Over the past 50 years, American businesses have sent billions of pieces of mail with an eye towards growing sales. Everything from simple letters and postcards, to CDs, three-dimensional brochures and boxes of cereal have found their way into mailboxes across the country. Needless to say, billions of dollars are riding on the success or failure of these mailings.
What’s the key to success? Talk to them! The best way to guarantee the success of your direct mail campaign is to personalize it with a call, make it easy for customers to respond, and measure the results. Campaign success is measured as return-on-investment (ROI) – or how many total sales were generated compared to the cost of the marketing campaign.
If you are running a long-term campaign, try testing your mailing on a small scale first. When conducting a test mailing, decide how many pieces you want to send. Make sure you send out enough responses to accurately determine your response rate and the effectiveness of your message. A good rule of thumb is to test between 1,000 and 5,000 pieces to start. Your response rate will vary depending on your product, industry, target market, and other factors. To increase the response of your mailing, you will want to pay attention to these factors:
- Campaign Goal– What is the goal of your campaign? Do you want to build brand awareness, generate leads, or make an immediate sale? Once you have decided on your goal, determine how many responses you need to make the campaign successful and then track the results.
- The Mailing List– Make sure your list is targeted at your actual buyers. Identify who your customers are, and build a list based on those criteria. What unique characteristics do your customers share? Are they business customers or consumers? Where are they located? How affluent are they? These questions are unique to your business and need to be answered in advance of the list-building process.
- The Offer – Having a good offer is one of the most important parts of the mailing. Whether it’s a discount, a free gift or rebate, the offer needs to be so tempting it is too good to refuse. Also, make sure the offer has an expiration date. Time and time again, it’s been proven that more people respond to an offer when there’s a limit on the amount of time they have to respond.
- The Benefits– Highlight the benefits of what your product or service will do for your prospective customer. Don’t dwell only on the features of your offering. Focus on what your service or product can do for the customer: Double your sales performance; receive a 50 percent time savings; lose 10 pounds in 10 days. Try to quantify the benefits available to make them more concrete and credible. If you have an important, valuable benefit, you may also want to use it in the headline with the offer.
- Lifetime Customer Value – Know what each new customer is worth. This usually boils down to understanding Lifetime Customer Value (LCV), or the actual profit (sales price less direct cost of goods sold) associated with each new sale. How often will a new customer purchase from you over the next two to three years. Multiplying these two numbers produces LCV. This is the maximum amount you can afford to spend to acquire a new customer.
- Campaign Costs – Understand at the outset how much you need to invest in your campaign. Take the total cost of your mailing, including creative, printing, postage, and labor, and divide that figure into the LCV. This will tell you how many sales you’ll need to make in order to break even on the campaign.
- Response Medium – Make it easy for your customer’s to respond. Provide a telephone number, fax number, email address, or a Web site. Let customer’s contact you in the way they prefer. Adding a toll-free number to your direct mail piece makes it easier for a prospective customer to call and can double your response rates. It will also allow you to better track your campaign for messages and the effectiveness of your offer so the campaign can be fine-tuned along the way.
- Personal Follow Through – For an even greater return on your marketing dollars, follow up your mailing with a personal follow-up call. Many business lists include phone numbers for your target customers. Whether you do it yourself, or hire an outside company, recent studies show that a personal follow-up call can increase response rates by nearly 50 percent. When calling consumers, though, be aware of the Do Not Call list.
Of course, the results produced by any campaign are dependant on the general economic environment, the market, the product, the list, the offer, and other factors. However, the following chart identifies the types of returns that are possible when implementing a solid direct mail campaign:
Direct Mail ROI
With Toll-Free #
With Follow Up Call & Toll-Free #
Number of pieces you will mail
% of response you expect
% of respondents you expect will purchase
Average sale size
Profit per sale
Lifetime Customer Value
Targeted mailing list
Design, creative, & coordination
Production & mailing cost (per piece)
Teleservices (inbound or outbound)
Total mailing campaign cost
Number of responses
Number of sales
Total immediate sales
Total (LCV) campaign revenue
Return on Investment (RoI)
(a) traditional rule of thumb is 2% — actual response will depend on factors such as product, market, list, & offer
(b) calculated as sales price less direct cost of product sold
(c) usually 24-36 months depending on product cycle
(d) one hour assumed at $60/hour
(e) assumes 100 minutes/1,000 pieces
(f) assumes business lists, consumer lists will be less expensive
(g) assumes business lists, consumer calls will require DNC compliance at additional cost
Source: Lauchpoint Inc.
So, if you have a product or service you’d like to sell, direct mail, combined with personalized services such as a toll-free number or follow-up call, may be just the marketing tool you need to take your business to the next level.
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