Performance-Based Marketing

There has been a ton of talk on looking at performance-based marketing versus the traditional way of looking at performance by planning direct marketing campaigns based upon how many pieces you can mail at a certain cost per thousand (cpm). Or the number of folks you can call for a certain cost per call. The thinking has been that if you can reach a certain cost per piece, call, campaign, etc., you’ll be spending your dollars most efficiently while meeting your marketing budgetary numbers.

Not so much any more . . . more marketers are now utilizing the concept of performance-based marketing instead of looking at the simple costs of each campaign. The reasoning that I’ve heard for this is that this is the right thing to do “in a time of recession . . .” oh boy, here we go again. Whatever economic state that we happen to be in right now, there is certainly more pressure than ever on marketers to be able to prove that the money that is spent will net in getting money back. I’ve even heard some say that if they spend $100 they want to be sure that they’ll at least get the $100 back. Yikes . . . whatever happened to the good old days when we insisted that we actually made money from our direct marketing efforts?

The truth is that we are still on the hook for making certain that we are squeezing every cent out of our marketing expenditures, and if you’re measuring the results of each marketing campaign because you have to prove that what you are doing is working then you are, very much indeed, involved in performance-based marketing. In fact, I’m not sure when we haven’t been. Again, the beauty of direct marketing is that it can so easily be measured and analyzed so that you can re-group, tweak and refine your campaigns over time.

Granted, there are those companies out there who are lucky enough to be involved in industries where they can blindly market or advertise and continue to make money but these companies are becoming fewer and further between. Most of the companies that we work with need solid proof from us that what we are recommending is positively impacting their bottom line. Trust us when we say that we are relentless as we scan our response rates, conversion rates, open rates, etc.

We analyze our client’s customer bases to ensure that we get the best understanding that can possibly be obtained of who their customers are. Then we scan the marketplace for data that will perform in only the most optimum way for our clients’ direct marketing campaigns. Then, we analyze the data. What is working? What isn’t working? What is working just OK? How can it be changed to increase the response rate?

By intelligently applying the tenets of performance-based marketing, we can ensure that we are increasing the profitability of every customer portfolio consistently. And by the way, while we’re at it, we’re increasing our own profitability, too. It’s a win-win scenario!

Next time you find yourself only looking at the cost per piece . . . really dig down into what that really means and how it will impact your overall profitability. It behooves us all to look at direct marketing expenditures from all perspectives, then blend those ideas that make the most sense for your business into a strategy that will bring you the most profitability.