I don’t have a success story, I have a sobering story. Here it is:
Number of pieces mailed: 10,000
Response rate: 1%
Number of inquiries: 96
Number that you manage to reach by phone to qualify: 70
Cost of qualifying by phone, per inquiry: $30
Number who turn out to be qualified leads (20%): 14
Total cost of qualifying ($30 X 70): $2,100
Campaign cost of $10,000 + phone qualifying cost = $12,200

Total cost of $12,200 divided by 14 qualified leads = $871.42. In other words, you must spend $871.42 to get to each lead who needs your product or service, can afford it, has authority to buy, and is ready to buy now. Not so good for a small business….

I will call this method the Machine Gun Marketing. Another method of Machine Gun Marketing is the Marketing Idea of the Week. You have an Ad Rep call on you and they have this special 3 for 2 deal. Plus they have this even that they will be attending and handing out another 1,000 pieces of whatever they are selling. Oh yeah, you will also be exclusive to your area of expertise and we will even create the ad. What a deal! But….you will have to do something by Thursday, this being Tuesday. Sounds like a great idea?

If it is not part of your overall marketing strategy, if it not targeted, and I mean really targeted, and you have extra cash in your marketing budget that you were just clueless on how to spend it and you have no collateral material supporting it and you cannot create the ad yourself(a two-step ad, by the war), and you already know how you are going to measure it and….. I have asked Ad reps, that I do not respond to this type of marketing, many have stopped calling. I wonder why…has their machine gun jammed or just ran out of bullets?

Technorati : Advertising, Direct Mail, Ideal Client, Target Marketing

I understand that starting with this statement may not be the best lead in this day and age, but you do have to start your process thinking here. Start-up or an existing business has to define their ideal customer. When you do, you understand your marketing challenges so much more clearly. So, who do you want as a customer? I would assume that you would like to have one that is economical to obtain, profitable once you have them and easy to retain. We need to start with a few specific characteristics but the overwhelming issue that you must address is how that interaction with the customer happens within your company, and if you can support it in a way that is acceptable then.

How Many Customers Do You Need? Think of the throughput of your organization and the mix of customers that you can effectively support. Can you only a support a few large customers, or many small customers? If you would like a mix of both, consider your percentage, 80/20, 70/30? Think how this would change not only your marketing but your operational structure?

What are the characteristics of your marketplace? Do you understand the market size, the growth rate(shrinking or growing), the different segments and your competition? You also need to understand the economic value of customers in each category that you may segment them in. After you determine the characteristic, ask yourself: Can you economically compete in this arena? Cost to service certain market can be considerable; it may be a good time for a SWOT analysis?

Decision Matrix template provided by Systems2win

What specific characteristics vary among customers that affect their profitability? We try to have an ideal customer but the bottom line is that all customers are different. Some of the specific characteristics that might be different are:

• Volume
• Sales support
• Inventory required
• Distribution support
• Credit and collection costs
• Speed of collection
• Engineering support
• Order entry support
• Field service

Maybe the most important consideration is when you consider the items that organization values the most, do your customers value them also. It is a hard road to go if you sell your organization on the values that identify your organization and then turn around and find a customer base that disregards them. So, who do you want as a customer?

Related Post:

Have you taken the path of your customer?

Another word for Marketing – How about Voice of the Customer?

Have you struggled defining your Ideal Client – Find out how

Is your Value Stream Mapping backwards?

Technorati : Buyer Persona, Ideal Client, SWOT, Target Market