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Danielle Hickey is the Campaign Manager for Global Resource Systems, a leader in interactive marketing solutions. She oversees a team responsible for all client campaigns, creative development, testing, deployment and analysis of all email marketing campaigns.

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The Case for Zero Cost Acquisition

Written on
February 6th 2006
Author
by Danielle Hickey  |
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For every customer you acquire, you spend x amount of dollars, most of which is wasted on non-converting leads. If you apply correct data collection methods, those leads can be turned into an additional revenue stream, which can then be applied toward your initial lead generation expense. This technique is used in email list management and can bring your marketing to Zero Cost of Acquisition.

Paying for leads is the ultimate gamble for any business that needs an ongoing stream of new prospects to convert into sales. Let’s say you are selling toothpaste. You pay an agency, affiliate or any online marketer $5 for every lead they deliver that was interested in your toothpaste product. You collected 10,000 leads in one month, costing you $50,000. Of those leads, 50% converted into a sale with an eight-dollar profit that generated total profits of $40,000 before figuring in the cost per lead. You are now out $10,000.

This happens to marketers more often than they would like to admit.

Enter list management. By adhering to best practices in your data collection methods, you can turn those 5,000 non-converting leads and the converters into extra revenue by sending them third party offers, bringing your marketing costs to zero or adding an additional revenue stream. Why doesn’t everyone do this? It takes a massive effort to manage and successfully deliver high volume email campaigns in an ethical manner. Anyone who has tried to send more than 50 messages at one time to an in-house list can attest to that.

There are two main issues that all high volume mailers must consider: controlling delivery and controlling conversions.

In order to deliver successfully you need to be assured that the emails will be whitelisted across all ISPs being delivered to. If you are not whitelisted, chances are your message will not be delivered or will be whisked into the junk mail folder, never to be seen by its intended recipient. Avoiding these deathtraps for mailers entails successful branding of the emails and their sender, which means no hiding behind fake names or flipping IPs. You must also adhere to the highest standards in data collection and list hygiene methods, constantly monitoring results such as bounces and react immediately to complaints.

Conversions vary greatly, the key being that the list needs to be tested with several types of creative and offer types to find the right fit. While your toothpaste leads may not be interested in a payday advance, they probably would love a tooth whitening cream but aside from the obvious assumptions, you will not really know until you test the campaign. You may be surprised to find that your list also reacts favorably to education offers or something else that wasn’t immediately apparent.

Does list management mean that you have no control over what happens with your lists? Not at all. You can choose the types of offers promoted on your lists, which types you want to leave out and how often your database will be mailed to; after all, it is YOUR list. You can also choose the format whether it be a “joke of the day” or a weekly brief after asking the recipients on your lists if they would be interested in receiving such communications.

List management has been around long before the Internet made it more affordable. As new standards are created and the industry evolves, it will continue to become a very lucrative and profitable business model. It is an excellent means for marketers to monetize their data creating more room for calculating the cost of the initial acquisition of that data.



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