| Direct Marketing: Pay for the Number of Sales, Not the Number of Pieces |
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| Written by Jonathan Lucenay |
| Tuesday, 20 April 2010 00:00 |
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The conventional wisdom about direct marketing often seems to be that lowest price is best. In fact, many dealers believe the low price-per-piece they’ve negotiated with their direct marketer is not only a great value, but also allows them to reach thousands of potential customers they wouldn’t have reached otherwise. But is price-per-piece direct marketing really a good value? And, more important, is it resulting in the increased sales you are paying for?
The truth is, the more you work to negotiate the lowest price-per-piece for direct marketing, the more marketers are tempted to lower their own costs—often cutting back on the analytics, demographics, and behavioral trending that make direct marketing effective. You get a good price, but you’ve guaranteed your marketer is not going to spend a lot of money finding people who are ready to buy and matching them with the right offer.
For example, many dealers market their “offer of the month” to their entire database. While that offer will resonate with some buyers, customers who are not in the market will only see the offer as junk mail. Or, in what would be considered a successful direct marketing campaign, you might pay a marketer to reach 10,000 people, and see 20 new sales. Sounds good right? What if, however, you could have sold those same 20 cars by only contacting 2,000 people and not have spent the money to reach the other 8,000 people who threw your offer away? When your mailers end up in the trash, so do your marketing dollars.
Recognizing the poor economics of the traditional direct marketing model, many dealers have begun focusing their direct marketing on sales results rather than the number of contacts. For too long dealers have assumed, and perhaps been told, they can’t pay marketers for results, but the reality is dealers should insist on it. No dealer would consider paying his or her sales associates for the number of contacts they make in the showroom. They get paid for results—sales.
For maximum value, direct marketing should work the same way: if the marketing generates sales, the marketer and the dealer make money. If the marketing doesn’t generate sales, then nobody makes money. Needless to say, direct marketers who will agree to this payment method are much more motivated to produce results. When done correctly, highly targeted, results-focused direct marketing can produce a 15 to 20 percent increase in sales right away, and an increase of 25 to 30 percent after a year.
With summer approaching, now is the perfect time to take a closer look at your direct marketing efforts and what you are really paying for. Are you paying for contacts or results? If you’re not paying your direct marketer for results (like you pay sales associates), maybe it’s time to find a marketer who is as motivated to make sales as you are. With effective, results-driven direct marketing, there is more opportunity than you think, even in today’s market, to grow your market share and reduce your marketing budget at the same time.
Jonathan Lucenay is founder and CEO of Summit Resources, LLC, an Atlanta-based direct marketing company that provides “guaranteed sales” for auto dealers (new and pre-owned) throughout the U.S. For more information, visit www.srppm.com, or call 1-888-786-6489.
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