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How Much Should I Spend on a Marketing Campaign?

10 Questions You and Your Team Need to Ask – and Answer

When we work with clients who want to get their message, service, or product in front of the right people – new prospects –  a very common question always comes up: How much should I spend on a marketing campaign?

The answer requires knowing the answers to several other questions within the framework of target marketing. Target marketing is researching and aiming marketing efforts at a specific segment of customers.

Within this mindset of target marketing, also ask yourself, “How much money can I save in sales resources if my marketing can do most or all of the job before sales gets involved?  For instance, if it takes five sales calls, on average, to get a proposal, can your marketing be so compelling that the prospect will give you the information you need to make your proposal on the first appointment? Target marketing, used with the appropriate message and a strategic delivery through optimally chosen channels, helps you optimize your resources – and get you a sale.

Below are the questions that need to be asked to develop and execute a well-thought-out target marketing campaign to prospects.

  1. Who are you trying to reach?
    If you’re a magazine or an association with a specific niche, then you need to find the people who are known to be interested in that topic or who are most likely to be the best prospects to which to send your offer or message. If you are a non-profit, such as a foundation, then you probably want to reach people of a certain age and of a certain income, perhaps with a known propensity to give.
  2. Why are you trying to reach them?
    This is important from the messaging and design aspects so that both reflect who you are or what you are trying to get across. For instance, let’s say based on the response to this question, the target group can be further defined, thereby adding another criterion and refining your group of prospects.
  3. How large is your geographic area?
    If you’re a local company trying to find new clients, then it makes sense to concentrate on specific zip codes, counties, or radius from the office. If you’re a magazine or association with a national presence, then you may not need to limit your campaign’s reach; however, based on your current readership/membership, you should be able to tell how many current readers/members are in each state. You can then decide to base any geography restrictions on that data.
  4. What is the size of the universe?
    What do we mean by the “size of the universe”? We mean, how many people there are available to reach based on identified characteristics. This is done traditionally through list brokers. The characteristics that define this universe include: Who are you trying to reach? Why are you trying to reach them? How large is your geographic area? However, it’s important to remember that the size of the universe depends on having the data available that fit your criteria. Some groups or types cannot be reached. We call this the Calico Cat Conundrum: You know there are thousands of calico cat owners in the United States. After all, you see them all the time. There isn’t a magazine on the market dedicated to calico cats, so perhaps you could fill that niche for calico cat owners. But during audience development research, you find that it’s impossible to find the audience you need to reach with your new product. Just because there is an interest and a passion for calico cats doesn’t mean people with that interest can be found.
  5. How much does your service, product, or membership cost?
    Everybody has a limit, even those with a high discretionary income, so it’s important that price is at a point people are willing to spend. But it’s not just about dollar signs, it’s also how much value the service, product, or membership brings to someone.
  6. How would your targeted prospects most prefer to be contacted?
    Some groups are better reached through the mail while others will respond better by being contacted through the web. Direct mail marketing can have higher costs depending on material choices, size, and postage costs; however, there are always options to help reduce costs and we continue to see direct mail perform well despite living in a “digital age.” Sometimes, a dual – digital marketing and direct mail marketing – approach might make sense. Make this decision based on the age other aspects of your target group – not your budget.  By reaching out to your group the way they prefer, you increase the likelihood of their responding.
  7. How would your targeted prospects prefer to respond?
    Our rule is to give prospects every opportunity. This is the case with direct mail marketing, when we often recommend providing a hard copy response mechanism, a phone number, and a web link. For web campaigns, ensuring a telephone number is visible as an alternative method of communication is vital. If you don’t already have all of these communication lines available, or you want to create ones specific for your campaign, then they will need to be set up prior to the campaign being executed, which stretches out the timeline.
  8. How many times are you intending to execute this campaign?
    It’s a well-understood fact that people need to see something multiple times before taking action. You don’t want to contact someone too many times, but you also don’t want to contact someone only once if they are a solid prospect. Give them a chance. For some campaigns this may mean three times… and for others it may mean seven times. Again, it’s about giving your targeted group – your best prospects – the opportunity to see your message or offer and to respond. And at each point of contact, people respond. Keep in mind the legal requirements of how many times you can contact someone if you have rented their name through a broker.
  9. Can the pieces created or used for the campaign be used for any other purpose?
    Let’s say you want to conduct a marketing campaign with the intention to mail to a certain number of individuals each month for six months. Reports reveal that the first three months have performed lower than expected and you decide to cancel the remainder of the campaign. But you still have all the pieces and work invested. By planning ahead – or by using existing materials and messaging – you can structure a campaign with pieces that can be used for other reasons. This is especially true with messages and offers that don’t have an expiration date.
  10. What is the projected lifetime value for each new person gained?
    Our publications director likes to say, “We make our money on renewals.” For our magazine titles, we will spend the value of a year’s subscription to get someone to become a subscriber because we know that people stay subscribers for an average number of years. For professional associations, enthusiast associations, and trade associations, the payoff of getting a new member isn’t just with their first year of dues; it’s about the lifetime value of that person and the income they will provide the association. For instance, let’s say an association is $150 a year. You know that members stay an average of six years. The lifetime value of one new person is $900 and not $150, not to mention any additional contributions they’ll make to a PAC, foundation, etc. Once you begin thinking in those terms, the cost it takes to market to a prospect is more reasonable.

When you define and refine your group of prospects, reach them the way they want to be reached, and compose a message that will resonate with them, the success of your target marketing campaign increases. Of course, in working with our clients – and for all marketing we conduct for ourselves – we make the effort to develop marketing campaigns that will work effectively and result in a positive ROI.

So instead of asking how much you should spend on marketing to your prospects, ask yourself, “How much am I willing to spend to secure a prospect who will remain invested – and support my cause, product, or business – for an extended period of time?

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