Mini$-$Case Where Should We Place Our Ad$?$

A software company that is fairly well regarded for two large product lines has TurboTax in its sights. They$$ve developed a tax package that they think their current customers will like, and they think this software will give them a chance to bring new customers to their other products.

The company has developed an informative, yet succinct, and even somewhat humorous ad$.$ One of the top managers is saying the company ought to ship out the ad in brochure form, along with a DVD with a demo file on it$,$ as a form of direct mail. A new manager is thinking that sounds retro but doesn$$t say that; instead, the manager argues that because the product is high$-$tech, they should reach out to customers through an email campaign. The email content would contain several embedded links to online demos on the website.

The boss is indifferent $($doesn$$t know much about marketing, history, biology, or what a slide rule is for$),$ but they care about costs. So a third manager called up some media providers and compiled the following price estimates.

$$

New Customers

Current Customers

$$

Direct mail $($list rental$)$

Email $($list rental$)$

Direct mail $($in CRM system$)$

Email $($list in CRM system$)$

Cost per $1000($CPM$)$

$$1750$

$$500$

$$750$

$$250$

Click$-$thru rate

$$

$10\%$

$$

$20\%$

Rate of purchase

$2\%$

$3\%$

$4\%$

$5\%$

For every $1000$ reached, yield:

$20$

$30$

$40$

$50$

Say software price is $$100,$ income:

$$2,000$

$$3,000$

$$4,000$

$$5,000$

Net income $($sale $$ cost$)$

$$250$

$$2,500$

$$3,250$

$$4,750$

What do we learn from the cost assessment manager?

Which of the first two managers$$ directions $($direct mail or email$)$ would you support?

What is the strategy? If the company wants to emphasize customer acquisition, what would you recommend? If the company wants to emphasize customer retention, what would you recommend?

What else would you like to know for a more thorough assessment?