Background: A regional home remodeling company was achieving a 10-12% advertising cost of sales for its direct mail program, delivering customers that were spending 3% per purchase above all sales from all sources of traffic.
Action: We identified a customer profile within the trade area that represented less than 8% of the demographically qualified home owners, but accounted for 57% of the revenue. These customers also spent 17% above average when they purchased. Put another way, the customer base was seven times more concentrated within the revenue base than within the overall trade area. Better yet, the client’s market share of the target profile was only about 1%.
Outcome: Advertising cost for current DM campaigns has fallen from 12% to under 5% of sales, with sales increased from 3% to 27% above average for all channels.