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  • Jonathan Harmon

The Ultimate Guide to Direct Mail Marketing

Updated: Dec 17, 2020



Introduction


In the age of digital marketing, direct mail marketing may seem old-fashioned, but smart marketers use all of the tactics available to reach marketing goals and direct mail is a time-tested way to reach customers and prospects.


Read on to learn more about direct mail and how you can use it to help your business succeed.


Definition


Direct marketing platform MailChimp defines direct mail marketing as, "a type of direct marketing that’s delivered physically to a prospect’s mailbox through the United States Postal Service or other delivery service."


Direct Mail Examples


Examples of direct mail include the following:

  • Postcards

  • Flyers

  • Catalogs

  • Coupon packs


Why Should I Use Direct Mail to Market My Business?


As more advertising continues to move online, you may be surprised to learn that direct mail is becoming more effective at driving sales.


According to a recent report from the Data & Marketing Association, direct mail response rates are 9% for house lists and 4.9% for prospects.


By comparison, email, paid search, and social media all have a 1% average response rate and online display has only a .3% response rate.


In a world of easily ignored, overstuffed email inboxes, your prospect's physical mail box is a great place for your message to stand out, letting you:

  • identify new customers

  • reconnect with inactive former customers

  • target new prospects

  • inform existing customers


Common Direct Mail Marketing Pitfalls to Avoid



Direct mail can be a very effective way to help you and your business reach your marketing goals, but the following mistakes can cause your efforts to misfire.


Undersized Creative


While traditional mail volume has shrunk through the years as email has gained popularity, your prospects still receive lots of mail and your piece needs to get noticed.


A standard postcard is too small, to stand out from the crowd, use larger sized mailing pieces to grab your prospects attention.


Insufficient Planning


Pressure to create a quick-fix for lagging sales may tempt you to throw together a mailing piece without planning and preparation.


Unfortunately, giving into the temptation to wing-it will only waste money and leave you worse off.


Taking the time to plan will more than make up for your effort with better results.


Rushing


Rushing work to meet mailing deadlines can lead to:

  • misspellings

  • bad addresses

  • low quality creative assets

Mistakes waste marketing funds and can be off-putting to prospects, sending the message that you are sloppy and don't attend to the details.


If you don't have time to do it right, don't do it.


Bad Messaging


Your customers use your business to solve a problem, do a job, or meet a need.


Your message needs to let prospects know how you can help and why you are the best choice.


Tailor your message to speak to their pain points. Focus on features that are relevant to their needs instead of listing all the things you want to tell them.


For example, if price is the pain point for your target audience, focus your message on your low price, not your new mobile app or warranty.


Bad Design



You may be tempted to cut costs on your design by doing it yourself. Don't do it.


You only get one chance to make a first impression. Use a qualified graphic designer.


An experienced graphic designer will charge between $150 and $250 to create a standard size postcard. A larger format piece will cost slightly more.


The difference in quality is worth the money and will increase the effectiveness of your campaign.


Once you choose a graphic artist, avoid micro-managing their work. Designers will feel pressured to implement your suggestions even though they will reduce the quality of the end product.


Provide the information that must be included and some samples of professional designs you like, then set them loose.


You hired a professional, let them do it right.


Low Frequency


Your prospects are bombarded with information from all directions. It is estimated that in 2020, the average person encounters from 6,000 to 10,000 ads a day.


One mailing to your list isn't enough. Plan on mailing at least three times to the same list to cut through the noise and reach your prospects.


Bad Copywriting


If your mailing piece looks great and your message is aligned with your audience needs, but the copywriting is bad, it still won't work.


Use simple language to create a compelling offer. Include a clear expiration date to create a sense of urgency to drive action.


Don't write a novel. People are busy and may just skim your copy. Keep it simple and focused on the value of your offer.



Budgeting


You must budget for the costs and revenues for a direct mail campaign to be sure it makes sense. You will need to know the following to inform your decisions:

  • Campaign Cost

  • Average Purchase Amount

  • Estimated Campaign Adjusted Gross Profit

Campaign Cost


The campaign cost is sum total of all the costs incurred in creating and distributing the direct mail piece and requires the following data points to calculate:

  • number of contacts

  • cost per contact

  • design cost

  • printing cost

  • postage cost

The campaign cost is calculated using the following equation:


number of contacts x cost per contact + design cost + printing cost + postage cost = campaign cost


For example:


If a list of 10,000 contacts that cost 20¢ per contact is sent a mailer that cost $350 to design and $50 to print with a total postage cost of $500, the campaign cost would be calculated as follows:


10,000 x 20¢ + $350 + $50 + $500 = $2,900 total campaign cost


Average Purchase Amount


The average purchase amount measures the average dollar amount a customer spends in a transaction at your business and is calculated using the following formula:


total sales in time period / transactions in time period = average purchase amount


For example:


If your business generated $3000 in sales a day with 100 transactions the average purchase amount would be calculated as follows:


$3000 / 100 = $30 average purchase amount


Estimated Campaign Adjusted Gross Profit


The estimated campaign adjusted gross profit measures the estimated profit associated with a direct mail campaign and is calculated using the following equation:


projected sales revenue - cost of goods sold - direct mail campaign cost = estimated campaign adjusted gross profit


For example:


If, for an upcoming direct mail campaign, you anticipate sales revenue of $5000, your cost of goods sold is $1666, and the campaign cost is $1000 your estimated campaign adjusted gross profit would be calculated as follows:


$5000 - $1666 - $1000 = $2,334



Mailing Lists


Mailing lists are a key component of almost all direct mail campaigns and typically fall into one of the following categories:

  • Compiled Information List

  • Direct Response List

  • USPS Every Door Direct Mail (EDDM)

Compiled Information List


A compiled information list is made up of data from multiple sources, including:

  • residential address directories

  • vehicle records

  • business databases

Typically these lists are used based on geography. For example, a compiled list may contain all households within a 4 mile radius of your business.


This approach may be inefficient if too many recipients are unqualified to purchase your products.


A better approach would be to target recipients based on demographics such as age, gender, or income range to reach more qualified prospects.


The main benefit of compiled information list is their low cost, but unfortunately you get what you pay for and the quality of these lists is relatively low.


Nonetheless, it may be good enough to meet your needs if your products appeal to a wide audience and should be considered as a possible option for your direct mail campaigns.


A good source for compiled information lists is Data Axle USA.


Direct Response List


Direct response lists differ from compiled data lists in that the lists are built using contacts that have a history of responding to direct mail offers.


They are created based on a number of sources, with a common source being data captured from people purchasing mid-quality products at low prices via direct mail offers.


These products often seem surprisingly cheap because the companies making the offers lose money on the products and make their profits by selling the data they capture throughout the sales process.


These lists can target audiences based on many factors including:

  • education

  • job title

  • interests

  • purchase behavior

  • credit ratings

The primary benefit of these lists as they have historically yielded better response and conversion rates than compiled data lists.


The main drawback of direct response lists is that they cost significantly more than compiled data lists, though often the improved response rate outweighs the higher cost.


One of the best resources for direct response lists is SRDS.


USPS Every Door Direct Mail (EDDM)


The United States Postal Service Every Door Direct Mail (EDDM) program allows you to work with the postal system to target households based on zip code.


Targeting criteria is limited to a few options including age, income, and household size, but their is no list cost, and postal rates are deeply discounted compared to traditional mailing costs (as low as 18¢ per piece for a standard sized postcard versus traditional mailing costs of approximately 30¢ per piece).


If your businesses products have wide audience appeal, the USPS EDDM program may work for you.


To learn more about the USPS EDDM program check out the video below:



Printing and Distribution


At this point you need to print up your mailing pieces and get them out to your list.


In the bad old days, this meant working with the printer to get your mailing piece and then working with a mailing house to get them addressed and delivered.


Fortunately, these days most printers offer professional mailing services to address, sort, and send your piece out for delivery, so you simply need to pick a printer, deliver the files and relax.


Just be sure you will get the opportunity to review a proof prior to final printing and mailing so you can ensure the quality meets your standards.


Shared Mailing Alternative


If you don't have the time or resources to create a solo direct mail campaign, you may want to consider a shared mailing provider.


Shared mailing allows you to deliver your offer in a mailing envelope or circular that you share with non-competing businesses that have similar target markets.


Cost savings can be significant and companies such as Share Local Media and Valpak can help you get the most out of your marketing budget.


Conclusion


Congratulations! You've made it to the end and along the way you've learned:

  • Direct mail isn't dead, but in fact is working better than ever.

  • Avoiding common direct mail marketing pitfalls will improve performance.

  • Budgeting can help you decided if direct mail makes sense for your business before you invest your marketing dollars.

  • Lists fall into two categories, compiled information and direct response.

  • The USPS EDDM program is an inexpensive alternative to traditional mailing lists that may make sense for your business.

  • Shared mailings is a low-cost alternative to solo direct mail campaigns.


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