The number of companies using classic lead generation and direct response marketing is very small, the opportunity for marketers to help others is huge. You don’t have to be one of the gure’s to make a difference. Here are some examples of what is working:
McDonalds
McDonalds promotes a $1.00 menu in many markets. Do they lose money on this promotion? For just the $1.00 menu, McDonalds probably covers all of their food costs. In the accounting world after considering other direct costs, McDonalds is probably not making any money on the dollar meal promotion. So why do they do it?
First the dollar promotion is very popular with students and even that group generally spend more than a dollar adding on additional items to their order. Students who like the deal, bring their friends and the average ticket often exceeds $3.00. In the fast food industry McDonalds is doing quite well.
The $1.00 meal is classic lead generation. Is it perfect direct response marketing? Hardly, since McDonalds still does not do much to build their data base of customers and use it for a direct to customer communication strategy.
Here are a couple of other examples:
Men’s Warehouse
They offer the “Perfect Fit Program”. This is classic direct response marketing. On line or in the store there are attractive offers to become part of this program. Members receive attractive offers by email on special buys and sales. Based on my experience with this retailer, they execute their lead generation and communication strategy very well.
Blue Hippo
Have you ever seen these brief informercials on TV? Blue Hippo wants you to send you a computer. They target people with limited resources by offering them a weekly payment plan. It appears they will send a computer to just about anyone. Their promotion is also classic direct response. The ad runs and viewers are asked to call an 800 number. Very easy to calculate return on investment. Run the ad, measure the calls received and measure the conversion of calls received to shipments booked. I have no idea of the economics of their business, but if it is like other pay by the week businesses the profit margins are huge.
The Number of Good Examples of Direct Response Marketing Are Increasing. Companies are beginning to wake up to the importance of measuring return on investment from marketing dollars. However, for every business having a marketing program that is structured to track return on investment, there are thousands that do not.
Even the companies that have in-house marketing experts often do not really know how to maximize the return on investment from their marketing dollars. Just this week I met with the CEO and marketing expert of a medium sized company that I am helping with a business plan and projections in connection with their interest in securing additional funding for an accelerated growth program. In examining what they have done in the past, I learned they purchased a targeted list of 5,000 leads. A mailing campaign with postcards was designed and implemented.
Sounds good so far. Upon closer examination, no testing was done on the marketing message. They could have used Google Adwords to test response rates and conversion of versions of their message. Even if they didn’t want to do that, they should have tested a sample of the 5,000 before have the postcard printed for a three step sequential mailing. The point is they are doing something, they are trying but they missed several key points that would have increased their return on investment.
Being on the list of most of the well known direct response marketers, it seems natural to identify gaps in my marketing expertise. Then I simply start paying closer attention to the marketplace and find huge opportunities for improvement. With every one of my consulting clients I work through with them enhanced processes and procedures to grow revenue and maximize gross margin and net profit. This approach is detailed in the free course “How To Increase Profits by 30% or More in 90 Days or Less” which can be found at www.stevepohlit.com and “Blogging for Profits” which is another free series that can be found here at www.stevereports.com
May Your Profits Grow and You Have Fun With The Journey
Steve Pohlit, Business Consultant
