August 05, 2019

I Know, You Don't Believe Me

In this example, the best customers do the following:

(a) They spend $360 a year BECAUSE of catalog marketing (and another $200 organically without catalogs, but that's a story for another day).

(b) They receive 22.1 catalogs per year.

(c) With a profit factor of 45% and $0.70 ad cost per catalog, the customer generates $145.70 in annual profit.

A lot of you use a "rule of thumb". You add productivity at 50% to see if another mailing will work or not.

So in this case, let's do that. Except we'll add productivity at 33%.
  • $360 / 22.1 catalogs = $16.29 per catalog.
  • 33% productivity = $16.29 * 0.33 = $5.38.
  • $5.38 per book * 0.45 - $0.70 = $1.72 profit.
Let's try adding the contact at 15% productivity.

  • $360 / 22.1 catalogs = $16.29 per catalog.
  • 15% productivity = $16.29 * 0.15 = $2.44.
  • $2.44 per book * 0.45 - $0.70 = $0.40 profit.
Do you see where I'm coming from?

Run your customer data through a sim and see what the sim tells you.

You're getting this help for free ... go do something with it, ok?????


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