The Ecommerce Blog

Introduction

I want you to think back to the early 1990s. Before the Internet, before email marketing and way before Google AdWords. Back then print magazines were flying off the shelves, businesses manually followed up with customers using the phone and direct response mail was a big part of the marketing budget for most successful companies large and small.

Fast forward to today and it seems like most businesses have forgotten about sending something physical in the mail (not email) to their prospects or customers. Think about the companies you’ve done business with in the last year – probably dozens. Now think about how many of them have sent you something in the mail after you’ve handed over your hard earned cash – none? One? Probably no more than a handful for more people.

If an online store such as Amazon.com or Zappos.com sent you a 20% off coupon for your next order at their website would you use redeem it? I bet you would. The fact is we can use all sorts of fancy copywriting and marketing ideas but when it comes down to it, people still love a discount.

The Cost of Doing Business: An Example

If we look at CAC (or Customer Acquisition Cost) for a sample company selling to consumers (such as an e-commerce company selling t-shirt) then we can do some basic calculations:

• Let’s assume we only advertise using Google AdWords
• Let’s assume we have a 7% conversion rate
• Let’s assume our average CPC (Cost Per Click) is $1
• Let’s assume our average order value is $47 (excluding shipping)
• Let’s assume our profit margin is 35%

So, if we invest $1,000 over a week in Google AdWords marketing we can work out the numbers as follows:

• $1,000 invested in Google AdWords at $1 per click gets us 1,000 visitors
• At a 7% conversion rate we get 70 customers
• At a $47 average order value we generate $$3,290 revenue
• At a profit margin of 35% we generate $1,151.50 in profit
• Nett result is a profit if $151.50

Now investing $1,000 and getting back $1,151.50 is a 15% return which isn’t too bad, but what if we could get 25% or more of these customers to come back to our online store and place one, two, three or more orders with us? Yes you can use email marketing to send out a follow up promotion, but everyone is trying to get into your customer’s inboxes and it’s crowded. Very crowded.

Consider these points in favor of postcard marketing to existing customers:

• They already know who you are and are familiar with your brand
• You have their correct address, otherwise how would you ship their order to them?
• They’ll be receptive to your message because they already trust you
• The average consumer receives 16 emails for every 1 direct mail piece

Now consider these points about prospects and customers:

• It’s cheaper to keep an existing customer than to find a new one
• If you “wow” an existing customer they’ll tell (a lot of) their friends
• You have to earn the trust of new prospects but existing customers already trust you
• If you value your existing customers you won’t have any problems getting new customers (word of mouth will do the work for you)

Step-By-Step: Postcard Marketing to Existing Customers

I want to propose a dead simple strategy to increase the LTV (Life Time Value) and RPC (Revenue Per Customer) from your online store, and I want to give you the exact blueprint to get the job done. Just follow these steps:

1. Work out how much of a discount you can afford to offer existing customers on their next order. If your profit margin is low it might only be 10%, but if you sell intangible items which cost nothing to produce such as eBooks or reports then it might be as high as 50%.
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2. Login to your BigCommerce store and create a coupon code from under the Marketing menu. Set it to expire in 14 days and make sure the unlimited use option is selected. Don’t use the auto-generated coupon code. Use a human-readable word such as SAVE20BUCKS or 35%_Off_March_2010.
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   Optionally enter a minimum order value before the coupon code will trigger a discount. If you do this your postcard’s message will look something like this: Spend over $100 on your next order and receive 25% off your purchase.
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3. Go to http://www.infousa.com and sign up. InfoUSA is a direct mail company which lets you design a postcard, upload a list of addresses and send your postcard out for under $1 per postcard.
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4. After signing up, click the “Postcard Marketing” menu option to create a postcard from one of the available stock designs. Make sure the side without the address includes a strong call to action such as “Thanks for your order from [Store Name]. Here’s a coupon for $30 off your next order, good thru [Date Coupon Expires].”
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5. On the back next to where the address goes, include a personal message such as “Please accept this $30 discount off your next order as a thanks from the team here at [Store Name]. We sincerely appreciate your business and just wanted to send you a small token to say thank you.”. Remember to include something about the coupon’s expiry date if you set one.
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6. After you’ve designed your postcard, login to your BigCommerce store and from the Orders menu, choose the Export Orders option. Search for order which were created in the last 30 days then hit the search button. This will give you a list of all orders (and customers) placed in the last month. The idea with our postcard strategy is that you create and send a postcard to new customers every 30 days if you can make the initial test profitable.
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7. When you see the list of orders, click the bulk actions dropdown menu (next to the Go button) and choose the Export These Orders option. Follow the wizard and export to Microsoft Excel. Save the export file to your hard drive.
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8. On the InfoUSA website you’ll be able to upload your order/customers list and schedule your postcard to be sent. Depending on whether you choose first class mail the price will vary but generally it wont be more than $1 per postcard.

That’s all there is to it. Once the postcard is sent out start checking your orders after a few days. Use the Search Orders option under the Orders tab in your BigCommerce store to find orders which were placed using the coupon code you sent out on your postcard. This will give you the exact revenue returned from your postcard marketing test.

As I mentioned above, it’s a good idea to set an expiry date on the coupon code. This creates a sense of urgency for customers and gives you a predictable period of time over which you can track the response to your promotion.

If you can get your initial test to bring in a positive ROI (Return On Investment) then congratulations, you’ve found a new follow up marketing strategy which you can use to indefinitely scale your business and increase your per-customer life time value.

If not, don’t give up. Play around with your offer: change the discount amount, extend/contract the expiry date for the coupon, try a different postcard design and/or try a different call to action. A lot of times with something as fickle as postcard marketing it takes just one small change to generate the ROI you need to turn a profit.

Conclusion

So there’s a dead simple way to increase your per-customer life timevalue using postcard marketing. Of course instead of postcards you can also try a sales letter, but postcards tend to grab attention because they’re typically sent by relatives or friends on overseas trips and not businesses so they bypass the junk mailer filter, giving your customers time to read your message and/or identify your brand instead of throwing your postcard in the trash.