Tuesday, January 13, 2009

The hiddden costs of any marketing campaign

Marketers are very quick to sell you on the upside of any campaign, whether it is TV, radio, print, email, or direct mail.  Skilled marketing companies can even supply you with data on conversion and response rates and how much return on investment you can expect.  But beware of the hidden side to any marketing modality.


Newton's third law of motion states that for any action there must be an equal but opposite reaction.  While in marketing, the opposite-than-intended reaction may not be equal, it is present and you ought to be aware of it.  Lets use a mailing as our example.

Let's say you send 2000 newsletters to your established patients.  Conservatively you can hope for the following:
  • Cost of the mailing ~$2500
  • 1% positive response rate, max = 20 patients who call to come in and be seen
  • Each encounter  = $150 = ROI of 120% or the campaign paid for itself + $500.
Sounds good, right?

Now lets factor in the turn off factor.

  • Of the 2000 mailings, you annoyed 1% 20 patients
  • 20-60 patients x $150 = $3000 in lost revenue for those patients who decide to hopefully just leave you.
  • Factor in an additional small percentage of really mean people who will use the mailing as a reminder to bad-mouth you to others.
Obviously, this is an extreme example, but the turn off factor is probably in the 0.1 percent range, or 2 patients out of 2000 = $300 plus any additional bad-mouthing damage that they may do.

Just think about all the possible outcomes before you do a mailing, or any other brand of unsolicited, in-your face, type marketing campaigns.

Good luck,

Dr S