Why Direct Mail Still Yields the Lowest Cost-Per-Lead and Highest Conversion Rate

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Direct MailThese days, marketing is all about digital. We are emailing, blogging, Tweeting and Facebooking our little marketeer hearts out.  So direct mail (the kind that the postal delivery person puts in your mailbox, remember?) must be dead in the water. Right?

Wrong. According to the Direct Mail Association (DMA) Factbook for 2013, 65% of consumers of all ages have made a purchase as a result of direct mail.

According to Direct Mail News, in 2012 the average response rate for direct mail was 4.4% for both business-to-business and business to consumer mailings—considerably higher than industry expectations, and surging past electronic mail’s response rate of just 0.12%.

All this indicates that direct mail is alive and working well, thank you.

Many of our clients, including those in high tech, are recognizing this and direct mail is going through a renaissance. They may have maximized their online spend and need to find another channel, or they may enjoy such a high response to direct mail that it’s added to the mix from the start. Either way, the results are highly satisfactory and direct mail is becoming a staple in their marketing plans.

Cost Per Lead about the Same as Email

“Well, OK,” you might argue. “But it still costs more to mail something printed than to send out email. What about ROI?”

Good question, you! However, the raw cost of a campaign isn’t the true test of success. Cost per lead is. The DMA reports that the cost per lead of direct mail is in line with print and pay-per-click, and significantly less than telemarketing (See Table 1). Direct mail production costs are somewhat more than email, but not enough to make email the holy grail of direct marketing. RELATED CLASS: Why Your Email Content Isn't Driving More Conversions, and How to Fix It

Table 1: Cost Per Lead Comparison

Direct Mail Cost-Per-Lead

Source: DMA, 2012 Response Rate Report

With a higher conversion rate than any other medium, the Print on Demand Institute (PODI) found that direct mail out-pulled all other channels tested in terms of conversion rates, both for lead-generating “free” offers and one-step “buy now” offers. Direct mail’s edge becomes even more dramatic when it is optimized with personalization and other factors, and combined with personalized landing pages.

Try adding your existing landing page URL to direct mail. Some buyers really prefer to respond online, and this may bring in more business at zero additional cost. This becomes even more effective when you use a personalized vanity URL that is easy to remember and to type—www.ABCcorp.com/John.Smith makes it simple for customers to use even though they can’t cut and paste.

Direct mail also enjoys longer “shelf life” than email, so it might be profitable to evaluate your existing landing pages and offers to see what can be repurposed to offer through direct mail. If you do, remember that people may access it weeks after the mailing, so make sure that the pages and offers are still good—or put a firm deadline on response time.

Try Postcards

Direct mail doesn’t have to be large and expensive to be effective. The U.S. Postal Service found that postcards are the mail format most likely to be read or scanned.

It may be that postcards don’t take much time to read. This means that to be effective, the prospect needs to understand your offer within seconds of glancing at it. Some of the same rules apply to postcards as to emails in terms of how much information can be effectively communicated.

Test postcard performance by using your best-performing promotional email as the starting point. Put the image and header on one side and the body copy on the other. Oversized postcards tend to get more attention, so try a large-format card size. Then see how your postcard test performs against email.

Remember, postcards are a great deal less expensive to print and mail than most forms of direct mail.

Direct Mail Lists Are Better Quality

Direct mail list vendors have been working on their databases for decades. Email lists are improving, but they are still not at the same level of quality. This means that your direct mail list from a good vendor will be more tightly targeted on your desired customer. Don’t forget to use your house list as well; house lists tend to outperform rented lists by orders of magnitude.

If you haven’t started a house list, now is the time. Include customers who have responded or bought previously as well as former customers (you might be able to woo them back with the right offer). Your time and attention to this mundane but critical task will be repaid many times over.

Break Out of the Mailbox

If you are using envelopes, you already know that the only purpose of the “outer” is to make sure the envelope gets opened and the contents read. Take the time to test the messaging on the outers. Tweak the wording or rephrase altogether to see if one version pulls better than another. And test “blind” outers as well; they often pull better than teasers because they don’t notify recipients that they are opening direct mail.

Use the Right Direct Mail Format

How well does your direct mail format correlate with what you are selling? Fun, glitzy pieces that work well for cosmetics or fashion will not fly if you are selling financial services; a somber No. 10 envelope would be more credible because that’s what people expect from financial services. Start collecting direct mail pieces as a reference library. Focus on direct mail aimed at your audience and analyze what the senders’ intentions were, the calls to action, graphics, etc.

Get Personal

Personalized communications continue to out-do generic pitches in all categories.

But using a person’s name is just the beginning—the content needs to be personalized as well. For example, if you are marketing high tech products that run on different platforms, users will have different hot buttons. A generic message that focuses on only one platform will not be relevant to other customers. Wording that tries to cover issues for all platforms will be cumbersome and uninteresting to most recipients. It’s worth the extra time and small expense to assure that your piece says the right thing to the right people.

Timing Is Everything

Direct mail campaigns used to take weeks to execute because of the time it took to develop concepts, print, etc. That can still be true of large and elaborate campaigns, but now marketers can take advantage of digital print-on-demand.

This allows you to be far more flexible in how you use direct mail. For example, American Signature Furniture once conducted a test, sending a self-mailer to people who visited a showroom but did not buy. The mailer included the customers’ names and the name and contact information for the sales rep who served them, as well as the date and time of the visit. Photos displayed the styles they considered during their visit to the store.

Results were impressive. People who receive the mailer and return to purchase spend about 40% more than those who did not receive the mailer. The reminder also boosted return visits to the store by 10%.

Use direct mail as an adjunct to other sales and promotion efforts. Salespeople who complete a sales call can drop a postcard in the mail on the same day, thanking the customer and perhaps offering a special discount. Direct mail can support an email campaign as well.

Of course, seasonality is important. If your swimming pool-supply business peaks during the warm months, be sure to send direct mail in March reminding pool owners of the delights of the summer to come—and the importance of having a clean, sparkling pool to enjoy.

Go Dimensional

3-D or dimensional mailings, whether they take the form of a box with a teaser on the outside or a tube, outperform standard formats by 250%, according to the DMA, but increase the cost per lead by only 50%.

Use dimensional mailers with high-value prospects, and make an even higher impact by following up with a telemarketing call.  I’ve seen a combination of email, direct mail, and telemarking consistently yield a 13% to 15% response, and once you have them engaged on the phone you can qualify them for lead quality and pass the “A” leads immediately onto the sales department.

Test Everything

Amid a plethora of promotional techniques that are extremely hard to quantify (such as social media marketing), direct mail remains refreshingly measurable. Every lead or order can be traced back using source codes or other techniques. This allows you to experiment with different approaches to determine which ones are the most successful. It also allows you to quantify your ROI and justify costs.

Learn how to drive better email response rates.

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