I have a coffee mug with a great quote on it. It says “Direct Marketing doesn’t have to make sense, it just has to make money”. (Thanks Hacker Group!)
It’s one of my favorite mugs. First, it holds a lot of coffee. And more importantly, for demand generation marketers, those are words to live by.
When was the last time you evaluated your demand programs solely on how much money they made? I mean ignoring creative, format, who developed it, who your favorite rep is, which one your boss suggested and just asked “Is this program profitable?” If you’re not sure, it’s time. Use the checklist below to help
- Before you run another lead generation campaign, make sure you can track it. Demand generation by definition means trackable programs that well, generate demand. That means every single campaign needs an offer that someone can respond to. If not, it’s not demand generation. (Don’t even get me started on “awareness demand generation”. I like to call that “wasted money”. )
- What do you track? Track leads. That means you need a name, company name and some way to get ahold of them – like an email address or a phone number. It’s not demand generation if you don’t get a lead that a sales person can contact to sell something.
- Once you have the number of leads, analyze your results. My favorite metric for demand generation is cost per sale. How much was spent on the campaign versus how much money was made in sales? If you net out positive, that’s success. If you have a long sales cycle and getting cost per sale isn’t feasible on a timely basis, my second favorite metric is cost per lead.
- All the other metrics are interesting, but in my opinion, they aren’t tracking money. Clicks, opens, etc. are good support metrics, but they’re not leads in the sales team’s hands.
- Once you have the cost per sale, review which programs are profitable. Those are keepers. A positive ROI means a program that should continue.
- If any programs don’t have a positive ROI, take a hard look at them. What can be done right now to make them profitable? If they haven’t made money in a few months or if they never have, cut them now and reallocate the budget to expand profitable programs or to test new ones.
- Then put the rest of your programs in success order. Consider the one with the lowest cost per sale the one to beat. Way back when I worked at MCI, we had a $10 cost per sale using outbound telemarketing. So every time I wanted to justify anything else, I had to promise I’d try to match or beat that number. That didn’t mean we didn’t have a diverse direct marketing program, but it sure put things in perspective when I had brilliant ideas to test with a predicted $40 cost per sale. I knew going in that I was unlikely to get approval and since the goal was making money, that made sense!
So, next time you sip a cup of coffee, consider putting these tips in place. And if your direct marketing still isn’t making money, call me. I’d be glad to help.