February 20, 2022

The "Optimal" Answer

We read a lot about obtaining the "optimal" solution.

There is no such thing.

Let's review an old-school catalog marketing concept of an "optimal" solution. We have an individual customer worth $100 in the next year, with a 40% organic percentage and a 30% profit factor. The company currently sends 16 catalogs a year at an average of 80 pages each. The paper industry nuked this business, causing them to "re-evaluate everything". Smart people.

So they run scenarios for everything from 0-24 contacts per year and 16-160 pages per contact. Which solution is "optimal"? Take a look.

The green cells are the most profitable cells. Sending 24 catalogs @ 160 pages each is clearly not the optimal strategy.

But there are dozens of answers that all similarly optimal.

  • 24 contacts / 16 pages = $6.20.
  • 11 contacts / 48 pages = $6.00.
  • 8 contacts / 72 pages = $6.14.
  • 6 contacts / 120 pages = $6.51.
  • 5 contacts / 160 pages = $6.82.
Their current best practice is 16 contacts / 80 pages which yields $4.93 profit. Which isn't optimal.

But the choices that are "nearly optimal" are diverse and require significant consideration.
  • Do you contact the customer every ten weeks with large catalogs, 800 pages a year?
  • Do you contact the customer every-other-week with tiny catalogs, 384 pages per year?
If you seek the "optimal" answer, you'll miss out on a lot of options. The two options mentioned above require different thinking, don't they?

There is no "optimal" answer. None. There are good answers, and there are consequences associated with good answers. Seeking an optimal answer means you don't want to think about what the future could hold with slightly different outcomes that lead to very different tactics.

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