The Cumulative Effect of EDDM Postcard Marketing for Carpet Cleaning Businesses
All business owners want an effective marketing campaign to grow their business. This is a "No-Brainer." However, the continuous and persistent carrying out of the marketing campaign is often where small business owners struggle. Great marketing companies know that marketing takes time and continuous efforts. Many of these marketing strategies are planned out over months and years. Too many small business owners look at a "one-time" marketing effort and decide that it didn’t work good enough, and put an end to the strategy. Unfortunately, many times, the owner may have had a good strategy that was called off too soon… before the strategy had time to produce.
Postcard marketing is a perfect example of an effective strategy that takes time to work. In the service industry, postcards can produce a steady growth of business over time. The financial payback of postcard marketing can be huge. However, many small businesses do not calculate Return on Investment (ROI) accurately to see the real financial impact on the business growth. Let’s look at postcard marketing more in depth and see how this type of marketing can grow a small service oriented company.We are going to look at a fictional company called: Bob’s Carpet Cleaning. Bob Smith, owner, has been in business for a couple years. Over these years, Bob has grown his business with word of mouth, a nice website, and a few advertisements in the local paper. However, Bob has now come to a point where he wants to put an actual Marketing Strategy into play. He wants to actively “Investâ€� in his company to make it grow. Now, a true marketing strategy should put into play multiple forms of marketing. However, we are only going to focus on one part of Bob’s marketing strategy: Postcard Marketing.
Let’s look at Bob’s Marketing Strategy: $10,000 Yearly Postcard Marketing Budget
Bob wants to mail out around 1,000 postcards targeting potential residential customers in his service area each mailing. Bob already calculated that it will cost around $0.36 per postcard (includes design, printing, & mailing costs) that he sends out. (Bob got a great deal on postcards from cleancraft.com). So, Bob knows that it will cost around $360 each time he sends out 1,000 postcards using EDDM Retail from his local post office (more on EDDM later). Bob decides to send out 1,000 postcards each week, skipping a few weeks here and there, because he was too busy to get more customers. Overall, Bob sent out postcard mailings 28 times during the year, totaling 28,000 postcards at a cost of $10,080 ($0.36 x 28,000).
Bob was smart. Bob put a coupon code on the postcards. So, when a customer called, Bob asked how the customer first found out about his company. Bob tracked this information in the computer using his accounting software. Bob was then able to create a report at the end of the year to find out how much money his postcard marketing strategy made him. Bob’s report showed him that he got a 0.25% (that is 1/4 of 1%) job booking rate on this postcard marketing. That is about 2.5 jobs per 1000 postcards mailed. His average job ticket was $225. So, each 1000 postcards sent out brought him in $562.50 in revenue (2.5 x $225) at a cost of $360 (cost of printing & mailing postcards). So, he received 70 jobs over the year (70 jobs = 0.25% x 28,000 postcards) and $15,750 in revenue over the year ($15,750 = $225 avg ticket x 70 jobs).
Looking at the profit, Bob figured, he only made $5670 in profit ($15,750 revenue - $10,080 costs) from mailing out the 28,000 postcards.
DECISION POINT: Bob was getting worried. He only made an extra $5670 profit in Year 1 doing the postcard marketing. So, Bob had to decide if he was going to quit postcard marketing, or continue doing it again the next year. What would you decide???
Most small businesses would quit. They do not see a good enough ROI on this type of marketing. Unfortunately, this could be the wrong decision for the company. Read further to see why.
Bob decides to give it another go. He continues with the strategy (Year 2), and budgets the same $10,080 as the previous year. Bob gets the same results: 0.25% Job Book Rate….. $15,750 Rev â€� $10,080 Exp = $5670 profit.
DECISION POINT: Is this getting any better? Should Bob continue?
Again, most small businesses would say that is enough. 2 Years and only $5670 more profit each year! However, we missed some data here... Read on to see the data and “Hidden Profits.â€�
Oops… Looks like Bob didn’t calculate some hidden profits into his Year 2 results. After looking further into his customer base, Bob noticed that around 25% of his first year postcard customers called back and booked again in the second year of postcard marketing. So, Bob had 17.5 customers repeat (approx. 25% of 70 new customers from last year). At the same average ticket of $225 each, this brought in another $3937.50 in profits ($225 x 17.5). So, really, Year 2 of postcard marketing brought in $9607.50 in extra profit($5670 in Year 2 New Customer profits and $3937.50 in Repeat New Customer profits from the previous year). I think you see where this is going… Bob continues again for another year (Year 3) with same budget and same results: $5670 profit from new customer mailings. 25% repeat rate from Year 2 = $3937.50 profits. Plus, repeats from Year 1 – which we will calculate at 35% (25% “Yearly Repeatersâ€� + 10% “Everyâ€�Other Year Repeatersâ€� from Year 1 that skipped Year 2 and are now calling in Year 3) = $5512.50 Profit (Approx. 35% x 70 ‘Year 1 Repeaters’ x $225). Now, let’s add this up… $5670+ $3937.50 + $5512.50 = $15,120 Extra Profit in Year 3. (Notice, each year grows exponentially)
So, three years of postcard marketing brought in a total of $5670 (Year 1 profit) + $9607.50 (Year 2 profit) + $15,120 (Year 3 profit) = $30,397.50 Total Extra Profits over the Three Years.
Now, you should be getting the point of the TRUE VALUE of Return on Investment. However, we can even take this further. Let’s say out of the 70 new customers per year Postcard Marketing brought in, that another 10% was brought in from referrals from these happy customers. So, the 70 new postcard customers brought in another 7 new customers (10% of 70). Now, snowball this through Year 2 and Year 3, and you have $1000’s more in profits each year! Now, the math is getting a little complex. So, for the sake of argument, we will cut it off here!
As you can see, the Cumulative Effect of Postcard Marketing is an ongoing growth opportunity. What if Bob stopped after Year 1 because of marginal returns on his investment? Just think of all the future business growth & profits Bob could have lost!
The service industry is a great industry for Postcard Marketing. The growth potential of the cumulative effect is great. Plus, CleanCraft Products, Inc. makes it easy for professional carpet cleaners. With professionally developed postcards that can be customized for your business and mailing services to get these postcards in your potential customers’ hands. Perhaps, it is in your company’s interest to grow with postcard marketing.
Take a look at our Post Card Printing & Mailing Services Page for more info. This page also describes in more detail how our Carpet Cleaning Postcards and USPS's EDDM Retail mailing work together to provide a terrific marketing strategy for your business. Also, feel free to give us a call with any questions.
Disclaimer: Obviously, this is a fictional company. The 0.25% booking rate was chosen based on past performance of mailings. Your rates may be more or less. If you Google average EDDM response rates, many results give 0.5% - 2.0% response rates. We chose less than this, at 0.25%.
