Marketing and Finance: the Peanut Butter and Jelly of Direct Marketing


Stephen Gilbert, CPA, 12/31/08

Note from Jim: Today’s column is dedicated to the memory of Stephen Gilbert CPA, 1917 – 2009.   My father, friend, mentor, sounding board and business partner.

Over the years, I’ve written many times about the importance of financial acumen as a core competency for direct marketing success.

Many people seem to think direct marketing is about killer creative, or campaign management, or even great customer service. But to me, it always starts with the finances.

If I’m writing a circulation plan, it starts with the break-even analysis, right on down to the list and list segment level. Each segment of my housefile has a P&L and breakeven attached to it, then each drop, each season and each year.  I do this in advance, even three to five years in advance, using historical numbers. And I do it before each mailing or other type of direct marketing campaign to measure the success or failure of every campaign I do.  Remember, past performance predicts future behavior!

I’m also nuts about other financial analyses, such as lifetime value, squinch (square inch for measuring catalog space usage), cash flow, balance sheets, etc.

Now with social media all the rage, and multi channel marketing being the norm for mail order, catalog and electronic retailers, the need for financial measurement and knowledge is greater then ever.

To this day, I’m amazed at how many people I work with, smart people, still want to practice direct marketing by the seat of their pants. To me, marketing just doesn’t make much sense without financial understanding….

Too many direct marketing companies think they’re brands…

Too many direct marketers think they “know” what their customers want and, hence, perform no analysis…

Just pull the trigger and see what happens!

But, there was a time in my career — when I started my first business, a publishing company — that I had no interest in the numbers. My father, a certified public accountant, took care of that, leaving me to market, sell and manage the day-to-day operations. I made many mistakes working that way, which my dad was quick to point out. So I learned, and learned quickly, thanks to him.

Many times, the disconnect between marketing and finance has been immediately evident to me the first time I walked into a company. And many times over the years I’ve brought my dad in to work with clients and client-side companies I’ve worked with. He’d communicate the top line, help organize the finances and financial analyses, and I’d address the bottom up marketing planning. Together we helped some companies turn the corner and grow, and save a few from ruin.

Direct marketing is a numbers based business.  Don’t do the math, and there are a myriad of ways you can find yourself in jeopardy.  Does your company think that way?  It could be critical to you and your company’s success.

What is strange is that as a kid I hated numbers — I was horrible at math — but I learned much from working with my father; a patient teacher.  The principles I learned I apply every day, even passing them on to you.

I wasn’t really planning this week’s column as a tribute, but — and apologies to you for getting maybe a bit too personal — I believe it’s fitting.

We are entering a new age of direct marketing that is much more complicated.  The internet has changed everything.

If you consider the impact of multichannel marketing and social media, coupled with the degree of difficulty and challenge each of these presents in terms of financial measurement, maybe this week’s column is actually right on the money!

7 thoughts on “Marketing and Finance: the Peanut Butter and Jelly of Direct Marketing

  1. Ben Quigley says:

    Great post – crucial point, especially today, and wonderful to hear the impact that your dad had on you.

    • Jim Gilbert says:

      Thanks Ben. I was not sure whether this article with the tie in “tribute” to my father would be appropriate. But in the end, after a conversation I had with a fellow direct marketer who applauded me for being so open about my love and relationship with my dad, I thought that it added value.

      Besides, most companies and the business process in general seems to strive to remove all emotion from the workplace. I cannot disagree more! It is my emotions, passion and caring that allow me to be the direct marketer I am today.


      • Scott Turke says:

        I couldn’t agree more. To me, Direct Marketing, or any form of marketing for that matter, but particular one-to-one, needs to start with financial analysis to know what you can afford, what are your P&L benchmarks and through LTV or other value barometer, know when customers are going to drive and add profit to your bottom line.

        I’ve also seen a number of marketing people, and executives in particular, who don’t understand (or don’t want to be bothered with) the numbers. Direct marketing is all about numbers: response rates, breakeven, profit margins, etc. With costs continuing to rise, every marketer needs to be smart AND analytical.


  2. Ron says:

    Nice tribute to your father, Jim.

    Also a great article. The question is, where does one find a THOROUGH presentation of direct marketing math and finance? I’ll see snippets here and there, but haven’t found anything that is THOROUGH.

    Can you offer any help, Jim?


  3. Kim Durham says:

    Hi Jim,

    I loved your article as well. In reading through the Rich Dad, Poor Dad series, it is clear what a Father or good Mentor figure can add to our lives, and it’s great to see you give your Father that tribute as well.

    In terms of the numbers, we have always stressed the need to know your numbers here at MSI. It is difficult to really help our customers if they have not yet kept track of their company’s ROI; so, we help them. Ultimately, if we cannot offer our customer increasing ROI’s, we’ve lost the customer, but worse, have done them a disservice at best.

    About a year ago, MSI brought on board the use of PURLS (personalized web-site campaigns) in conjuction with our personalized direct mail marketing programs. As you’ve stated, “the internet has changed everything.” A few weeks ago we were telling our customers that they could potentially leave 51% of their future customers on the table, if they were not utilizing web-based multi-media marketing. Statistics in some areas now have that number as high as 61% (i.e., 61% of the people are doing pre-purchase research on the web). We’d like to take advantage of that growing market. Direct mail alone is a “fight.”

    Thank you for your articule. Certainly much room for thought and I see areas I can improve in – maybe even developing my own, personal, P&L statement with regard to my sales business here at MSI.

    Thank you again.

  4. Sue says:

    This was a great article, and your Dad would be proud. I wanted to mention CPA or Cost Per Action as a way to help satisfy the “finance” issue that you spoke of. This is the ultimate form of accountability for your ad dollars spent.

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