What Marketing Math Really Means

?I have a fun case study for you today. Did you ever think to send a real rubber whoopee cushion through the mail? Remember those fun toys we all had as kids growing up?

David has been a long-time reader of this newsletter. In fact, I think we met him at one of our first speaking engagements with 3D Mail way back in 2009. He’s been using our items for a few years and I finally get an opportunity to highlight him. He’s doing some good stu .

First, a little background on the piece before we get into more advanced analysis. This is David’s second shot at this particular mailing list. David first mailed this list a couple months ago as part of his “cold birthday promotion.”

David is able to get a list of people in his geographic area, who meet his demographics, whose birthday’s fall in a particular month. He then sends them a birthday gift, usually a free oil change to his shop. Every time he does one of these mailings he gets new clients in his shop.

But why stop at one shot when you know you have a responsive list? David realized this and decided to hit them up again a few months later with a new promotion and o er. After all, these are the exact clients he wants in his shop.

This is also a lesson in doing lots of things simultaneously and as systematically as possible. David’s new birthday mailers are systematic; they start the first of every month, without fail. If this new step proves to be a winner, even if just mildly, he needs to systematize it as soon a possible so every month he can count on at least three new clients in the door from this promotion.

And here’s a copy of the envelope we used.

He did a lot of good things here. First, he offered a relevant free gift with response and includes a picture (which was detailed much more on the buck slip he included in his original mailer, I did not recreate it here). He has good ‘reason why’ copy to answer the client’s question, “Why am I getting this thing in the mail?” His reason why copy is easy to follow and helps progress the sale. He uses an expiration date.

Dave specifically spells out the services given away for free, so nothing is left to assumption or interpretation. He includes many other details we teach here each month. Two things I certainly would have added are testimonials (especially given this is to a cold prospect list), and map with the location and directions to his shop.

He sent out 200 pieces and got 3 responses. While you may be thinking to yourself, “big deal,” it may be a big deal once we dive a little deeper into the actual meaning of those results.

Having worked with many auto repair shop owners using 3D Mail, I’ve become pretty familiar with the industry.  I was amazed at the Lifetime Customer Value (LCV) of a single good client when I first started working with them. The number ranged from a few thousands of dollars over the lifetime of the relationship, to $20,000 and higher. This brings us to the great conversation of the number you need to know in order to make your marketing a success.

I’m NOT talking about the numbers you get from your accountant each month. I’m talking about the MARKETING NUMBERS you need to know in order to really know if your marketing is working.

This should be fairly obvious, but this is the total amount of dollars brought in from a certain client. It can be gross, or net. I personally like to track both. Just because you have gross dollars, doesn’t mean you have net. The LCV ultimately controls your decisions about how much to invest I obtaining your customers. Knowing this number also helps you know the costs of losing a customer and determine what you are willing to invest to keep them.

For this, a little math exercise. Let’s assume the campaign cost David $300 ($1.50 per letter sent, which I believe is about right). Let’s assume all three new prospects came in, got the free oil change and nothing more, thus no money exchanged hands. You’d have a CPL of $100 for this campaign. Now let’s assume that two of the prospects came in for the free oil change and nothing more, but one needed additional work done at $300. Your CPL remains the same, but now your CPS is 1:1, or $300.

Let’s assume that two of the three become good customers and they bring their cars in every three months for oil changes at $40 a pop. That’s an additional $320 gross dollars for one calendar year. Add that to the $300 from the previous example, you’re at $620 gross.

Now let’s say one becomes a really good client. They bring two cars in for oil changes three times a year, plus each year they need an additional $500 in work between the two cars. They do this for five years. Now we have $320 gross in oil changes per year, plus $500 in other work per year, so a LCV of $4,100 over the five years. Gross ROI over a five year span is 13.6:1. Let’s assume David has a 50% gross margin. He still has a 6.8:1 ROI net.

In this example it will take David about 9 months to get back all his money on the campaign (net profit, not gross). So David’s questions now becomes, “Can I wait 9 months to ‘get positive’ each time I send these letters?” If the answer is yes, then it’s a no brainer to continue the campaign.

Another important thing to note is that each marketing activity you do will have a di erent CPL, CPS and LCV. In this example the LCV of a client from direct mail is $4,100, CPL of $100. So when choosing to expand, reduce or simply continue a current marketing function, you need to answer four questions:

If you can answer those four questions I can tell you whether to increase or reduce its use, or whether you should eliminate it altogether!

And here’s the next valuable lesson… You must keep doing this! Don’t stop because you go bored with it. Keep testing, tweaking and systematizing the stu that works, and tossing out the stu that doesn’t. After a while, David has lots of simultaneous and systematic things happening to get clients in the door.

Soon, every month he opens his doors knowing what his sales will be at the end of each month. It can sure take a lot of stress out of running your business.

The Whoopee Cushion has long been one our best performing pieces. In fact, it goes all the way back to our original catalog of 3D Mail items. One of the BIG reasons I love this piece is it doesn’t add postage cost to your mailer!

You can take 15% off the Whoopee Cushion mailer when you enter Promo Code WHOOPEE. Or you can call (360) 761-7486 and place your order over the phone. We’re open 9am to 5pm Pacific.

If you need some inspiration, I’ve uploaded a handful of Whoopee Cushion examples letters.

Remember, we can help you with the complete mail fulfillment; print, stuff, fold, and mail your entire campaign. Click here to get a quote or call (360)761-7382.