The 1% Factor

By: Dan Kennedy on: April 23rd, 2010 17 Comments

I’ve spent this week blogging about my favorite type of small business marketing, which of course is direct response marketing. If you have understood what I have said so far, you should hopefully embrace the idea of thinking, talking and only investing in measurable results marketing.

But I did mention in an earlier post that there is a 1% added benefit factor inherent in direct marketing. It applies to those who do not respond to a given mailing or other direct marketing effort still will be positively exposed to your company.

In fact, there is a cumulative effect of such exposure that creates additional customers over a long period of time and you will benefit from this.

However, I am opposed to counting it to attributing cash value to it to offset marketing costs. Your marketing should pay its way with current, measurable results.

I will cheerfully tell you that I am not very well liked by certain folks in the ad agency, media and consulting businesses for my strong criticism of non-measurable marketing. However, I insist that any business not devoting at least 90% of its total advertising, marketing, and promotion budget to direct marketing is mismanaged.

I would never buy stock in a company not putting over 90% of its marketing money into direct marketing. I encourage you to be very tough minded in your marketing investments.

Ask the tough questions like, “How will we know how many dollars were derived from this media or method?” If there is no good answer there’s only one good decision.

By the way, do you know what the single most valuable asset you have in your business is? Is it your inventory, your accounts receivable, your unique products, your personnel, your building and equipment?

Well I tell you what the single most valuable asset any business has in Mondays post.

Do you know what it is? Leave your answers in the comment section below.

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    Dan Kennedy is internationally recognized as the 'Millionaire Maker,' helping people in just about every category of business turn their ideas into fortunes. Dan's "No B.S." approach is refreshing amidst a world of small business marketing hype and enriches those who act on his advice. For more money-making marketing tips, tactics and strategies, go to

    17 Responses

    1. Jason Dove says:

      Existing customer data for targeting future direct response marketing.

    2. Scott says:

      client database. no question

    3. Scott says:

      I read this post several years ago and didn’t fully grasp the 1% factor. Now after doing direct response for 3 years and aggravating all my competitors, I finally get it. I now have people coming in who are paying full price even though they received an offer. choosing not to use the offer but doing business with me anyways, just because I stayed in touch with them. Bonus.

    4. I may not have the answer Dan is fishing for (can’t wait for Monday’s post!), but I would say the most valuable asset in my business is my marketing system, because I could lose every client I have now or even change the focus of my business (making my client database obsolete) and get new clients with my system fast. Not that I plan to lose clients (my retention marketing systems are improving all the time) anytime soon, but it is comforting to know that I can always get more clients just by using my system.

    5. #1: Customer list.

      Everything else can be replaced.

    6. It is the relationship I have with my current clients (“relationship with my list”).

      Nothing else comes close.

    7. Charles Ra says:

      I agree Steve
      the money is NOT in the list.
      if this were true, spammers would be multimillionaires.

      the money is in “the relationship with my list”

    8. John Bruin says:

      Would someone be so kind as to give me a definition of direct response marketing?(As it applies to GKIC) Would it be marketing that requires the recipient to take action that is measurable, no matter what the media method?

      I concur with the others that it is your existing customer database. If they bought from you and were happy with the purchase, then your relationship is forged and is only strengthened by continued contact.

    9. Rob Anspach says:

      A database of clients that are eagerly awaiting your offers, messages and materials who have proven time and time again that no matter what business you are in they will always follow.

    10. your past and current customers is #1.

      having “people on the list” means nothing. I have clients and friends that make a large living off a small list (as Dan talks about small herd but going deep).

      On the other hand, spammers have millions of email addresses and yet it’s still what’s known as “GIGO”… garbage in, garbage out!

      can’t wait to see Mondays post!

    11. Scott Martin says:

      A fully-laden African Swallow.

      But seriously…I would have to agree with the database answer.

    12. John Zajaros says:

      Great post! I agree wholeheartedly! In fact, I am often asked about the intangible effects a properly constructed and implemented marketing campaign can have, particularly in light of all the talk about ROI, measurable results, and direct response marketing. True, the return is not always immediately apparent, yet the impact may be beneficial to a business’s long-term success. The significance of the 1% Factor is that there is often a compounding effect and the ultimate results may increase exponentially over time! I tell my clients it is like a dynamo, at first there appears to be no movement at all…but before long the movement is not only measurable, it is unstoppable! Other times I speak of farming. We plant and see nothing, all the activity is going on beneath the surface and the results are not immediately apparent. Then, almost at once, we are standing in corn 6′ tall! The results of our efforts are not always immediately apparent but if our marketing is consistent, directed to a properly targeted audience, we too can be up to our ears in corn…or clients! The 1% Factor is not always measurable but it is undeniable! Well said!

      John P. J. Zajaros, Sr., Ph.D.

    13. Charles Ra says:

      @ John
      definition of direct response marketing?(As it applies to GKIC) Would it be marketing that requires the recipient to take action that is measurable, no matter what the media method?
      that is a nice approach.
      for an accurate definition, concept and implementation, read this book ultimate sales letter. and for marketing definition and ideas. this book ultimate marketing plan.
      cuz all starts with the triangle: target, message and media. and continues…
      hope that helps

    14. John Bruin says:

      @Charles Ra
      Thanks for the resource suggestions. I’ve been wondering where to start with the Kennedy materials.

    15. I focus on measurable results for my clients because I need to show them the ROI. I like to use direct mail and send customers to a custom landing page with a custom message that relates to the direct mail piece and provides them with a special discount or offer. Easy way to track who visits and if they convert.

    16. I believe my mind is my business’ most valuable asset.

    17. I like your answer, Paul.

      Unfortunately, for most companies that is their biggest liability…

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