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How could Randy's Ring and Pinion, the largest distributor of aftermarket automotive differential parts in the United States, create enough demand to continue to fuel its rapid revenue growth while reducing expenditures to meet its profitability targets?

Randy's Ring and Pinion, the largest distributor of aftermarket automotive differential parts in the United States had the twofold challenge of continuing to aggressively ramp revenue while increasing overall profitability.

The Challenge
Continued revenue growth meant increased demand generation efforts were required. At the same time the call for improved profitability meant that marketing program expenditures would need to be reduced.

The Solution
CRM Group targeted the direct mail budget where Randy's historically spent the bulk of their marketing dollars. They set up a testing strategy that allowed Randy's to determine what it cost to generate an inbound phone call from different market segments. Next they analyzed the data gathered on the test and overlaid the results against the proposed annual direct marketing plan. Then they optimized the direct marketing plan allowing direct mail expenditures to be reduced significantly without adversely impacting inbound call volume.

Step One: List Segmentation
The first step was to separate the mailing list into customer and prospect segments. Those segments were further broken down based on recency of purchase or inquiry.

Step Two: Testing and Analysis
Each segment received the same direct mail offers and the amount of inbound phone calls generated by each group was tracked. The cost per call for each group was calculated and the list segments were stack ranked.

Step Three: Revisiting the Direct Marketing Budget
CRM Group used the data acquired through the tests to revise the proposed annual direct marketing plan with the expectation that costs could be reduced without a corresponding reduction to inbound call volume. This change will save Randy's several hundred thousand dollars over the course of the year.

The Results
Despite significantly decreasing direct mail spending, during the first four months of the year Randy's saw inbound call volume actually increase by nearly 15% over the same period during the prior year due to better targeted efforts.

Performance Feedback
Randy's Ring and Pinion President, Randy Lyman said, "CRM Group's work on our direct mail campaigns allowed us to find a way to support our goals of increasing, both, sales and profits. It's enough to make me want to do my happy dance."

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