First Plan I – Input Overview

The best template to start your first plan is with either the DM Single or PPC Single templates, depending which type of advertising channel you will be using. DM covers direct response campaigns, space advertising, and specialized promotions like events. (We will cover those separately.) PPC covers Pay Per Click internet advertising.

This post explains the different sections.

Reference Data

The top left section for Plan Number and other descriptive information is for storing and retrieving plans.

MPP plans can be printed or can be saved as new files or PDF’s. We recommend you place the MPP program in a new folder where you can add other new folders below it to store plans.

Create a few folders under the MPP folder to contain workbooks and PDF’s that MPP creates. A hierarchy of folder names based on how you manage campaigns or ads. Folder examples are Google PPC, Customer DM, Outside List DM, Publications, Dates, Tests, etc.

Product / Service Data

This section contains input relevant to the product, packaging and operational costs of fulfilling sales orders. See the detailed explanations in the Glossary. These costs are not included in General & Administrative Expense for several reasons. If these operations are outsourced, the vendors charges are based on the specifics of the individual products. If all fulfillment is done internally, tracking the fulfillment costs on each unit sold allows the pricing decision to be based on actual costs.

Transaction Costs

This section contains Credit Card Discount % – Credit Card Use Rate % – Sellers Fees % charged by web commerce platforms used for advertising, like Amazon, Etsy, eBay, and shopify – and G & A Expense %. G & A is your company General and Administrative, which is things like rent, utilities, insurance, and some manpower. The manpower (and rent – overhead) costs of packaging the product, warehouse packing and shipping, distribution, order entry & customer service are not included in G&A because they are calculated separately in the Product/Service Data section.

Sellers Fees % that are related to product warehousing, packing, shipping and returns should be included in Product/Service Data sections. The Sellers Fees % is the commission amount the seller’s distribution channel charges for using their platform.

Timing Data

This is the number of days to calculate the outflow and inflow dates in the Cash Flow Data section. The timing starts from Promotion Date input.

Direct mail Promotion Date should be the estimated date the mail will be received in the mail box.  This time span is longer for advertising class mail than first class mail. When entering the Response Flow In Days use judgement and keep a record of the basis the establish the input. Direct mail campaign responses usually come in over a span of many days, not all at one time. Therefore, most direct mail planners use what is known as the “Half-life” of campaign response as the midpoint for number of days when responses are 50% in as the Promotion Date. Space advertising is the date the magazine or newspaper is delivered or on the newsstand.

PPC internet Promotion Date starts when the campaign is turned on. Convert Process Days is when actual sales start. Keep in mind the Cash Flow Data dates are estimates or indications. All dates are calculated forward, meaning each flow period starts after the Promotion Date. In some cases, inventory must be paid for before the Promotion date. Some advertising purchases can be paid after an ad run. Postage for direct mail campaigns is paid when the mailing enters the postal facility.

Qualify and Order Ship Rate.

This shows you will create 200 responses.

Promotion date is explained above. The other inputs are explained in the Glossary.

Forecast Data

The strength of Marketing Profit Plan is that every plan has a forecast result based on specific parameters. Direct Marketing plans are intended to get positive results. That’s why the creative almost always has “Calls to Action.” The DM Plan has the key cost variables in the Advertising Data section because these variable can be manipulated to control or improve the profitability of results. If you have no response history upon which to estimate Forecast Data, start with industry averages and what if back and forth to change parameters like costs and other factors to arrive at a profitable forecast.

Special promotions like event participations use the DM Plan template to achieve a forecast the following way. If you cannot forecast any result coming from the promotion expense, enter in the dollar cost in the Advertising Fixed Expense input. This will calculate a loss in the Income Statement for the same amount. But let’s forecast the result of the event the following way. Input 2.0 in Advertising Circulation,  $2.9 in Advertising Fixed Cost, 10.0% in Response Rate, and 100%) at a loss of $2,900.   This is a good time to use this promotion event to introduce the DM Multi template.

PPC forecast responses are determined in the Advertising Data section. The two key drivers are Cost Per Click Maximum (Bid) and Time Period Spend Maximum. The Responses Received are the calculation of Spend Maximum divided by Cost Per Click Maximum.

Group Templates

Both DM and PPC Templates for Multi and Group use the same basic inputs, except Groups do not use Timing Data and calculate cash flows.

After the basic campaign strategy is calculated using a Single template, Group is to breakdown the campaign into individual key codes. For example, a DM campaign might consist of 10 different outside mailing lists – or 10 different segments of the house customer list. Group allows each to vary the response rate, mailing cost, circulations, and other parameters to show the detailed view. A PPC campaign uses the same format to allow for different keywords with different Cost Per Click Maximums and Time Period Spend Maximums.

Multi Templates

Multi templates are all-purpose templates. Multis create from 1 up to 15 single plans on one worksheet with each plan in one column. Multi calculates each plan’s results separately and combines them in a total. The calculations for each plan are the same as Single. All plans are combined in the Income Statement and cash flow table.

Multi is for planning comparisons and multi part strategies:
• multi-step sales funnels
• Inquiry to sale conversion programs
• Time periods like month, quarter or year
• Comparing results of different channel types like email, PPC, direct mail, customer vs outside lists

Multi can also display Customer Lifetime Value scenarios and plan retention strategies.