Budgets Schmudgets

Think about the last time you saw or heard an advert for the next lottery draw. What was their hook? It's usually along the lines of "this week the jackpot is an amazing twelve million pounds!!!" Seems fair enough, why wouldn't you buy a ticket when the chance to change your life forever is a mere six digits away?

What would happen if the advert simply said "This week, a lottery ticket will only cost you fifty pence"? Do you think it would have the same massive appeal? No, of course it wouldn't.

Now the interesting thing for me is that people look at their marketing from the latter point of view. So many people take a look at their next important campaign and start by setting themselves a budget.

Of course we have to be realistic. You can't just throw an infinite amount of money at something on the assumption that it's going to return a profit, but it does seem that there is a fundamental difference in the question that we are asking, rather than the one that we should be asking.

So how about this. The next time you decide you want to use some promotional merchandise for a campaign, don't ask yourself how much you want to spend. Instead, ask yourself how much you want to make.

As I've mentioned on many occasions, simply giving out merchandise to the masses is not effective marketing. You have no real way to test and measure how effective it is. You may well send out 5000 gifts, get 50 customers and then congratulate yourself on a 1% conversion rate - and in the world of direct mail, 1% is considered a victory.

One percent? Say it again and really think about it - ONE PERCENT. If I told you that tomorrow morning you would have to go to work, slog it out for eight hours, put up with all manner of stress and at the end of the day, improve your personal circumstances by one percent, you'd probably do the smart thing and stay in bed.

So the next time you're putting a campaign together, shift the focus to what it is you truly want to get out of it. If you're only looking at a 1% conversion, then put your money away. You'll make so much more by simply asking your existing customers to refer you to someone they know and arranging to go and meet them.

However, if you have a very clear objective that what you want is hundreds, if not thousands of new customers, then now we have something to talk about, and your allocated budget will pale in comparison to the amount of money that you stand to make.

Well, I'm off to sunny Spain for a week and then it's Christmas, so the next posting from me will be on the 29th of December - I hope to see you then.