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When you mail 10, 000 strangers at a cost of $0. 50 each ($5, 000), and get a response rate of 1% (100 leads), then your cost per lead is $50 ($5, 000 in cost divided by 100 leads).
Now let’s say you offer a free information booklet. The booklet costs $1 but offering it increases your response rate from 1% to 3%. Here is what happens:
Your cost of mailing remains constant: $5, 000 Your response rate increases: 3% So your number of leads increases: 300 leads Your cost per lead drops: $16. 66 ($5, 000 divided by 300) Add the cost of your freebie: $1 per lead And your new cost per lead is: $17. 66
So you see that, by offering a freebie that costs you $1 extra for each lead you generate, you almost cut your cost per lead in half, even though your total costs increase. That’s because your $1 freebie tripled your response rate, from 1% to 3% (entirely possible).
By the way, if you want to reduce the number of “freebie collectors” that you attract, link your freebie with what you are selling (a free lawn analysis, for example) rather than offering something that just about everyone would want for free (an AM/FM radio, for example).
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About the Author:
Alan Sharpe is a business-to-business direct mail copywriter and lead generation consultant who helps high-tech firms attract new clients using creative, cost-effective direct mail. Subscribe to "Sharpe & Direct, " his weekly newsletter, at www.sharpecopy.com
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