AMiable Solution #131: Common Cents Tip #2

Some parameters are easy to identify.  For example, you know that if a former customer, client, or donor doesn’t respond to any marketing efforts in a specific period of time, your organization will mark that individual as inactive and remove him/her from the house list (or at least exclude the individual from future marketing campaigns).

Other parameters, however, may not be so easy.  If you haven’t identified your department’s “failure threshold” in different activities, you could be wasting more money than generating it.

What is a “failure threshold”?  It’s the point where you cut your losses.  The point that you know the likelihood of getting an acceptable return for your list, promotion, offer, format, effort, etc., is either non-existent or too small to justify continuing.

That may mean you add a new rental list to the “never again” column after only one mailing with a poor response, or it may mean that you discontinue trying it after three response duds.  Or it may mean you pull a web-only offer after two weeks if it fails to generate X number of orders or calls. 

How do you determine your threshold?  History.  Research.  Analysis.  This takes time, of course, and the results will be different for different industries, even different departments of the same organization.   But understanding how much your organization can--and should--invest in new, unknown, or even previously successful factors will help you set your boundaries and limit your risk.

Knowing when to say “when” shouldn’t be left to chance, and it shouldn’t be decided with every promotion that’s planned.  Pre-determining acceptable and unacceptable limits and incorporating them into your department-wide strategy will not only provide more consistency in your decision making, but it will also allow your marketers to spend their time and your budget more wisely.