closely related to notions of constraint, communication, control, data, form, instruction, knowledge, meaning, mental stimulus, pattern, perception, and representation.

Many people speak about the Information Age as the advent of the Knowledge Age [citation needed] or knowledge society, the information society, and information technologies, and even though information science and computer
...click on link for more information and related articles.

educational purposes only. The reader is solely responsible for any actions made based on the information contained in this article. Many factors affect success such as product, mailing list, offer, sales letter, etc.)

Jay McKee is a freelance copywriter and

Education formally is a social science that encompasses teaching and learning specific knowledge, beliefs, and skills. Good teachers in a given field use a variety of methods and materials in order to impart a knowledge of a curriculum to the students. Informally, teaching is the process of learning how things work including numbers, reading and language that are taught by parents and other members of the student's culture. There has been a plethora of journals, magazines, books, and digests in the field of education that addresses these areas. Such literature addresses the teaching practices,
...click on link for more information and related articles.

marketing consultant located in San Jose, CA. Jay specializes in all forms of direct response marketing. He also provides marketing advice to small businesses located in San Jose. To improve your direct response ads or to learn more about how you can use

Marketing, as suggested by the American Marketing Association, is "an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders".[1]

Another definition, perhaps simpler and more universal, is this: "Marketing is the ongoing process of moving people closer to making a decision to purchase, use, follow...or conform to someone else's products, services or values. Simply, if it doesn't facilitate a "sale" then it's not marketing.
...click on link for more information and related articles.

direct marketing to get more customers, sell more of your product, and boost profits without spending more on

Direct marketing is a discipline within marketing that involves the planned recording, analysis and tracking of individual customers' (business-to-business or consumer) responses and transactions for the purpose of developing and prolonging mutually profitable customer relationships. The term was coined in the 1970s by Lester Wunderman, who pioneered direct marketing techniques with brands such as Amex and Columbia Records.
...click on link for more information and related articles.

advertising go to: http://www.jaymckeemarketing.com

Advertising, generally speaking, is the promotion of goods, services, companies and ideas, usually performed by an identified sponsor. Marketers see advertising as part of an overall promotional strategy. Other components of the promotional mix include publicity, public relations, personal selling, and sales promotion.
...click on link for more information and related articles.

Digg this article.

Break Even On Your Next Direct Mail Campaign...And Still Generate Huge Profits

With direct mail, you can break even and still claim success. The reason for this can be understood only when determining the lifetime value of each customer brought in and the likelihood of those customers responding to subsequent offers. Here is a concrete example to illustrate my point.

Other articles