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Note too, that we have provided for equal weighting to each variable. The reader may wish to assign different weightings as for instance, scalability may not warrant a maximum score of 10 for a very small business seeking only 10% growth p.a. Nevertheless, we believe that the Q-Score acts as a reminder that recruitment is not just a numbers game. Much depends on the quality of the customer and the volatility of each channel of recruitment.
So what are our favourite channels for recruitment at Scotts? Here’s the list, in reverse order, starting with the channel of recruitment which in our experience achieves the lowest Q-Score.
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No. 10: Two-stage Press Advertising The classic first ‘toe-in-the-water’ strategy for many novice direct retailers. Cost and scalability are the key issues here. Unless the ‘product’ is consumable, a high-frequency repeatable, or a subscription service with very high LTV, ‘small square’ display ads in magazines are a very expensive channel for customer acquisition. Conversion rate on enquiries needs to be at least 8% and this can only be achieved with a good conversion pack. Not recommended as a means of building a substantial business, but low risk and the quality of respondents will be high.
Q = 9 (Customers have high LTV as the 2-stage conversion process acts as a filter) S = 1 (Not at all scalable) C = 1 (Very high cost per ‘000 on small ad spaces) R = 5 (Press advertising tends to be volatile with the ever-present risk of shortfalls) Score 16
Scotts results: Poor return on time and other resources. Not scalable, so not used
No. 9: Press Advertising Off-The-Page Many mailers rely on off-the-page advertising for their recruitment. Scalability is the main issue with this approach as results from press advertising can be volatile and publications respond at very different rates. Individual sales results from exceptional offers can be spectacular. Kaleidoscope ran a full- page advertisement for a 7-piece luggage set at £39.95 in the Sunday Times colour magazine on 7th
January 1979. The cost of
the space was £5,000 with cash sales recorded of £259,000 – 52 times ad cost. Sadly, those days are gone, and direct response advertisers need to buy space at ‘distress rates’ to stand a chance of achieving sales equivalent to 5 times ad cost.
Q = 3 (as the LTV of press ad respondents is even lower than for press inserts); S = 5 (there are few publications available for roll-out and results degrade on repeat); C = 4 (the patient advertiser can access good distress rates, but pricing is volatile); R = 5 (less risky than press inserts as circulation shortfalls don’t result in print losses); Score 17.
Scotts results: Typically, our ‘Hit Rate’ is 1-in-4 these days. Every 4th
ad may make a profit. A lot of effort is required as it is rarely
possible to ‘book’ ads at distress rates weeks in advance. We now confine our efforts in OTP to known ‘winners’, but once every 5 years, we’ll hit a blockbuster product and put a substantial spend behind it.
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