B-to-B Insights: Success Is in the Numbers
Remember story problems, such as two trains heading toward one another? The problems looked so innocent and easy but usually had some tricky twist. Well, if you attempt to solve my story problem, it could mean the difference between a campaign that sizzles and one that fizzles.
Come with me through the story of sharp marketer Margie and her manager Sue. Using marketing math fundamentals as touchstones, let’s see how they tackle their current marketing mayhem and ultimately succeed based on a sound, tried-and-true solution.
Sue and Margie’s Dilemma
Manager Sue comes down the hall to speak to her demand generation employee—marketer Margie. “Margie, we’re not going to make the quarter. Our numbers are way off, and the vice president of sales is screaming!” Sue says in a panic. “How can we generate $2 million in gross revenue to hit our targets?”
Sue offers a fix: “I was thinking that we need to launch a new demand-generation campaign immediately!
We need leads to start flowing now!”
But Margie knows that marketing investment mistakes are common when decisions are made too quickly. So she quickly unpacks her mathematical tools and historical data, and begins to sort out the real picture.
Here’s what Margie knows for sure:
• The product’s average sales price is $25,000.
• There are no add-on sales opportunities to increase the average order.
• Given the high-quality brand and the complexity of the product, the direct mail package costs have been running around $1.50 each on quantities of about 75,000 pieces.
• The company’s targeted cost-per-sale is 7.5 percent of gross sales, or $1,875 (.075 x $25,000).
• In Margie’s three years at the company, response rates have been about 1 percent. Each inquiry receives an e-mail, which costs about 50 cents to deliver.
• Fifty percent of all respondents to an offline campaign go on to demo the product, after they go through an online nurturing and telephone conversion process. To close them, the sales staff calls each respondent who’s demoed the product at a cost of about $20 per contact.