Do your direct mail dollars add up?
ithin the past year I sold my cleaning plant
in New Orleans, Louisiana, to an experienced drycleaner who,
along with his wife, have operated successful locations in a
smaller town about 40 miles away.
As the economy shudders from the
attacks that occurred on Sept. 11, 2001, he questioned whether
he should continue advertising as I had done, at that location,
in the past.
The following is our
correspondence, which is applicable to cleaners around the
country.
Danny,
The mailing room asked me to
contact you about whether you want to continue the Alpine
mailings. We’ve completed one three-month cycle during
which 168 cards were returned, representing $3,896.14 in
total sales. This is an average of
$23.19 per order, which is considerably higher than your
average order. (Unless things have changed.) I’ve never
considered money spent on advertising to be a luxury. It really
is a necessity when you have as many transient people as
Kenner, Louisiana, does. The only way to get these new move-ins
to know you are there and to come to you, and not the
competitors, is to advertise constantly.
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His answer to me follows.
Dennis,
I have a few questions:
1. Are you still experimenting with
the two different size cards for Alpine?
2. Will you send future mailings to
same or different addresses in Kenner?
3. According to the results of Alpine
mailings, we are spending about $300/month to bring in around
$1,200 of (additional?) revenue. Is 25 percent a reasonable
cost?
4. How do you know what is the right
amount of advertising? Is more always better? Is there a
percentage of revenue (or budget) that is generally
recommended? Is consistency more important than quantity?
5. Would you like to experiment with
two sizes of cards in the Houma area?
6. Should we hit the same Houma
households over and over, or move around? We have noticed the
same coupon customers coming in a second time.
7. Should we make a note of customers
that actually use the coupons and keep those addresses
permanently on the mailing list?
Thanks.
Danny
My response was as follows.
Danny,
Yes, we are still using the two
different sized cards to each alternating address. At first the
results showed that the response was greater in quantity with
the smaller card, however, the larger cards were bringing in
much larger orders — almost twice the size. Now, it
appears they are equaling out.
Future mailings will go to the
same target market. First, all residents of Chateau Estates
proper, and then to all $50,000 and above households, until a
total of 3,000 homes are reached.
Spending $330 per month to bring
in $1,200 is fabulous! A rule of thumb is that a promotion
should generate at least three times the dollars spent on the
promotion. Many cleaners, and other businesses, would be
tickled to death to bring in four times the expense of their
promotions.
For most cleaners, five percent of
desired gross sales is what their advertising budget should be
to receive maximum return on their investment.
At Alpine I have spent as much as
eight percent, attempting to see if more could be better. I was
always experimenting with my advertising budget to find the
right amount of advertising for that store. What I found was
that five to six percent works best.
When I tried to decrease the
budget, my sales slumped. When I tried to go too high (8
percent), it didn’t bring in any more business.
Consistency is the most important
factor. Many Alpine customers look forward to receiving either
the direct-mail piece or the newspaper insert, or both. And
that’s good, because it means they’re not going to
take their clothes somewhere else.
The split results are:
Small cards (4 x 6),
$1,988.87; 86 cards: average sale, $23.12.
Larger cards (5 1Ž2 x 8 1Ž2),
$1,907.27; 82 cards: average sale, $23.26.
From those figures you can see
that the results are virtually equal. We were planning to run
one more cycle just to be sure, but I don’t really expect
the results to be any different. Based on this, there’s
no real reason to run a split test in Houma.
Targeting the same homes in Houma
is very important, because repetition is what makes advertising
work. I can’t tell you how many cleaners we have that do
one cycle and declare the program a failure without ever using
it properly, which is to repeat the cycle over and over again.
The people who do stick with it long enough to see the true
results become our most ardent supporters. That’s what
happened to me at Alpine.
Yes, the same coupon customers
will come in a second time, and you will see new people, who
didn’t respond to the first mailing, coming in. This is a
build-up process and once you have a large number of customers
hooked on this, its important not to lose them.
Like Alpine, all of your stores
should have detailed customer lists that can be used for
special mailings. “Big Tunas” should get special
attention, and offers, that the other customers don’t
receive, the same way the casinos handle their big players. The
smaller players can be left to the general mailings and
newspaper inserts.
The questions you are asking are
the same ones I asked before I finally convinced myself that
this type of marketing, combined with quality work and great
customer service, is what made my business successful while
many others in the area went under.
Dennis
Dennis McCrory works with The Golomb Group
which provides direct mail and marketing services for
drycleaners. They also produce the following book and video
packages:
• “The Caplan Method of
Stain Removal”
• “The Caplan Method of
Shirt Laundering and Finishing,”
• Also available is McCrory’s
“Pre-employment Screening Kit.”
To order any of these, call The Golomb
Group, (800) 679-5856.