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Better Business Idea #32

Repetition – A Key To Marketing Success

© 1999 by Michael C. Gray

December 20, 1999

Sometimes businesspeople leave an enormous amount of business on the table by limiting their marketing efforts.

For example, a business mails a sales letter to a list. It has a response that more than pays for the advertising expense, but stops after only making one mailing.

By continuing the campaign by repeating the offer again and again, it could multiply its response. For example, it might get 1% response on the first mailing, 1% on the second, and 2% on the third. If it stopped after the first mailing, it would have reduced its results by 75%!

Why is this the case?

First, "life is a moving parade." People’s situations are changing. Maybe they didn’t want your product or service before, but now they’re in the market. For example, if you were in the auto sales business, your prospect might have had an interest in new cars before, but had no urgency to act. After your first contact, she has an accident and totals her car. Now she is in the market and ready to buy!

You need to be "in your customers’ faces" regularly so you will be there when they are ready to take action.

Second, your customer might not have seen the letter or ad! His spouse might have thrown it away. The postman might have thrown it away. She might have been busy and "screened it out." When you continue sending the material, you dramatically increase the likelihood your prospective customer will actually see it!

How long should you continue mailing or your advertising campaign? As long as the economics work.

If you get no response from your first effort, and it was sizable enough to be a legitimate test, throw it out!

If you get a response that justifies the expense, continue it as long as it pays for itself.

For example, Best Co. sends 10,000 sales letters following up for a previous mailing. It gets a 1/2% response. Should it continue following up?

Assumptions:

The cost to mail is $1 per piece.

The gross profit per order is $500.

The lifetime value for a new customer is $5,000.

Total mailing 10,000
Response percentage        .005


Number of responses 50
Gross profit    X $500


Total $25,000
Cost of mailing – 10,000 X $1   $10,000


Net income from mailing $15,000
Value of customers gained – 50 X $5,000 $250,000


Total gained from mailing $265,000

In this case, the mailing is still paying for itself, so it’s worth continuing. Also, since the lifetime value of a customer is so high for this business, it would be worth continuing the mailing even if there was a net loss from the mailing, provided Best Co. can finance it.

Many charities have found that they have a loss from the first donation from a donor. They make their money from continuing to get donations from people who donated before.

Dan Kennedy has a fascinating approach to increase response, which he "borrowed" from the debt collection industry. Simply compress the time between mailings to one or two weeks, and have your follow-up letters refer to the previous mailings. You can "label" the letters "second notice," "third notice" and "final notice"!

Keep investigating alternative ways for repetitive contact with your customers, such as repetitive marketing campaigns and newsletters (like this one), and you might dramatically improve your business results!

For new articles about how to improve your business, subscribe to our newsletter, Michael Gray, CPA's Tax & Business Insight!

Keep in contact with your potential customers by sending sales letters repeatedly.


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Michael Gray, CPA
2190 Stokes St., Suite 102
San Jose, California 95128
(408) 918-3162
Fax (408) 998-2766
email: info@profitadvisors.com
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