In tough economic times, it’s tempting to cut back or eliminate prospecting.  Getting new customers is often very expensive in the short term.  Prospecting campaigns often yield a short-term loss.  The finance department will look at this loss and say, "stop doing that."

But they would be very wrong.

Getting new customers is the lifeblood of your business.  They are the source of your future revenues and profits.  Without new customers, your business will die.

Case in point, Red Envelope just announced their earnings for the quarter ended July 1, 2007.  They reported a net loss of $3.6 million for the first quarter compared with a loss of $900,000 in the prior year and net revenue of $24.5 million versus $26.9 million is the same period last year.  What happened?  According to John Pound, their executive chairman:

"We expected to be in a revenue downdraft this quarter, with resulting bottom line losses. This was a result of reduced prospecting late last year and early this year, which resulted in a weakened customer file."

It sounds like he saw it coming.  But it only proves the results of cutting back prospecting.  Don’t fall into this trap if you can avoid it.  If you are not growing, you are dying.

I am at a cocktail party meeting someone new and she asks, "so… what do you do for work?" (to determine if I am qualified to join her social network).  I explain that I run a company called NextMark that builds software for direct marketing and we focus on helping businesses to find good mailing lists.  Her reaction is as if she just bit into the sourest lemon ever and exclaims, "Oh, so you’re the reason I get all that crap in my mailbox!" (and she is thinking: no, this guy will definitely NOT be admitted to my social network).

It’s interesting, everyone has that same visceral reaction to direct marketing: bad, bad, BAD!

What most people don’t realize is that direct marketers hate junk mail, too.  Think about it… It probably costs them $2.50 to print and send that catalog to you.  When you toss that catalog in the recycle bin without looking at it, it’s a big waste of their money.  You are not the only one who is upset by junk mail.

On the other hand, someone else receives that very same catalog and they are delighted by it.  So, delighted, in fact, that they order $300 of stuff.  It’s exactly what they were looking for, it fits perfectly, and the quality is top notch.  They placed their order from the comfort of home at 10:30 pm and did not burn the time and fuel to go to the retail store.  Plus, free shipping and no sales tax.  And it was on sale. So happy.

This same catalog was junk mail to one and a treasure to another.  What’s the difference?  Relevance.

Finding relevance is the big challenge of every cataloger and every direct marketer.  Relevance is matching the right offer to the right person in the right way at the right time.  When they find relevance, happiness for you and profitability for them.  When they don’t, junk mail for you and losses for them.

NextMark’s goal is to help businesses to reach their market. Junk mail is failure.  Relevance is success.  We help our clients to find relevance.

So, I explain to my new friend, our goal is to eliminate junk mail from your mailbox and to replace that with the stuff you want.  My new friend’s face now turns serious and she says, "I run this business and could really use your service…"