Direct marketing (or sending marketing messages to prospects and customers individually by mail, email or even door-to-door), can be very cost-effective in the right circumstances. Email marketing has been hot for the past few years, but lately we’ve seen an increased interest in direct mail. Newbies to the medium are asking two excellent questions: Would direct mail be a good medium for us to test? And if so, what’s the most cost-effective way to do that? So let’s talk about it.
The truth is direct mail is very effective… in the right circumstances.
Spend money to make money?
Well…sometimes. In terms of the per-person, out-of-pocket cost, direct mail can really pack a whollop: $1 and up is not uncommon (compare that to relative pennies for print, online and even TV). Consider a few recent scenarios:
• We recently coordinated a 3-step B2B campaign for one client with around a $7-per-piece budget for 300 pieces (yes, $21 per prospect, and that’s not including creative development costs), but when the return could be in the hundreds of thousands, it’s a drop in the bucket if they get just one customer per mailing.
• We developed a B2C campaign, a self-mailer that directs people to a landing page, that ran about $1 per piece for 6400 pieces (plus a small investment in the web page). The average return for a new customer just the first time (not counting future spend), however, is $250, so a response rate of anything over 0.4% (26 people) will earn their money back. And these customers tend to be repeat buyers, so you can see how this begins to reap big rewards.
The right choice for the right circumstances
There are many circumstances that might coincide to make direct marketing by mail the right choice for you, but here’s a useful checklist to help you decide whether you should investigate further:
• Mailing lists exist for the target audience you want to reach; this is make it or break it. If you mail to an untargeted list, you’re really flushing it.
• The value of the customer—meaning the transactions they’ll have with you over time (a.k.a., their lifetime value)—will deliver a satisfactory ROI.
• You have sufficient cash flow to afford to invest today in an effective mailing effort that will generate its greatest rewards over time.
If you can check off all of these, direct mail might fit well into your marketing efforts.
Squeezing more out of your mailings
First, make this one element in a larger marketing and communications strategy—like our self-mailer that also linked to a specific landing page related to the mail piece’s messaging. That’s because, while you might get a good number of responses to your “one-shot” mailing, today’s savvy consumers expect to have options. You’ll satisfy them better, and squeeze far more out of every dollar you invest, if you help them get as much information as they need, and encourage them to take action every step along the way.
Second, think about creating a mail piece that you can use more than once as new customers enter the market. In an area like Raleigh-Durham, where we do most of our business, that’s tracking at somewhere in the neighborhood of well over 300,000 new people in the past 10 years, or 40% growth, and since some people will have moved away, too, your overall customer pool may be seriously in flux!
If all this fits your business profile, direct marketing using the mail might be just the ticket to pull in your next crop of new customers—and help you score big this year.