Once thought of as a stepchild to the glamorous advertising world, direct marketing has come into its own. Direct marketing allows companies to measure results and better utilize marketing investments. It shifts the marketing fusion of art and science more towards science and lends itself toward increased accountability and intelligent marketing. With the ability to narrowly target a specific audience, personalize your message, and conduct "unlimited" testing, direct marketing offers a number of features that lead to more effective marketing initiatives.
Direct marketing includes all forms of direct response advertising – direct mail, telephone marketing, web sites, postcard decks, door-to-door salespeople, coupon advertising, direct-response TV shows (infomercials), or any other form of marketing that attempts to make a sale or create a response immediately. Advertising on the radio or in a newspaper certainly has value and provides benefits, but you may not know exactly how much value or how large a benefit without making several assumptions. With direct response advertising you know immediately if your advertising worked and how well it worked. Since you are measuring specific actions – calls to your 800 number, visits to a specific web page, reply cards returned, items purchased, leads generated – you can accurately define what works and what doesn’t with direct marketing programs.
Over time or Overnight
Since the ability to measure the success and the ROI of a mailing is one of the strongest benefits of direct mail, a distinction should be made between strategies designed to generate a return overnight versus those designed to generate a return over time. When your goal is to increase sales, store traffic, or web site visits, you must design strategies that generate new customers by using a strong incentive. Coupons, price-offs, bonus packs, sampling, and other sales promotion items are elements that can be incorporated into the direct mailer to accelerate the purchase decision or some other immediate behavior. Consumer products companies use this non-franchise building promotion quite effectively to encourage trial or purchases. Non-franchise building refers to the focus and result of the sales promotion. It is generally short term, does not build loyalty, does not encourage repeat purchases, and is used to increase sales in the short term. A franchise-building promotion focuses on building long term and repeat purchase behavior, loyalty, and product preference. Examples of franchise-building promotions are frequent flyer programs, sweepstakes, special events, and other forms of brand building activities. Direct mail campaigns that are designed to increase awareness through brand exposure are those that generate results over time and must be evaluated over time rather than over a few weeks.
Your Target Audience
One of the most critical factors—in fact the most critical success factor—in a direct mail program is the mailing list. The decisions you make regarding the criteria for selecting a list will ultimately determine the overall effectiveness of the direct mail program. After all, you may have a great message and a compelling offer, but when it is delivered to the wrong person or is undeliverable, the result is a disappointing zero. This painful lesson is experienced by even the most sophisticated marketer at one point or another. According to the Direct Marketing Association (www.the-dma.org), the list can contribute more than 50% of the success of a direct mail program. Other major factors include the offer, the message (copy), and the creative (design).
The list being the most important factor in direct mail success, there are several ways to go about acquiring a good list. Your existing customers are your best prospects for new products or services, and these names are the first to include. Studies show that customer lists generate two to ten times the response of a rented list. Your own customer list is also a great source of additional names (referrals of potential customers). After compiling your own customer list, consider using a list broker. A list broker sells lists of names. In some cases, the broker has compiled the names and list details. However, most list brokers act as a seller’s agent and are re-selling a list generated from another source. There are more than 40,000 mailing lists available for rental or exchange in the US. Targeted lists can also be complied from magazine subscription lists, organizations, and trade associations.
Test, test, and test again
Direct mail is one of the few marketing communications tools that lends itself to cost-effective testing with rapid results. Guerilla Marketing author Jay Levinson suggests that the three most important things to do if you are to succeed in direct marketing are to test, test, and test. When you test a mailing, you are able to determine, in a relatively short period of time, whether your mailer will be a winner or needs adjustment. This can save you money and a lot of pain when you launch a full-scale direct mail program. When developing a test, be sure not to introduce too many variables for manipulation. If you change five different things in each mailer, you will be challenged to decipher which change made the difference. Six key things to test include: offer, product, creative, mail package format, seasonality, and the list. You should see fairly quickly how much response your offer would generate. A general rule of thumb is that within one week you will receive 25% of your responses, within two weeks 50%, and within four weeks 75% of your responses. The rest will trickle in over the next few weeks.
Things They Didn’t Tell You
The items described earlier are certainly well known and documented practices in direct marketing. If you can develop a clean list, strong creative, and a compelling offer, you are well on your way to a successful direct marketing campaign. However, even when these elements are in place, there are some pitfalls that must be avoided—or at least taken into consideration—to ensure maximum results from the marketing investment.
From a B2B perspective, mailroom policies are a potential hazard to getting your message to the intended receiver. Mailrooms commonly have policies specific to the type of mail that will get delivered to the addressee and the type of mail that will be pitched by the mailroom employees. Mail that appears to be “junk” may be discarded before it reaches the targeted audience. Other times, large bundles that require time to sort in the mailroom is also susceptible to mailroom abandonment.
Not all companies have such policies in place. However, the continuing growth in the number of mail pieces being delivered requires companies to find new ways to handle the distribution and management of internal mail. If you are mailing to more than ten people at a single location, your mail will not always be tossed if you use a non-traditional approach. A personalized or official looking envelope will not be as likely to be trashed as one addressed to “Manager” or a self-mailing piece. Using alternative packaging and carriers (e.g. FedEx, UPS, Priority Mail from the USPS, DHL, etc.) are also methods of getting your mail to the intended receiver.
A final point regarding “bulk” mailings—it is not uncommon to find that the postal service bundles mail pieces of ten or more to a single location. Bundling is a signal to the mailroom that a bulk mailing has arrived and may end up in the circular file (i.e., trash). If you are mailing to a large number of persons at a single location, stagger the mailing over a few days or weeks to ensure your mailers are not bundled and have a better chance to getting to the intended recipient.
Another danger preventing you from realizing success in your direct mail program is overestimating the relevance of the product to the audience. Although you hold your product or service in high regard, the receiver may not have the same perception. Even when you have narrowly targeted the audience, it must be clear to the audience why your offering matters and its relevance to them. If relevancy is not clear to the receiver, you increase the risk of a poor response rate.
In conjunction with overestimating the relevance of the product, many companies underestimate the importance of having brand name recognition. Because consumers and businesses are inundated with messages and demands for time throughout the day, your brand must be strong enough to hold attention and garner a response. If you underestimate the importance of a brand name, your response rate may be well below expectations. Direct mail can certainly help develop brand awareness, but this process is not overnight, and requires a long-term outlook integrated with other marketing communications programs.
Conclusions
The 7% annual growth rate in direct mail usage since 1985 is proof that it works. By the end of 2001, direct mail is expected to grow to nearly $47 billion—a strong testimonial to the power of direct mail. The typical business will allocate between 2% and 3% of sales revenue to advertising and promotion. Of that budget, 22% is direct mail. For small businesses, that number can approach 50%. Because direct mail lends itself to a highly targeted audience, multiple testing, personalization, and accountability, it can be an excellent vehicle for marketing your business. Whether you are part of the Fortune 100 or a one-person operation, direct mail can produce solid results and can play an important role in marketing communications.
Original publish date: December 2002
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