The most successful promotion I’ve ever worked on – which brought in hundreds of millions of dollars – didn’t really “take off” until the fourth version of the brochure. My whole life would be different now if that company had stopped mailing after the third version and never mailed the fourth version.
How do you know if you should be persistent and keep trying to make the mailing work, or if you are “beating a dead horse”?
I see lots of mailers who try a product or promotion once, and if they don’t instantly get rich, they give up and go on to try a different product. But, often a promotion can be turned into a “winner” with just a few tweaks.
Partly, it is in how you analyze the results.
There are a lot of one-time costs to set up a mailing, such as paying the copywriter to write the sales letter, paying the graphic artist to make the letter or brochure look nice, and so on. You have those costs with the first mailing, but you don’t have to pay them again for all your additional mailings with that piece.
New mailers will often look at what they spent creating a brochure, and if they don’t get back every cent they spent, plus make a profit, on the very first mailing, they think the project is a failure and they drop it.
However, those “one time” costs should be handled differently. You pay them once, but they serve you over the entire time that you mail the brochure, which may be several years in the case of a successful piece.
To get a true picture of whether you are able to make money off a particular sales piece, the “one time” costs should be set aside. Only the variable costs related to mailing the brochure should be considered. Just the printing, postage, mailing list, and mail preparation – the items that make up the “in the mail” cost.
You might think you should include “overhead” expenses like salaries and rent on the office, but those expenses are fixed and will go on regardless of whether you mail or not.
The reason for looking at it this way, is you will very likely find that you will make a profit if you continue mailing. For example, you might figure out that if you spent an additional $10,000 on another mailing, you’d bring in $15,000, which would be a profit of $5,000 over costs.
That only considers the profit you are making now; it doesn’t consider the additional profit you will make off those new customers over their lifetime of being your customer.
The other thing I often see mailers do is look at their costs for a small mailing and think the costs would be proportionally greater for a bigger mailing.
When you are mailing in small quantities, like 10,000 pieces, the costs are way out of whack, because you are often using a small “quick print” printer instead of a commercial web press that does larger runs. You might be paying $1.00 per piece or more to get in the mail, when you could get in the mail for 80 cents each in a larger quantity.
A rule of thumb with printing is that you can get double the number of printed pieces for only 50% more money. So, 50,000 printed pieces may not cost that much more than 25,000 printed pieces. 100,000 printed pieces won’t cost a lot more than 50,000 printed pieces, and so on.
There are two types of costs in printing – setup costs and run costs. The setup costs are things like setting up the press, plates, film, etc. and those costs are the same whether you are printing a thousand pieces or a million pieces. The other costs are “running” costs, which include things like the paper and the ink.
The price you pay is a combination of both the setup and the running costs. If you’re printing a small quantity, the setup charges take a larger percentage of the overall total price. If you are printing in a large quantity, the setup charges are a smaller portion of the overall cost. Basically, the more pieces you print at one time, the less it costs per piece.
A promotion that loses money can often make money by simply mailing in larger quantities, because the costs are cheaper per piece in larger quantities.
And again, don’t forget to look at the additional profits you will make from those new customers on the back-end.
There are other considerations when buying printing. The size of each individual page or the number of pages in a brochure may not make it economical to print on a particular press because it doesn’t “fit” the press well without causing a lot of waste. One of the reasons I have mailed literally hundreds of millions of 5.5” x 8.5” booklets is that it is very inexpensive to print them on a particular type of press.
I’ve seen cases where slightly adjusting the size of the pages, or even ADDING pages (believe it or not) will bring down the cost of a brochure.
This is the kind of thing you find out by talking with your printer or a printing broker. My private clients get the benefit of the fact that I’ve spent the time and money to find the experts for my team, including graphic designers and printing brokers who are very familiar with direct mail, and know all these “tricks of the trade” so I get the best deals for my clients.
Take Away: I’ve seen mailers “walk away” from promotions that they THOUGHT weren’t money-makers, but could have been turned into money-making WINNERS if they had simply mailed again, and perhaps mailed larger quantities. Often a small “tweak” can turn a loser into a WINNER.