{"id":222,"date":"2006-10-13T12:47:13","date_gmt":"2006-10-13T19:47:13","guid":{"rendered":"https:\/\/staging.opexlearning.com\/resources\/222\/the-junk-mail-business-model"},"modified":"2013-07-10T01:23:18","modified_gmt":"2013-07-10T06:23:18","slug":"the-junk-mail-business-model","status":"publish","type":"post","link":"https:\/\/staging.opexlearning.com\/resources\/the-junk-mail-business-model\/222\/","title":{"rendered":"The Junk Mail Business Model"},"content":{"rendered":"<div class=\"a296a24fa2fc69ef5487857f02f111e8\" data-index=\"9\" style=\"float: none; margin:10px 0 10px 0; text-align:center;\">\n<script async src=\"\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\"><\/script>\r\n<!-- Single Post readerboard -->\r\n<ins class=\"adsbygoogle\"\r\n     style=\"display:inline-block;width:728px;height:90px\"\r\n     data-ad-client=\"ca-pub-8207522353004717\"\r\n     data-ad-slot=\"1144967431\"><\/ins>\r\n<script>\r\n(adsbygoogle = window.adsbygoogle || []).push({});\r\n<\/script>\n<\/div>\n<p><!--adsense#120by240right-->Even though I submitted our phone number and mailing address to the FTC&#8217;s &#8220;Do Not Contact&#8221; list, I still get a lot of junk mail. As I sift through the mail, it dawned on me that the people behind the mailings aren&#8217;t trying to bother me &#8212; no intentionally anyway, but that they are trying to make money. The second I mentally placed myself in the enterprising perspective, which is where I feel pretty comfortable, I wasn&#8217;t so annoyed anymore.<\/p>\n<p>So, how do direct mail companies make money?<\/p>\n<p>In direct mail campaigns, costs are response rate are critical factors. For direct mail, cost can be comprised of the following: print on the material and any associated creative fees, material costs, and postage. Pretty simple. Response rate is defined as actual people responding to the campaign.<\/p>\n<p>So, the break-even model is pretty standard. It follows the <a href=\"https:\/\/staging.opexlearning.com\/resources\/the-profit-tree\/201\/\" target=\"_blank\">profit tree model<\/a> I wrote about several months ago. Here&#8217;s the model for a direct mail campaign:<\/p>\n<p>Break-even model is,<\/p>\n<blockquote><p>((R) revenue per mailing) &#8211; ((C) cost per mailing) = 0<\/p><\/blockquote>\n<p>But, response rate (rr) is critical here, so<\/p>\n<blockquote><p>(rr)*(R) &#8211; (C) = 0<\/p><\/blockquote>\n<p>Let&#8217;s assume that JunkMail Vendor decides to engage in a junk mail campaign. JunkMail&#8217;s costs are .30 per mailing and they decide to mail to their target demographic. Their revenue per postive response is $20.00 &#8212; what is the response rate needed for JunkMail to break-even?<\/p>\n<blockquote><p>20rr &#8211; .30 = 0<\/p>\n<p>.30 \/ 20 = rr<\/p>\n<p>rr = 1.5%<\/p><\/blockquote>\n<p><!--adsense#250by250squareleft-->So, given the example above, only 1.5% of those that received the junk mail need to respond in order for the firm to break-even. Given the low risk and massive upside, no wonder junk mail is such a prevalent and annoying marketing tactic. By the way, the inverse is true also: if Cost Per Acquisition (CPA) were higher than the expected revenue, the model still works &#8212; the campaign would just require a higher response rate or profit wouldn&#8217;t come until the second year, perhaps, it it&#8217;s a subscription model.<\/p>\n<p>The enterprising me say&#8217;s &#8220;wow, it doesn&#8217;t take much, really, to make money from this marketing strategy.&#8221; The consumer me says &#8220;I hate junk mail and email spam. I hate &#8217;em.&#8221; But, one can&#8217;t argue that it&#8217;s an easy and relatively cost effective way at increasing revenue, winning customers, and increasing brand awareness. No wonder companies can afford to spam customers.<\/p>\n<!--CusAds0-->\n<div style=\"font-size: 0px; height: 0px; line-height: 0px; margin: 0; padding: 0; clear: both;\"><\/div>","protected":false},"excerpt":{"rendered":"<p>Even though I submitted our phone number and mailing address to the FTC&#8217;s &#8220;Do Not Contact&#8221; list, I still get a lot of junk mail. As I sift through the mail, it dawned on me that the people behind the mailings aren&#8217;t trying to bother me &#8212; no intentionally anyway, but that they are trying [&hellip;]<\/p>\n","protected":false},"author":12327,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[7],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Direct Mail Statistics, Direct Mail Ideas, Direct Mail Marketing, Cost<\/title>\n<meta name=\"description\" content=\"Article on the business model of direct mail, including direct mail marketing, direct mail costs, direct mail statistics, direct mail examples\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Direct Mail Statistics, Direct Mail Ideas, Direct Mail Marketing, Cost\" \/>\n<meta property=\"og:description\" content=\"Article on the business model of direct mail, including direct mail marketing, direct mail costs, direct mail statistics, direct mail examples\" \/>\n<meta property=\"og:url\" content=\"https:\/\/staging.opexlearning.com\/resources\/the-junk-mail-business-model\/222\/\" \/>\n<meta property=\"og:site_name\" content=\"OpEx Learning\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/get.shmula\" \/>\n<meta property=\"article:published_time\" content=\"2006-10-13T19:47:13+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2013-07-10T06:23:18+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/staging.opexlearning.com\/resources\/wp-content\/uploads\/2016\/12\/Shmula-KanbanCody-Logo.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"910\" \/>\n\t<meta property=\"og:image:height\" content=\"309\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Uday Kawar\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@shmula\" \/>\n<meta name=\"twitter:site\" content=\"@shmula\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Uday Kawar\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/staging.opexlearning.com\/resources\/the-junk-mail-business-model\/222\/\",\"url\":\"https:\/\/staging.opexlearning.com\/resources\/the-junk-mail-business-model\/222\/\",\"name\":\"Direct Mail Statistics, Direct Mail Ideas, Direct Mail Marketing, Cost\",\"isPartOf\":{\"@id\":\"https:\/\/staging.opexlearning.com\/resources\/#website\"},\"datePublished\":\"2006-10-13T19:47:13+00:00\",\"dateModified\":\"2013-07-10T06:23:18+00:00\",\"author\":{\"@id\":\"https:\/\/staging.opexlearning.com\/resources\/#\/schema\/person\/9335b5223b67189b35bda7d6be11c3fd\"},\"description\":\"Article on the business model of direct mail, including direct mail marketing, direct mail costs, direct mail statistics, direct mail examples\",\"breadcrumb\":{\"@id\":\"https:\/\/staging.opexlearning.com\/resources\/the-junk-mail-business-model\/222\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/staging.opexlearning.com\/resources\/the-junk-mail-business-model\/222\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/staging.opexlearning.com\/resources\/the-junk-mail-business-model\/222\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/staging.opexlearning.com\/resources\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Business\",\"item\":\"https:\/\/staging.opexlearning.com\/resources\/business\/\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"The Junk Mail Business Model\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/staging.opexlearning.com\/resources\/#website\",\"url\":\"https:\/\/staging.opexlearning.com\/resources\/\",\"name\":\"OpEx Learning\",\"description\":\"Lean Six Sigma. 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