After 25 years of managing Direct Response advertising campaigns, here are some secret steps to helping you become profitable fast.
Step One: Before you spend a penny, know when you make a dollar.
The heart of direct response is knowing how many responses you need for your investment so the campaign delivers your profit instead of costing you your future retirement. Here are the metrics you need to know:
- How many responses, calls or unique visitors does it take for me to generate a purchase? That is your conversion rate or ratio. If it takes 10 calls for you to generate 1 purchase or sale, then your conversion ratio is 10%.
- Next, how much can I afford to invest to generate these responses? Let’s say your product or service costs the customer $500, and your profit on that sale is $250. If you convert at 10% then your target cost per lead can be no greater than $25 just to break even on your media, or deliver what is called a 1 to 1. Spend a dollar, make a dollar. So any media that delivers a cost per call or response under $25 is a winner.
Step Two: Match your media to your sales system.
Analyze your internal sales system. Do you generate most of your sales from your website? Do you have in-house sales people or a call center answering the phones? When do your best salespeople work? That will guide you to your media mix as to how much Television, Radio, Mobile or Internet you need to be doing.
Step Three: Make sure your creative is really a well-crafted Direct Response piece of advertising.
Direct Response advertising is a totally different animal than branded advertising. There are tried and tested formulas you need to adhere to. Hire a professional Direct Response agency. They will make sure you have the best creative and alert you to any copy that may hurt your response rates.