Though its first prospecting effort did not break even, a direct marketer of toffee is satisfied with the results based on the long-term value it expects from the new customers.
“What we did was purely a customer acquisition test to see how prospecting would work,” said Andy Volkmann, controller at Enstrom's Almond Toffee, Grand Junction, CO. “You have to look at the lifetime value of the customer. That's the idea behind it, not as a one-year wonder. If they act like the other tens of thousands of customers — BTB and consumer — we have, this type of effort will pay off for us. Some of our customers have ordered with us for more than 20 years.”
To gather the prospecting list, Enstrom's submitted its BTB house file of 8,000 to 10,000 customers for profiling to Abacus, which provided a bit more than 10,000 BTB names.
“We said to Abacus, 'Give us 10,000 names,'” he said. “We wanted to test the placement of the sample and timing of the mailing. It was supposed to be a blend of everything. We're trying to find out how many mailings it would take to get a certain number of orders during the Thanksgiving and holiday seasons, and we're dabbling in prospecting for the first time. Most of our BTB orders came in early December.”
Names were randomly segmented into three groups. Pieces to all three included:
· A reply envelope.
· A pitch letter from the company president.
· An order form with spaces for five toffee recipients and a “please ship for” option that included Christmas, Thanksgiving or “Now.”
· An 8-by-11-inch, three-panel foldout brochure outlining the details of quantity discount and warehouse direct purchase programs. “Some gifts say: 'It was nice working with you this past year.' Our hand-crafted almond toffee says: 'We look forward to working with you for the next 100 years'” was included on one of the panels.
Two groups of 4,500 received this mailing. A third group of 1,500 also got a sample toffee bar. One mailing of 4,500 and the mailing with the sample went out in early September, followed several weeks later by the final 4,500-piece drop.
Providing the toffee sample yielded mixed results. The response rate for the group receiving the sample was 1.6 percent, much higher than the 0.18 percent and 0.29 percent response rates, respectively, for the two 4,500-piece mailings. The average order among those receiving the sample was $57, compared with $505 and $112.62 for the other two drops.
“With our BTB customers, it's real hit or miss,” Volkmann said. “They can put in a $10,000 order. The highest in this particular group was $3,300, pushing the average up to $505. The orders continued to come in following the end of the holidays in early January.”
The mailing with the toffee sample had a per-piece expense of $2.64 while the rest of the effort produced a $1.82 per-piece cost. The brochure cost 38 cents apiece. Per-piece postage expense for the mailing of 1,500 reached $1.16 and was 84 cents for the rest of the campaign.
“[The $20,000 expense swamped] … the revenue coming in, but the people we got will come back next year,” he said. “I need to learn from Abacus who did the ordering in order to get a profile of the person who opened the piece. Abacus said [those targeted included] BTB customers who have in the past purchased food gifts. I also want to profile the companies that responded to our offer.”
