I haven’t managed a business postal mailing marketing campaign since the 1980s. The new marketing partner of a marina client wants to test a post card mailing project. In order to convince myself that the project is worthwhile, I had to make some early assumptions. This what I have so far:
Product offered: The main product is higher quality seasonal boat slips (deep water, protected, new wide docks) at $1,000 which is less than prevailing market rates.
Market: Boat owners within 20 miles who are generally not active on social media.
Goal: The goal of the project is 10 seasonal slip rentals for 2017.
Catch Offer: The ‘catch offer’ for responding to the promotion within the time frame is free seasonal trailer storage, normally $200.
Printing Cost: Postcard printing, two-sided color, is about $.30 each. I presume this includes design services.
Postage: First class postage per standard card mailing is $.34
Repeated mailings: It takes 5 postcards per recipient to reach maximum expected response.
List rental and labels: The cost of the list rental and label printing is $1,000
Labor: The labor cost is $500. ($100 per mailing which works out to $.10 per piece for label and stamp application).
TOTAL COST: of the project is .64x1000x5=3200.0 +1000 + 500 = $4,700
EXPECTED RESPONSE AND CONVERSION: After 5 mailings the conversion rate is 1% so 1000 mailing person list = 10 slip rentals
TOTAL REVENUE: The total revenue is 10x$1,000=$10,000.00 . That means the cost of sales is 47%. Tough to handle, but possible.
So under this analysis, it would cost $4,700 to bring $10,000 additional revenue. That’s only the first part of the analysis. After that, I have to look at how to address the gross income issue. I already know that gross income is less than the cost of advertising because the cost of boat slip construction and fees is so high. But that’s not the marketer’s fault. It means that there are other operational issues that need to be fixed. Factored into the decision, we should consider the likelihood of repeat business and the possibility of additional product sales to these new marina customers.
If anyone reading this has any experience or comments, I would like to hear. My main goal is to avoid the disaster I stepped into last season entering into a social media campaign that was designed to boost branding, not generate sales leads.