It’s not every day you hear a large national retailer admit to a marketing error when total revenue falls short of projections by $140 MILLION.
Yet that’s what happened.
Erik Nordstrom, co-president of the giant luxury retailer Nordstrom, recently admitted:
By ending their long-standing direct mail loyalty program in favor of reaching customers online, earnings took a dive, along with foot traffic.
Their rationale for the change was simple:
Digital methods are cheaper, faster and work better in today’s consumer marketplace.
As it turns out, replacing a mailer with an email is not an even trade when it comes to generating awareness, leads, and revenue — as Nordstrom found out the hard way.
Yet Nordstrom is hardly alone here.
Their mistake is just the latest example of one marketing lesson that, despite all of the training and education available, almost every single business owner and marketer is going to make.
I’m guilty of making this mistake myself, along with a few other business owners I personally know. Here’s where we went wrong:
Mistake: “Money is tight, so I’m going to have to cut my marketing budget a tad.”
This one was on me. When my company was just getting started in 1998, most of our clients were in the real estate and mortgage industries. This was true for our first 10 years in business.
So, when the real estate market and the economy tanked in 2008/2009, we lost thousands of clients almost instantly, and our revenue dropped significantly. Some weeks, I wasn’t even sure we could make payroll! But I was dead set against laying anyone off.
To cope with the steep revenue decline, I listened to my advisors and — against my better judgement — cut our direct mail expenditure.
As a result, new incoming leads and revenue suffered more than any of us could have anticipated. In fact, that year remains the only year our revenue ever fell in 21 years in business.
Today, I maintain an annual marketing spend that equates to roughly 15% of our overall revenue. Since then, our revenue has steadily been climbing.
Mistake: “We’re doing really well right now, so I’m going to scale back on marketing.”
Lakewood College is a for-profit college (and a client of PostcardMania) that only had about 120 students initially when I met them, and they were feeling a little lost with their marketing.
After reviewing their competition, business goals and budget with one of our consultants, they started marketing more consistently and mailing postcards every month.
And their results?
Well, their efforts showed an almost immediate response. Incoming leads and new enrollments increased significantly.
So, what did they do next?
They responded by incrementally increasing their efforts every month, and as a result:
Enrollments likewise rose.
They realized: more marketing = more enrollments.
Then, they switched gears.
They put a stop to monthly mailings and decided to switch to mailing every other month. BUT they doubled the quantity they mailed.
10,000 postcards mailed 1x per month over 6 months = 60,000 postcards
20,000 postcards mailed 3x per month over 6 months = 60,000 postcards
And 60,000 postcards mailed = 60,000 postcards mailed = the same response. Right?
The math checks out, but their response told another story.
Check out this graph to see what happened:
We quickly helped them right the ship and got their marketing plan back on the rails, and as you can see, their registrations started to increase again concurrent with their mailings.
Sure, you could argue this is a coincidence or maybe there were other factors at play (like the economy, for example), but take a look at this last example:
Mistake: “Business is steadily increasing, so I’m going to try something new.”
My client, Dr. Eric Wolfe, started his practice from scratch in late 2013 in Aurora, CO.
By early 2014, he knew he needed to increase his new patients, so he contacted PostcardMania to help.
We set up a direct mail campaign to target the 18,000 residents closest to his practice, and mailed 3,000 postcards every 2 weeks for 6 months.
The results were positive:
Dr. Wolfe reported his practice started receiving 25-35 new patients per month. He was averaging 31 new patients every month, up from averaging 10 new patients a month.
That’s a 210% increase. Not bad for a brand new scratch practice!
But surely we could do better?
Happy to see such tangible results, Dr. Wolfe increased his marketing as follows:
- Upped his mailing list from 18,000 to 31,000
- Increased his mailing frequency from 3,000 every other week to 2,600 cards per week
This campaign ran steady for 21 MONTHS.
Dr. Wolfe went from averaging 31 new patients a month to 41. Additionally, his staff doubled in size from 2013 to 2016.
Dr. Wolfe wanted to change things up.
In late 2016, he reduced his mailers to 5,000 postcards per month (instead of 2,600 per week), in lieu of investing in digital strategies that he thought would pay off. He also switched mailing companies and left PostcardMania.
Not long after the change, his new patients declined. His practice went from averaging 41 new patients a month to averaging 35 new patients thereafter.
This new strategy carried into 2017, and his new patients dropped even more — down to an average of 33 per month.
Here is a graph of his new patient numbers, to help you visualize the changes in new patients:
The pink shaded area represents the timeframe he changed things up and reduced his direct mail outflow.
In mid-2017, Dr. Wolfe contacted us to get his marketing back on track.
The other strategy was something he wanted to try, but he could admit its failings.
We got his new patient numbers back on track and then some with a campaign targeting 40,000 residents near his practice.
He returned to more frequent mailings and started sending 5,000 postcards every other week.
He also added automatic Google ads to his direct mail campaign to simultaneously reach prospects online.
Just a note: This is something we offer (along with automated Facebook and Instagram ads) through our Everywhere Small Business campaign bundle — which is actually an incredible product if you want a totally turnkey, done-for-you marketing campaign that reaches prospects on every major platform. Personally, I would never mail a single PostcardMania postcard without it.
Back to Dr. Wolfe:
After doubling down on mailing frequency, he bounced back and began averaging 42 new patients per month again.
That’s a 28% increase over the previous year — just by bumping his mailing quantity back up to where it was in 2015.
You’ve probably figured it out by now, but the single marketing lesson we all have to learn for ourselves is this:
If ain’t broke, don’t fix it.
When you find something that works, don’t discard it arbitrarily in favor of something else — because the something else could be what drives $140M in revenue for your business.
Instead, introduce new marketing methods the appropriate way: add them to your marketing mix, track the results, and increase the spend as long as your return justifies the investment.
If you have any questions about marketing with Everywhere Small Business, or starting any marketing campaign for your business, don’t hesitate to call one of my marketing consultants at 800-628-1804. Their advice is 100% FREE for you to use!
Or you can email me directly at firstname.lastname@example.org
P.S. If you want to see what our postcards look like, you can order a FREE sample pack here!