Although it may seem counterintuitive, giving something away at
no charge can lower your cost per lead. That’s because offering
a freebie usually increases your response rate.
Here’s an example of what I mean.
Your cost per lead is the money you must spend to acquire one
lead. 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).
More Information:Alan Sharpe is a professional fundraising letter writer, instructor, coach, author and newsletter publisher who helps non-profit organizations to raise funds, build relationships and retain loyal donors using cost-effective, compelling, creative fundraising letters. Sign up for free weekly tips like this at
http://www.RaiserSharpe.com/ 
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