Return on EDDM

Residential
21

Hey Chris- Thats pretty low but I can see going that low on one form of advertising to make sure the guys stay busy at all times while your other forms of advertising are hitting much higher returns such as websites etc.

If in my case the returns were that low accros the board I would pretty much be out of business.

22

My thought is 3 to 1 is pretty close to brake even

23

How is 3 to 1 close to breaking even? That means if you put in $1000 worth of advertising you’re getting $3000 in work. Not ideal, but by no means breaking even.

24

Hello Jermey

My quick thought process was

you spend 100 dollars to get get three hundred dollars in work

it cost roughly 30% to do the job that comes out roughly to 100 to do the job

so now you have spent 100 to do the job 100 to get the job and that leaves you 100 right back where you started.

maybe im wrong I that’s just the way I see it

d

25

If your looking at doing EDDM, in order to have a successful campaign, you can’t deal in hundreds of dollars but in Thousands of dollars. If your only spending a couple hundred dollars, I wouldn’t be using EDDM.

26

hello Jeremy

I used 100 to make it simple in my thought process, in theory is doesn’t matter how many zeros you put on the numbers the percentages are the same. I may be missing something maybe chris will do a quick brake down for us

27

[MENTION=1]Chris[/MENTION]

28

3-1 is not good if everything your doing has a return rate of that. Make the example anything such as you make $30,000 for every $10,000 spent to advertise. Then factor in your labor cost, the gains you make that are taxable income etc. your barely going to break even if your lucky.

Chris is saying he would go as low as 3-1. I can see that. Probably most of the time he’s doing much better then that. Also he sure as heck doesn’t have all his eggs in one basket which is critical to anyone success.

I dumped the yellow pages a few yrs ago because of the 2-3 to 1 return we were getting which then we were spending upwards to $10,000yr to advertise in all the YB in my area with large ads.

29

Yea 3:1 is kinda the low point as John mentioned… I kinda look at it this way.

We can use simple math

$100 spent $300 made

$300 rev

  • $100 adv exp
  • $150 - labor, Chems, fuel, admin over head etc…

$50 left for the company

This works for me for a few reasons…

  1. this is as low as we would go
  2. $50 sounds small, but these #s are small examples and we typically are talking in the tens of thousands
  3. This is worst case scenario and typically we yield way more than this on our different advertising methods
  4. We are on the larger side and can absorb things like this sometimes, margins are leaner in the slow season and sometimes breaking even is ok with us in order to keep our people busy until busy season is back in effect. The cost of retraining and getting people up to speed can be huge.

Also this would just be on new customer acquisition, 75% or so was repeat clients this year… So once they are in our system things get a lot more profitable.

Hope that helps a little bit guys.