Direct Marketing: How To Get Direct Marketing Copy That Sells From A Direct Marketing Freelance Agency

5/23/2008 7:34:32 PM

The purpose of direct marketing is to produce customers who spend substantially more money with your business than you spent on the media space or time to acquire them.

Why do you invest in direct marketing? Are you trying to reach prospects and convert as many as possible into paying customers or are you buying direct marketing creative and copy because you have an advertising budget to spend?

Your answer to this question will determine what type of return on your investment, if any, you can expect from each of your direct marketing campaigns.

Before planning to acquire new customers via direct marketing and in order to get the highest possible return on your direct marketing investment, you must first determine what your existing customers are worth to your business.

Only then, after you determine their economic worth, or their Lifetime Market Value ( LMV ) – what the average customer will spend with your company over the life of the relationship – can you begin to accurately forecast how much money you will have to acquire each new customer.

More often than not, business owners and managers establish their direct marketing creative and copy budget based on a percentage of annual sales. However, setting a direct marketing creative and copy budget based on a percentage of sales has no direct correlation between acquisition costs and profit potential in the average new customer relationship.

An direct marketing budget based on a percentage of sales instead of on your customer’s LMV is flawed by design. How can you begin to budget for the acquisition of new customers when you have no idea what your present customers are worth?

A simple formula for regaining control of your direct marketing budget without having to determine what your average customer’s LMV is to look closely at what you are spending on average to acquire customer transactions now.

To do this, determine how many transactions you have in a year. Then divide your annual number of transactions into your gross annual sales. This will give you the average value of each customer transaction.

Once you have your average transaction amount, deduct your average cost of goods and all other related costs of sale. Add your average costs together and subtract them from your average transaction value. The remaining number is the maximum amount of money you can afford to spend to acquire each new customer transaction and still remain profitable.

By determining your maximum allowable transaction acquisition cost, you can then determine exactly how much more money will be available to acquire each new customer relationship based on your average customer’s Lifetime Market Value.

To get your money’s worth from any direct marketing campaign, you must determine what an average customer is worth before you budget or spend any money on direct marketing to acquire them.

To learn more about Direct Marketing, Direct Marketing Copy That Sells From A Direct Marketing Freelance Agency or to Buy Direct Marketing Creative And Copy visit the Marketing Strategies Catalog section of this site.

Tim Cohn is a Google Advertising Professional and author of the book For Sale By Google.