Going postal or social: weighing pay vs. play

Many companies are back in the black, and stakeholders are looking for quality earnings in 2010 that flow from revenue growth, not just cost-cutting. If you’re expecting to grow your top line this year, then don’t expect it to happen from friends and followers. While having a reputable social media presence in the right circles is important, the efforts are complementary to proven tactics for new customer acquisition. It’s important to realize that while social media use is on the rise, the spending in this area is not. With everything else being equal, the value of a paying customer will always outrank the value of a prospect “playing.”

You get what you pay for

Consider the opportunity cost of your time spent on social media activities. The opportunity cost of time can vary based on factors like compensation, talent, core competency, unemployment and idle capacity. If you’re really good at mining for quality prospect data and can deliver above average response rates and lifetime value, then you may be better off coaching an intern to manage your presence on social networks. If you realize that his or her efforts are not worth cost of a paid internship, then it’s probably not a good investment of your time either.

Select media based on objectives and lifetime value (LTV)

Before you invest in data or delivery, consider the effectiveness of each media channel as it relates to acquisition and retention. Direct mail is still a strong media channel for new customer acquisition and you can’t beat the data card information on quality response lists when it comes to determining variables to predict lifetime value. Many experienced list brokers have access to high-definition data cards that include frequency distributions for recency, frequency, and monetary value (RFM) data. Doubling the response rate may result in half the income if you’re not tuned in to the “FM” metrics on the data card for lifetime value. This information is now updated directly from certified integration partners that host files for list rental fulfillment, so you know the counts are up-to-date and accurate.

Postal wins for privacy

In regards to privacy, going postal is a better bet than going social because there are many controls in place to protect consumers against the improper use of mailing lists. Direct marketing companies work together and share information about unethical mailers to prevent scams at the front-end of the process. There are also clearance approvals and list rental agreements that are required, and most lists are seeded to ensure compliance. In addition to these and other controls, the members of the Direct Marketing Association (DMA) abide by a Privacy Promise and Code of Ethics.

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