In developing an economic model for HoganDirect clients — one that can be used to justify advertising and sales budgets (current and future) and will withstand the scrutiny of fiscal experts, we include the following componets:
Identifying RFM cells (Recency, Frequency. and Monetary Value) for each current customer, based on weighted scores;
Determining short- and long-term goals and supporting objectives;
Determining measures for advertising and sales;
Identifying other variable costs;
Determining actual contact costs (for inside and outside representatives);
Developing an awareness/acquisition model based on expectations and costs;
Developing a cultivation/retention model based on customer quintiles from RFM cells;
Calculate discount rates, based on expected rate of inflation coupled with weighted factors;
Calculate Lifetime Customer Value for newly acquired customers;
Calculate Lifetime Customer Value for current customers.
A lead-generation program Hogan & Associates created and produced for independent contractors that sold and erected Robertson Building Systems (a leading manufacturer of engineered building systems) generated the following results over a five-year period (2005-2010)::
- The program targeted 22,500 owners of companies in selected types of businesses (by primary SIC) that employ 10 or more employees and generate $1 million or more in annual revenues.
- Quarterly mailings were sent on behalf of independent contractors who chose to participate in the program..
- When a business owner responded to one of the mailings, his (or her) name and address information was removed from the lead-generation mailing file.
- 2,643 responses were received.
- Cumulative rate of response based on the number of individual prospects = 11.11%
- Total number of fully qualified leads that provided building and/or expansion plan. information = 1,220 (46.1% of all responses).
- Total number of sq.ft in new buildings or expanded facilities identified by prospects to the mailings = 22, 207,888
- Average sq.ft. size per project = 18,797 sq.ft.
Criteria for a Fully Qualified Sales Lead
- Indicated a positive attitude in favor of owning versus leasing.
- Identified the company’s current situation: Owned or leased
- Disclosed his/her company was planning to construct new or expand an existing facility.
- Specified a time frame they planned on building (e.g., six months, one year, two years, etc.)
- Owned or did not own the land on which the company intended to build
- Identified the approximate size of the building or expansion thst was being planned (in sq.ft.)
- Disclosed the purpose(s) for the new or expanded facility (e.g., manufacturing plant, warehouse facility, office space)
- Specified if their plans called for a single or multiple-story building
- Told if the company had or had not engaged the services of an architect
- Disclosed the company’s level of familiarity with engineered building systems
- Disclosed the company’s level of familiarity with Roberston Building Systems and the named contractor in their area.