Power Direct Marketing: The Book
A Task Method Example
Because the task method is so popular in direct marketing, heres an example of how it works.
Lets create a sales situation. You are an organization with an outside field sales force. You sell business-to-business. The sales team works off leads to make appointments to give a demonstration that leads to a close. A sale.
You have determined your sales staff of 5 needs, as a result of your marketing programs, 3 fresh leads each week. A total of 15. Figuring a 50-week year, that is a grand total of 750 leads (5 staff x 3 leads x 50 weeks = 750).
You have a fairly high-ticket item and can invest up to $100 to generate the lead. Which means your marketing budget for the year can be set at $75,000 (750 leads x $100 = $75,000).
Up to this point it is fairly straightforward. And simple. Because we "assumed" a few things. We assumed well get 750 qualified leads. Each ready for a sales visit and demo. Highly unlikely!
We also have said nothing about closing ratios. Even with 750 qualified leads, how many will the sales force close? What is the ratio now1 of 3, 2 of 5, or ? ? ?
We havent talked about the potential audience. How large is it? If it is 15,000 or 150,000, how do we approach the market?
What we really havent said in this example is: HOW MUCH ARE WE WILLING TO INVEST FOR A SALE? Cost per sale is the all-important number. Cost per lead is nice to knowbut it doesnt get the order.
Lets go back now and fill in some of the blanks. And see where that takes us, how it helps.
First, the close ratio. History tells us that from all qualified leads your experienced sales force closes 1 of every 2 presentations.
Based on the last 2 years of experience, for every 3 leads generated, 1 was worthy of a personal follow-up sales call.
If we close 1 of 2, that means we can invest up to $200 in marketing expenses to get a sale (If we could afford $100 for the lead, and we were happy with the 1 in 2 close, that must mean were happy with the $200 figure.).
Further, if it takes 3 leads to get 1 demo, and we want to hold to our total of 750 presentations for the year, that means we need to generate 2,250 leads total (which will give us 750 qualified leads, 1 of 3).
All of which says we can invest $33.33 to produce a lead (2,250 total leads into $75,000 = $33.33). This certainly makes the program look different than when we looked at it with a $100 per lead cost.
We can now decide from the available audience where we want to put our efforts. Is it possible to select from the total those most likely to buy now? What about those we talked to last year that didnt buyshould we chase them this year?
We also know that we have "only" $33.33 to generate a lead ... not $100. Big differenceimportant difference to know. Up front. Which, if you were not planning your budget against your objectives, you just might overlook.
In this example we had a specific task to get 750 qualified leads for our sales force. By setting a budget with these numbers and thoughts in mind, we help ourselves create a better direct marketing program. We are more tuned to the audience selection, offer, creative, and media options open to us. Our program becomes better. And enjoys a much higher probability of success.
by ROCKINGHAM*JUTKINS*marketing, all rights reserved.