 
Is this campaign a good
investment?
Sounds like a pretty important
question.
We will answer it by:
 |
Estimating
costs |
|
Plugging in
the revenue returns |
|
Calculating
expense-to-revenue ratios (E:R) |
|
Adjusting
these numbers to allow for contributions
from your partners |
As in step 6, we
will use the worked example from step 4 and
apply the numbers to two campaign structure
examples. You should find it easy to
extend these two examples to other, more complex
campaign structures. |
|
Costs and E:R for a one-touch
experience-based telemarketing campaign |
 |
Cost
of data = $0 |
It is
not necessary to "buy" data for most projects.
At KMA we put our customers' existing data
through a data optimization process that
usually yields data as good as can be bought
(see Marketing Data for details) |
| Cost
of calls = $8,000 |
Assume $10 for an experience-based qualification
call. Remember that these calls require skill
and experience levels that equal or exceed those
of the sales reps who will sell to the leads.
So, do the math and you will see that it is not
easy to get a quality call of this type for $10.
With the use of advanced systems and processes
KMA has halved the original cost of this type of
call and can now offer them at around this
price. |
| Revenue = $400,000 |
(From
the assumptions used in Step 4). Here we assume
5 wins with an average revenue value of $80,000. |
| E:R =
2% |
Total cost ($8,000) divided by
total revenue ($400,000) gives, in this case, a
sweet answer. Any answer under 4% should be
considered excellent; up to 8% is often
acceptable. Higher than that - contact us to
discuss |
| Partner contribution = $2,000 Net E:R = 1.5% |
IBM may have special offers in
Campaign Designer. Your distributor may have a
coop offer that this project could qualify for.
In our example, we assume that your distributor
has a deal where they will provide coop funding
for KMA HiQ calls in this market.
As a result, your total expense
is reduced to $6,000. This makes your net
effective E:R 1.5%. If your numbers come out
like this - don't walk - run to implement this
project. |
|
Costs and E:R for a two-touch
- mail plus experience-based telemarketing
campaign |
 |
Cost
of data = $0 |
It is
not necessary to "buy" data for most projects.
At KMA we put our customers' existing data
through a data optimization process that
usually yields data as good as can be bought
(see Marketing Data for details) |
| Cost
or mail = $800 |
Here
we assume $1 each for a business letter with
color. For a fancier mailer that requires design
and special printing you may need to assume $2
or even $3 each for small quantities. |
| Cost
of calls = $8,000 |
Assume $10 for an experience-based qualification
call. Remember that these calls require skill
and experience levels that equal or exceed those
of the sales reps who will sell to the leads.
So, do the math and you will see that it is not
easy to get a quality call of this type for $10.
With the use of advanced systems and processes
KMA has halved the original cost of this type of
call and can now offer them at around this
price. |
| Revenue = $400,000 |
(From
the assumptions used in Step 4). Here we assume
5 wins with an average revenue value of $80,000. |
| E:R =
2.2% |
Total cost ($8,800) divided by
total revenue ($400,000) gives, in this case, a
sweet answer. Any answer under 4% should be
considered excellent; up to 8% is often
acceptable. Higher than that - contact us to
discuss |
| Partner contribution = $2,000 Net E:R = 1.7% |
IBM may have special offers in
Campaign Designer. Your distributor may have a
coop offer that this project could qualify for.
In our example, we assume that your distributor
has a deal where they will provide coop funding
for KMA HiQ calls in this market.
As a result, your total expense
is reduced to $6,800. This makes your net
effective E:R 1.7%. This is the sort of return
we love to provide to our clients. |
| |
|
|
What if your numbers
don't look good? |
If
you have got this far and don't like the look of
your E:R - don't despair. Contact KMA and share
your numbers with us. If you are trying to sell
...
| A high-tech, high-value
product or service |
| In the "IBM" world |
...
we'll work with you to find a way to generate
leads at acceptable costs. |
|
Adjusting the business
case |
You
may have other objectives that this project will
meet. Therefore, this project could supply
additional value beyond the revenue generated.
Such additional value could include:
| List enhancements -
updates that will make future projects more
efficient |
| Market research - finding
out why the non-leads are not interested in
your offers could be vital to making your
next lead-generation project succeed - or
even to repositioning your products. |
| "B" and "C" leads. KMA
likes to justify and measure lead generation
projects on fully qualified "A" leads.
However, we always generate additional
partially qualified or long-term prospects.
In the worked examples above, it would be
typical to generate 25 to 40 "B" and "C"
leads in addition to the 20 "A" leads.
The long term value of the "Bs" and "Cs"
could equal the value of the "As". |
If you are the decision maker,
you will know the value of these other items
and, even if you want to be conservative on
these "softer" items, you should use estimates
to recalculate your true E:R.
If you are in marketing and
you role is to recommend these projects to the
decision makers, you should put some estimate on
these items and ask your decision makers for
guidance on how they want them treated in the
estimation/measurement of E:R.
Whether you are decision
maker, marketing professional or both, KMA would
love to talk with you about this vital subject
of how to place real value on marketing actions.
Our XPerience database supports a wealth of
knowledge on how marketing projects create
immediate and long-term value. |
