I wanted to share this really cool quick case study with you.
I’ve been working with an offline student who just sent out their first batch of postcards to offline customers.
Here are the early results.
5,000 full color, large 6.5×11 sized postcards printed, addressed, stamped = $1700
Don’t freak out, he only had to pay for the printing up front and pays for the rest of them in “chunks” when he mails them out.
Total cost per card – 34 cents
Total cards sent to date – 1200 postcards
Can you guess how many sales he landed as a result of the postcard?
15, 20, 30, 42, or some other number?
1
That’s right – he’s made a single sale from the postcards (he has appointments still coming in from them though).
1 sale Tim … that sucks.
Not when you look at the most important figures – return on investment.
That one sell put $1500 in his pocket. So lets look at the important numbers
1200 postcards times 34 cents a piece is $408.
$1500 (the amount he got paid) minus the $408 (what he spent on the postcards) is a profit of $1,092.
That’s a 367% return on investment
(On a side note if you want to know everything I know about postcard marketing check this out: http://30minutepostcards.com/postcard_marketing/ I used everything I taught in there to help make this postcard and get the 367% ROI)
That’s why it is so important not to focus on the percentage of response ( I think it is a .001 response by the way) and focus on return on investment or ROI.
It’s also important to make sure the numbers make sense in order to use postcards.
Here is what I mean.
If you are going to do postcards in the US right now postcard stamps are 28 cents a piece. Then you need to factor in the cost of printing and labeling the postcard. Not to mention if you’re buying a mailing list you need to factor in that cost as well.
So lets say a postcard cost you 40 cents to mail (just an easy figure to work with).
That means for every 1000 postcards you send out it will cost you $400.
So now you know your cost on sending them out – what you need to also focus on is the cost of your product.
Lets say you get .001 response to a mailing. That would mean one sale every 1200 postcards.
So the cost of the postcards would be $480.
Your product needs to be AT least $480 to break even.
Here’s a rule I live by when it comes to pricing a product to use with postcards.
2 figures – forget about it
3 figures – needs to be $500+
4 figures – now you’re talking
5 figures – hello cash machine!!
(Did I mention you can learn everything I know about postcard marketing right here: http://30minutepostcards.com/postcard_marketing/ I used everything I taught in there to help make this postcard and get the 367% ROI)
Now that you know to focus on ROI instead of percentage of response it’s also critical to think about who you are sending the postcards to.
For instance – this postcard was mailed to a cold list (they had no idea who my student was) of construction companies within a 60 mile radius of where he lives.
It’s also important to note that the postcard was sent over a period of several weeks to different businesses. I like to send 500 or so postcards a week just to keep a steady flow of new business coming in.
So here were the top 3 keys to success for this campaign.
1. Who he mailed the postcards to. Businesses (construction companies) who could afford his services and were already doing some form of advertising.
2. His pricing. He made sure his prices were high enough that he could afford to send nearly 5000 postcards and all he would need to do is sell 1 client in order to break even. This is where people lose their lunch. Price your product to low and you’ll be out of business before you know it.
3. Persistence. He fully committed to the 5000 postcards, no matter the results. He didn’t stop after 200 card, 400, 600, 1000, or even 1200. He got 1199 no’s BUT he made 367% return on investment with this 1200 postcard. Most people don’t fail at anything, they just give up way to soon (Brian G. Johnson quote).
Got a comment, thought, or suggestion about this post? Post it below so I can read and respond.
Hi Tim, That is an awesome start for his business and if he never gets another response from the cards it is still an awesome start! He got a customer who may refer other business + he covered his a_ _ + he has a terrific ROI…
I have a friend in the restaurant business who thinks that his business lives and dies by food cost percentages not his profits. Yet, at his bank they accept dollars for deposit…not (per)cents…Thanks for the “real world” example Tim.
Tim, that is great stuff – good work. On a side note, I sent out 12 postcards the other day (yes…12)… and received a call and I’m currently working with a business.
Hefty up-front fee with $XXX monthly retainer. Post-cards def work when you do them right!
I get the concept. But .001 for a single sale seems to approach a single point of failure if that one sale doesn’t come though. Now I understand why Jay Abraham talks so much about getting endorsements and doing multi-step marketing. It truly is a force multiplier. Thanks for the insight!
Thomas -
You’re focusing on the wrong thing. Percentage wise it sucked. Money wise he made almost 4 times his money back. Would you take a 367% return on your investment. Or to put it another way – if you gave me a dollar and I gave you back 4 bucks how many times would you make that trade?
Tim
Hi Tim,
Would you please recommend your source(s) for (1) printing postcards (2) printing and mailing postcards.
Thanks, Sidra
Like you said, it is always about the ROI. Who gives a crap about response. You can’t deposit response.
Sometimes it’s tough to see the forest through the trees. Your every day, no nonsense examples are very much appreciated. Thanks for “clear cutting” when making your point. Always very insightful and helpful.
I really don’t know how I originally missed this post.
Anyways, since I’m here, I’ll give my $.02…
I would go further and say that the lifetime profit of the customer should be taken into account rather than the one sale when evaluating acquisition cost per customer.
(I would be willing to bet that he will make a lot more than just one sale to that client…)
Thomas, I personally don’t know about Jay Abraham’s marketing plan, but more than likely it’s based on the Krispy Kreme marketing method. (Multiple channels, multiple media, targeting influencers, etc. There’s a really good case study in HBR if you’re interested.) And you’re right, if he’s only doing one form of marketing, then yes, it’s a SPoF… however, I don’t think that postcard marketing is his only form of marketing. The real takeaway is that you need to figure out how much the acquisition cost is vs the lifetime value of the customer, regardless of the type of marketing involved.
(Also, something that you always need to consider is the cash flow… you need to be able to make it to the sale goes through…)
Well, that’s my thoughts on the subject. Good post Tim!
-D