Higher-cost, Hyper-targeted Efforts Can Win Big (1,164 words)
By Daniel Kelman
You do the math.
Target until it hurts; then target some more. That is the mantra of a successful marketing campaign. But targeting alone isn't enough. To get exceptional response rates—as high as 90 percent—I suggest using what I call the "high connection" approach.
Traditional high-end direct marketing math dictates that while targeting models are crucial, efficiencies are created through production economies: large-volume mailings plus a low cost per unit. High connection marketing turns that logic upside down. For this type of effort, you have to hyper-target down to a micro list. When you do that, you can afford (and justify) a higher cost per unit.
You don't need to be a numbers whiz to recognize that you can spend more per person on 50 people than you can on 1,000. That additional spending allows for exceptionally creative vehicles that generate drama and intrigue for prospects.
Let's say you target a specific group of 200 CEOs, and send each of them a piece with a production cost of $40. If you only get a 5-percent initial response, that means it cost $8,000 to get 10 respondents through the door. Now say you offered each initial respondent an additional $10,000 incentive (e.g., a trip on a private jet to a product demonstration and golf outing) and half the group took you up on it. That means you've spent $58,000 on the campaign, and if the sales team can close the deal with just one person, it's still a great return on investment.
If a new account is worth $1 million in gross profits, it's unlikely you will capture that customer with a 79-cent effort. You should hyper-target your list to the small group you want to reach, and invest heavily to create a unique experience.