Power Direct Marketing: The Book
How to Budget for Direct Response Programs
Lets begin by including some ways not to set your direct marketing budget:
In direct response the product/service category hardly matters in setting a sound budget. Budgets that work are those that are based on your objectives and timetable. Those that are less likely to work are those that are thrown togetherthe SWAG approach.
By beginning with specific objectives for your direct marketing programknowing the numbers you are aiming to achieveit will make setting the budget just that much easier. And more likely to be on target because your objectives are numeric.
How much should you invest? I dont know. How should you determine what to invest? By answering these questions:
How much should you invest? It all depends. It depends on many factors. Food service works on small margins and high volume. Luxury items have more to play with.
In direct marketing budgeting the elements to be concerned with are these:
1. The cost of reaching your audience
2. The response generated from your audience
3. The promotional cost per response
Most business-to-business manufacturers budget somewhere in the 2%5% of sales range. Those in mail order from 20%30% of sales. I have worked on projects where we spent less than 1% of projected sales to over 50%. It all depends.
What should you include in your budget? Everything that fits! All promotional cost. These can include:
And anything and everything you plan to include as part of this direct response effort.
What should you NOT include? I recommend that all sales, sales staff, and sales service costsmostly people and related expensesNOT be included in your direct marketing budgets. They need their own budgets, their own controls.
In most cases youll have no difficulty separating sales from marketing. Sales management will recognize, as you do, you are talking 2 different disciplines. Marketing is an activity that directs the flow of your business. Sales is to work that activity and gain a closeget the order. They belong in different budget categories. Dont mix themyoull both regret it.
by ROCKINGHAM*JUTKINS*marketing, all rights reserved.