Leaving Cash on the Table
By Stephanie Beckman
In our business, there is much discussion about not leaving "money on the table." We challenge our expertise to make certain that we have the best media deals, that all the calls generated by an airing can be answered, and that the offer and telemarketing script have been maximized to yield the most revenue at the best possible order conversion rates. All of this effort is applied to ensure that a campaign achieves maximum profitability when consumer interest in the product and show is high.
Imagine my surprise to discover, while researching industry-wide DRTV backend practices for a financial services client, marketers literally leaving "cash on the table" by terminating calls of customers with no credit card or electronic debit purchasing ability. Many marketers have given up on the cash-based consumer due to the poor collection history and operational hassles of COD or delays with receiving mailed check and money orders. Profitable campaigns are run on metrics that afford to eliminate cash-only calls.
BREAKING DOWN THE FIGURES
What marketers may not realize is that nearly 80 million American consumers do not have a credit card or checking account. Research shows that even consumers with credit cards may not use them because of high interest rates or they have exceeded their spending limit. Initial research into the un-banked, cash-based segment indicates that these consumers represent 3 percent to 10 percent of our English-language DRTV campaign results. Consequently, if your English-language infomercial campaign is generating $150,000 to $300,000 in sales revenue per week, you may be turning away $4,500-plus in weekly revenue. That adds up to a tidy monthly sum!
The impact of low credit card penetration is even more dramatic with Spanish-language campaigns, due largely to cultural preference rather than credit worthiness of their $760 billion buying power. I recently managed a profitable Hispanic campaign that generated roughly 40 percent credit card orders, with the remaining sales concluding in COD transactions. I am also aware of campaigns with even higher COD percentages. Hispanic infomercial marketers currently employ a multitude of techniques to assist with the successful completion of COD orders (including continuity transactions), which should be seriously considered for English-language campaigns. In addition, the largest domestic cash-acceptance network has begun offering DRTV consumers the ability to easily convert cash into an electronic payment mechanism for use over the phone or Internet.
It's great to meet your ROI goals with just credit card and check debit transactions alone. Wouldn't it be even better to capture the extra sales of cash-based consumers? Perhaps it's time to apply the backend payment collection techniques commonly used by Hispanic marketers to general market campaigns...and pick up some of that cash on the table!
Stephanie Beckman is a DRTV marketing and campaign management consultant. She can be reached at (310) 577-0389, or via e-mail at stephanie@responseadvantage.com.
