Over the last few weeks, something interesting has begun happening - we've started getting calls from night clubs, and night club promoters who traditionally have take the cheap and cheerful route looking at using the services of our business.

Why?

Good question, when I asked Dean from one of the promoters who called in, it was because the services that they had been using, less than 90% were actually getting to their contact list.

Well if you're paying peanuts, then that's OK isn't - well, it's easy to say yes, but no not really.

I'll give you a hypothetical for a moment.

I'm a promoter for Night Club A - I have a contact list of 2300 members (OK, so we're a boutique bar) that I want to contact once a week.

In order to get a really good price I need to buy up, so I'll buy 60,000 messages which will cover me for six months which I can get from a provider for 8 cents per message.

The problem is I'm having to pay upfront, which means in rough figures, it's costing me another 5% in lost interest that I could have accrued over that period - so on average the messages are actually costing me 8.2 cents.

I'm sending 2300 messages, give or take, each week, but because only 90% at best are getting through, I'm only hitting 2070 contacts.

Because SMS is such a great way to market, I get a great response of 25% - at $20 per head from the door, my business earns $10,340 per week.

However, I'm missing out getting to 130 contacts - which based on the same ratio means I'm missing out on a possible $460 per week in revenue. Well, it's not huge... that's $11,960 in lost revenue within 6 months - nearly $22k over a year!!

If you add the lost opportunity cost to the cost of the messages purchased in the first place, then actually your message costs work out to be closer to 28 cents per message - which is nearly 2.5 times more than what you would have paid if you had of used a local service and bought that many messages in the first place.


Obviously the figures can be pushed around depending on the size of the club, the upshot though is that even at 90% hit rate, which I think is generous, will still always equate the cheap and cheerfuls of this world to end up being more expensive than the local guys!



Have a great day,
Enjoy,
C