Setting a Marketing Budget

Most novice marketers have definite fixed ideas about direct mail that are way off base - most often in the area of what to spend and how much to mail.

Without enough marketing, one might experience a continuous "failure" in the area and really begin to believe their efforts are in vain. It has always been my belief that you should determine what you are able to spend for your marketing budget, spend it, and determine the maximum number of leads you can create.

With that said, I have to admit I hear this statement quite often: "We aren't a large company. How could we send out 5,000 postcards at once?"

I totally understand this question, because "What if they all call?" seems like a valid concern, right?

Here is the reality behind it: Unfortunately, they won't all call. However, a good deal of them very well may and making sure your traffic is not more than you can handle is something to think about.

Truthfully, there is no sure way to tell exactly how many people will call if you haven't done this type of marketing before. Think of it this way: What would happen if they did all call? You may not be able to handle all of them, but you would handle as many as you possibly could, right?

In this scenario, you would have maximized your income for that time period providing you close up all those callers! You can also explore the idea of expanding your operation to handle the number of leads you can create.

What if you don't max out your promotion at the very start? You can afford to send 4,000 pieces every two weeks, but you think you will simply get too many calls to be able to handle. So instead, you send out 2,000 and the response is decent. However, you still have downtime and find yourself trying to "manufacture" sales.

You saved $400 in marketing money but you had enough downtime to have closed quite a few more sales. The question now becomes, "Which gives me more money in my pocket? Saving $400 on marketing, or closing more sales and earning as much as a couple thousand dollars?"

More than likely the answer is to spend as much as you possibly can on your marketing, right?

By spending all that you can afford on marketing when you start a program, you maximize your income almost immediately.

The scenarios above are interesting, but not common. Most folks are concerned with not getting enough leads, not too many. The question I hear most often is, "What if I send out 5,000 postcards, shell out $1,500 of my hard earned money (postage is about a grand of that $1,500 by the way) - and NOBODY calls?"

You will never know which scenario will occur for you without actually doing a mailing. I promise you one thing; if you apply all the things you learn in this manual, you won't have zero incoming leads from your postcard marketing efforts.

But how many leads should you expect? Good question. And it's a very common one. People want to know what they can expect. This is what I hear all the time: "Okay, I'm on board. I'll send out 5,000 postcards. What will my response be like?"

You know what I say? "How the heck should I know?"

Okay. I do know a little about this. But the truth is, it's different for different industries, different postcards, different lists, different promotions and even different times of the year.

This is not a turnkey industry where you plug in a formula, fill in a blank, pull the trigger on the mailing and reap exactly what I told you to expect. Besides, there really is a saner way to look at it than number of leads in versus number of pieces sent out.

Return on Investment (ROI)

ROI or Return On Investment

Let's talk about ROI - Return On Investment. With 5,000 postcards sent, you're spending about $1,500 total. First of all, you need to track the responses very carefully in order to see the number of leads that come in off of a specific mailing, and how many of those actually closed. What is the amount of money you earned after spending the initial $1,500? This is your ROI. At my company when a customer doesn't get the results they expected, we go down a checklist with them to help them figure it out.

You can ask yourself these same questions:

  • Is the list I used for the right market/audience?
  • Is the list I used fresh?
  • Did the design have a bold headline and a bold color scheme?
  • Did I list the benefits of the product/service on the back?
  • Did I tell the recipient to call or go to my website with my postcard text?
  • Did my receptionist route all the leads? Is my receptionist reliable?
  • Did I track them to see how many actually came in?

The Myth of the Bad Receptionist: A Marketing Fable

I can't tell you how many times it has been "lousy receptionist" as the "why" behind the "no leads" complaint. This next thing really has nothing to do with this particular manual, but I'd feel remiss if I didn't mention it.

Your receptionist is the first living, breathing line into your business. She is more than the mere gatekeeper to your back of the line employees; she is equal parts customer service rep, den mother, big sister, cheerleader, tour guide and bouncer!

Of course, you can always use a computer-generated service to answer your calls, but why would you? Those things are evil!

Do you like it when a machine picks up when you're calling a business for the first time? Do you hit zero over and over until a living person picks up? Do you hate it when that living person sounds like a zombie and like they couldn't care less if you reached the person you're trying to reach? Have I made my point?

Unfortunately, businesspeople assume the best receptionist is one who works for low wages. Why would you pay low wages for the first impression your company makes?

We always have a living, breathing receptionist. As we expanded our business over time and the number of incoming calls grew and grew, we found that our leads started to flatline. We were sending out more and more postcards, but we weren't getting a higher amount of leads. We discovered that many of the calls - about 200 a day - were going directly to our computerized answering device.

We decided to hire a second receptionist to answer the phones along with our regular receptionist. What happened? You guessed it. The leads picked right back up.

And the number of incoming calls in general skyrocketed. Prior, about 200 a day went to voicemail but even more had simply hung up and we could never know how many leads we actually missed.

Never underestimate the human factor in doing business. Postcard design, campaigning, tracking, it's all for naught if your prospects can't feel the human factor behind the message you give them - and the service they get. So in discussing what you should expect from your mailing, you must take into consideration ALL factors involved, especially the human factor.

I have to tell you another story: This time about a company that mailed solely on blind faith and just refused to track the responses. What kind of person would spend postage money month after month after month without tracking results? Who in this world would follow my advice religiously without question? My husband, of course.

His entire industry had changed dramatically. (He does title searches and document retrieval for mortgage lenders and title companies.) The re-fi boom was over and he, along with all his colleagues, found themselves with half the business they had the previous year. He has four really close friends that all do the same thing but are in different territories around the country. They're always comparing numbers - number of new orders in, dollar value of that number, gross income, etc.

Anyway, when his numbers crashed in April of 2004 I basically told him it's "do or die" time. Then, a year and two months after the first mailing, he hit a highest ever month in his company's six-year history. And after checking with his friends, they were still suffering with low numbers and complaining about the industry in general.

So what's the secret? Well, it's only a "secret" if you just flipped to this page and started reading! He mails 12,000 cards, month after month, like clockwork. We designed a series of cards and over this period he's built great credibility with his potential client base. But I also have to say that he is a brilliant executive and really delivers a superb product with terrific customer service, too. Postcards can generate leads but you have to be able to close the sale and then deliver the product if you want to succeed. It all comes back to the human element; no business can succeed without it.

What is his ROI? Well, with no mailings his company brought in $80,000 in April 2004 - a total crash. The next year he did upwards of $180,000. The gross income started going up immediately after he started the mailings. He tracked nothing but his income and his new orders.

We have no idea how many reaches into his company there were. We have no idea of the number of new customers. We know none of those things. But we do know he's making way more income. If he didn't have friends to compare numbers with, one might simply say, "Well, the industry is turning around - thank goodness." But this would be a false "why." He's marketing consistently and he's bringing in more income. Period. He spends around $3,000 per month on postcard mailings and his income went up $100,000 per month.

Do you think that that is good ROI? I sure do.

Your Formula for Your Business

With my husband Sam's business, we chose a random amount of cards to start mailing. We did this because he wasn't doing ANY marketing at the time and we knew that a good amount to send for acquiring new business is about 10,000 pieces per month. We have started many companies off with this amount and it always pays off if done consistently. But there is a more organized and mathematical way to figure this out if you're up for it:

Do a test mailing of 5,000 pieces.

This is the number I recommend for a successful mailing, based on nearly a decade of experience.

Ensure all points for a good design are included in the piece covered 
in Chapter 13.

If necessary, re-read. (In fact, I'd make that mandatory!)

Put a code on the postcards so that you can track the responses.

Without this code, tracking will be twice as difficult - and half as effective.

Gather information using the human factor.

You'll have to have your sales rep or receptionist ASK, "How did you hear about us?" If "postcard" is the answer, then proceed with the next question: "Can you give me that marketing code you see there on your postcard, please?"

Keep track of all incoming data.

Note down all responses and where they came from, regardless of whether or not you think they're qualified (someone unqualified today may become qualified down the road - never disregard an incoming lead).

After about four weeks, evaluate how many leads you closed off of that mailing.

I have to tell you, though; "four weeks" is completely arbitrary. Obviously, different businesses have different sales cycles. Some products are easily sold with one phone call while others require much more follow-up. But this is a good place to start. Leads will actually continue to straggle in over time as well.

Figure out what additional income you brought in due to that test mailing.

This would be impossible without proper tracking procedures, so if you haven't done #5, go back and start over.

At this point you want to come up with how much additional income you would like to make.

For instance, let's say you made an additional $10,000 that month over what you normally make, but you'd be happier with an extra $20,000. Well, if 5,000 cards yielded $10,000 up to this point, then you can safely assume that 10,000 pieces will yield double that.

Read the chapter on campaigns.

There is very valuable data in there on how all of this works. I developed a worksheet, provided in this chapter, to figure out your mailing formula. But in order to know exactly how much you'll need to send in order to yield the results you want, you'll have to test mail and then mail consistently. The main thing is to never give up.

Keep mailing no matter what.

When your sales numbers slow down, mail even more in order to make up for it. If you stop mailing, your leads will dry up and result in even lower sales.

Download the Estimation of Effort Worksheet PDF


Start Planning Your Own Marketing Campaign!

chapter index: The Ultimate Postcard Marketing Success Manual
chapter 1: Marketing Strategy Defined
chapter 2: Two Step Marketing
chapter 3: Attention Grabbing Marketing
chapter 4: Overcoming the 4 Marketing Obstacles
chapter 5: Email Lead Generation is NOT the Answer
chapter 6: Marketing ROI is Key, Not Responses
chapter 7: How to Build a Marketing List
chapter 8: Marketing to Customers
chapter 9: Marketing to Follow-Up List
chapter 10: Marketing to Targeted Prospects
chapter 11: Targeted Mailing Lists 101
chapter 12: Targeted Mailing Lists 102:
Keep Them Fresh
chapter 13: How to Design an Effective Ad
chapter 14: 10 Elements of a Effective Postcard Design
chapter 15: Writing Effective Ad Copy
chapter 16: Crafting a Successful Marketing Offer
chapter 17: Web Design Marketing Tips
chapter 18: Building an Integrated Marketing Plan
chapter 19: Setting a Marketing Budget
chapter 20: Setting a Marketing Schedule
chapter 21: Marketing Repetition is Crucial
chapter 22: Tracking Marketing Campaigns & Improving Results
chapter 23: Lead Follow-Up Process
chapter 24: Complete Marketing Process Overview
chapter 25: Postcard Marketing Case Studies
chapter 26: Key Marketing Terms Defined