plainpainter 217 Report post Posted January 7, 2009 Here are some #'s I've crunched to shed light on mass mailing campaigns - with some certain assumptions here and there. First what's the cost of a 10,000 mailer campaign? Well for starters - I add my costs and it's always more than what others say. But let's just pretend for now that all the costs of design, acquiring lists, printed, sorted, bulk mailed runs you approximately $0.50 per postcard. So the cost of a nuts to bolts mailing campaign will run you $5,000. Now for a 'succesful' campaign, and success is defined by how much money you need to fulfill a real business model, i.e. direct overhead runs you 50% of your gross sales, you have a 10% Net profit, etc, etc. And guys have said in order to achieve this business model you need an ROI -{Return of investment} of about 10:1. If it's less - your overhead will eat too much into profit, if it's more - then you are doing really good. So now we know from some basic assumptions, you will spend $5,000 and due to an ROI of 10:1 - we need $50,000 in gross revenue to justify the expense and stay on track for real business model. So let's say you are advertizing pressure washing services to homeowners - how many jobs do you need to accomplish in order to gross 50k? Well from looking at alot of #'s I am going to throw a random of a reasonable 'average' job. I am going to say for a company that is well equipped and gets a good customer base - you will succesfully be able to average about $461 per job. You may ask, why this amount and not $250 or $750? Well you could lower your pricing to average $250/job - you will have a higher closing rate - but at the expense of a much higher direct overhead for operating your company - i.e. more workers salary paid out, more wear and tear on equipment {have to set aside more for amortization} , more jobs takes longer period of time so the 'density' over time of profits decreases radically. And if you quote too high - you simply won't get many jobs. And there is theoretical limit - only so many folks are going to call you anyways from one mailing - even if you get every job - it's not an infinite pool of work. So we've decided $461 is about where you want to be for the 'average' pressure washing job in the residential universe. So what does this tell us? We need to gross $50,000 - divided by the amount of an average job - that's rougly 108 or 109 jobs we need from this mailing. Basically we need to 'close' roughly 1% of our entire mailing list. You see this is where you start to see the #'s coming together - had your average job been lowered to half {$230.50} in an effort to close at a higher rate in order to secure work - this would have implied that you would have had to perform work for approximately 2% of all the households you mailed to! 2% doesn't seem like much, right? Well we know from much anecdotal evidence and personal experiences - getting 2% to even call you from a single mailing is quite a feat! So now we know a good balance per average job is $461, and we need to close 1% of all households. And our target audience is good and our sales skills are good - we figure we should be able to close anywhere between 1/3 to 2/3'rds of all the calls we get. This implies we need anywere from 1.5% of the entire list to 3% of the list of folks to even call us inquiring about our services!!!! These numbers seem to be very aggressive - there are a few assumptions, but we know that no matter how cheap we price our services - we aren't going to get 5, 6, or even 7% of the folks to call us. And the figure of $461 as an average represents a company that is actively pursuing a very determined marketing and sales model and pursuing a higher end demographic that isn't based so much on price. All these assumptions are tenuous and could easily fall apart. Getting 1.5 to 3% response is an aggressive assumption based on anecdotal evidence, and closing anywhere between 33% to 66% of all the prospects is equally aggressive. And put into perspective that your competitors are doing $150 house washes - and you start seeing putting $5,000 however plausible is also quite risky. My own data suggests that these numbers reflect a market during good economic times - and during the up and coming year could be a disasterous investment especially for those for whom 5 grand is putting everything on the line. Share this post Link to post Share on other sites
John Doherty 126 Report post Posted January 7, 2009 Your assumption of .50 per card is extremely high, I think .25-.30 is more accurate. Share this post Link to post Share on other sites
plainpainter 217 Report post Posted January 7, 2009 Your assumption of .50 per card is extremely high, I think .25-.30 is more accurate. For a 4x6 postcard you may squeeze into that level - but now we're into how many folks are going to respond to a 4x6 postcard vs. a much larger jumbo card that costs more money? Will a 4x6 get 2-3% callback? I think you would be lucky to get 0.25% to 0.5% callback percentages on a 4x6 postcard. I know I've done much worse. I'll throw this out - let's say you can get $0.25 per poscard - I am going to say you will get a 0.10% callback in this day in age. From 10,000 folks - I'd say from a one time mailing with a small postcard you will get about 10 folks calling you back, if you are utterly lucky you will get 25 folks calling you back. it will cost you $2,500 to get about 10 folks to call you back. If you charge an average of $461 - and land all the clients you will make $4610 - but you will have spent $2,500 getting them. For a 1.844:1 ROI. Share this post Link to post Share on other sites
newlook 265 Report post Posted January 7, 2009 How much you paying per 1000 for the 10,000 names you are renting? Share this post Link to post Share on other sites
John Doherty 126 Report post Posted January 8, 2009 For a 4x6 postcard you may squeeze into that level - but now we're into how many folks are going to respond to a 4x6 postcard vs. a much larger jumbo card that costs more money? Will a 4x6 get 2-3% callback? I think you would be lucky to get 0.25% to 0.5% callback percentages on a 4x6 postcard. I know I've done much worse. I'll throw this out - let's say you can get $0.25 per poscard - I am going to say you will get a 0.10% callback in this day in age. From 10,000 folks - I'd say from a one time mailing with a small postcard you will get about 10 folks calling you back, if you are utterly lucky you will get 25 folks calling you back. it will cost you $2,500 to get about 10 folks to call you back. If you charge an average of $461 - and land all the clients you will make $4610 - but you will have spent $2,500 getting them. For a 1.844:1 ROI. I have to disagree, the pricing I've mentioned is for 5.5x8.5 both sides in color. I would consider a 1% response rate fair, although my experience with our campaigns places us at roughly 1.75%. We also run about a 55% close rate. Even at .75% with a 50% close rate your at 38 jobs, at your $461 rate it's $17,500. It's not 10:1 but it's not bad. Share this post Link to post Share on other sites
John Doherty 126 Report post Posted January 8, 2009 especially for those for whom 5 grand is putting everything on the line. I couldn't agree more! That $ needs to be spread around, putting it all in one basket could be disasterous. Share this post Link to post Share on other sites
John Doherty 126 Report post Posted January 8, 2009 How much you paying per 1000 for the 10,000 names you are renting? You can get them as cheap as .04 to .05 per and that's targeted to a specific demo, and owned not rented. If you mail per carrier route you don't have to pay for any names or addresses, and you reduce your costs even more because the postage is cheaper. Share this post Link to post Share on other sites
plainpainter 217 Report post Posted January 8, 2009 John - I paid far more for my lists with infousa than .04 - .05 per thousand per mailing piece. I think last time I paid something on the order of $300 for a 3,330 list of targeted folks. If that's expensive I'd love to know where you buy yours? Share this post Link to post Share on other sites
John Doherty 126 Report post Posted January 8, 2009 I keep saying this about postcards, you have to shop around! Find a good lettershop and you'll be glad you did. It's all the same data, with the same counts. Mailhouses and lettershops want your business, they'll sell the lists for cost or just above. Share this post Link to post Share on other sites
plainpainter 217 Report post Posted January 10, 2009 I would consider a 1% response rate fair, although my experience with our campaigns places us at roughly 1.75%. We also run about a 55% close rate. I don't know John - when were you getting these type of results? Were you getting these results until very recently? I think some folks have gotten great results in the past - with the emphasis on the past tense! Here is a guy reporting back some his results in a BBS message on a painting board in a thread started by Fenner. This guy is in Richmond Virginia - he is getting 1/3 of 1/100th of a percent callback return! Somehow I feel fortunate I got my 1/10th of one percent callback return now! Like I said this is for a single style mass mailing campaign and not Fenners' idea of a more concentrated demographic hit multiple times - with supporting local area guerrilla advertizing. ***quote*** Thank you, Ethan P.S. We are running at roughly .003% on our door hanger/flyering/direct mail attempts. We have tried other mediums to support advertise like TV, Trade Shows, etc. but I believe that we have gone after too large of markets and would benefit from focusing on smaller markets as you suggest. ***end/quote**** Share this post Link to post Share on other sites
John Doherty 126 Report post Posted January 10, 2009 Dan our fall campaign went down the tiolet, but I have nothing to compare it to. I never did one that late in the season and it was the first one that was not targeted, I went for the saturation rate. So there are several variables, not targeted, late in the season, not addressed to an individual and the state of the economy. Share this post Link to post Share on other sites
plainpainter 217 Report post Posted January 10, 2009 Dan our fall campaign went down the tiolet, but I have nothing to compare it to. I never did one that late in the season and it was the first one that was not targeted, I went for the saturation rate. So there are several variables, not targeted, late in the season, not addressed to an individual and the state of the economy. This is exactly what I am talking about, in contrast to a well targeted demographic, targeted at the right time early in the year and a good economy - there is a world of difference. This is what I am saying - a mass mailing isn't insurance of success. If done well you can reap the rewards - if several mishaps happen - you just plunked down thousands and thousands of dollars - with a big goose egg. Gone are the days where landscapers are going to do their massive 20,000 wide canvassing mailers per month and get results. It's going to be funny watching all these 'high-volume' guys try and rationalize their way out of this one. High Volume business model is built on a premise as flimsy as a house of cards. Targeted smaller more repetitive marketing and lots of supporting guerrila marketing and a high priced service is the only business model that is going to succeed for this coming year. Guy thinking they can cast a wide net - are going to feel like gloucester fishermen after the fish populations have been fished to oblivion - cast as wide as you want, ain't nothing gonna be in the nets! Share this post Link to post Share on other sites
fireandrain 39 Report post Posted January 20, 2009 Daniel... Same with me. I only mail out 6x9 cards, 10,000 at a time. .50 p/ card = $5K. For every campaign, I put up $5K, average 10 jobs p/campaign, average job (I only do deck restoration), is $2K. I gross $20K on every $5K I invest in mailing campaigns. works for me. If it aint broke, why fix it? Share this post Link to post Share on other sites
fireandrain 39 Report post Posted January 20, 2009 p.s. My season runs from mid March-October. I like to get 2 ad campaigns out p/month. So, in a typical season, my advertising schedule goes something like this: Late February (weather permitting): 1 Campaign March: 1 campaign April: 2 campaigns May: 2 campaigns June: 2 campaigns July: 2 campaigns Aug: 2 campaigns Sept: 2 campaigns Oct: 1 campaign Frequency is the key to any guerrilla advertising campaign. I keep $6K in an advertising account, replenish IMMEDIATELY when jobs roll in. Gotta stay on top of it. Thats the key for me. Share this post Link to post Share on other sites
plainpainter 217 Report post Posted January 20, 2009 Matt - are you targeting the same 5,000 folks throughout the year. If not - how many times do you 'rotate' your mailing list? Share this post Link to post Share on other sites
fireandrain 39 Report post Posted January 21, 2009 (edited) Daniel, I target my 10,000 addresses, the same 10,000 address every round of advertising. The addresses are what I would refer to as 'premium', that is, million dollar + homes in my area. As I mentioned, I believe that the heart of any direct mailing strategy is FREQUENCY. I realize that my targeted client receives a mountain of mail each day. Important people receive important mail, and LOTS of it! Your postcard is your 'billboard' in a way...You need to get your branding committed to your target markets' memory. Same $6K advertising "wad", continually re-generating into my market. Again, I can't stress enough how important it is to have your postcard PROFESSIONALLY designed. I think that too many guys just sit down in front of their computer with photoshop and slap something together that 'seems to look professional'... I always encourage people to gather their local competition's advertising, i.e. their yellow pages ads, postcards, coupon mailers, etc... Then, and only then, begin designing YOUR mailer. If it looks a bit like theirs, RE-DESIGN IT! Unique layout, simple message, articulate catch-phrase... an your outta there... Edited January 21, 2009 by fireandrain Share this post Link to post Share on other sites
