Making Direct Mail Work in Tough Times

For a long time, we direct marketers have been facing the twin threats of declining response rates and increasing mailing costs. Anthrax, 9-11, a sluggish economy, and continuing terrorist threats have further depressed direct mail response rates, making it even more difficult to stay profitable.

Following are some ideas that may be able to help you reverse this situation, boost your response rates, decrease your mailing costs, and make your packages perform well again:

Build a private-use database. In a private-use database, names are taken from all the lists you want to mail and maintained in a single, unduplicated database for your company’s exclusive use. This costs less than you might imagine, since you pay only for the names actually mailed, and not all the names taken from the various lists and placed into the database.

With a private-use database, you know a lot about the prospects in your files. When you rent a list, by comparison, your knowledge of the prospects on the list is extremely limited. Companies with private-use databases can use the in-depth data they maintain on each prospect to their advantage in direct mail.

For example, one of our clients is a large seminar marketer. At times they mail brochures for 15 to 20 different seminars a week.

Mailing 15 to 20 seminar offers to a single individual in a week is counterproductive. It’s an enormous waste of postage and paper -- no one is going to sign up for 15 different seminars in a week. The flood of mailings from the same company is also likely to irritate the customer. With a private-use database, you can identify over-mailed individuals and suppress their names to cut down the volume they receive.

* Use tag suppresses. Tag suppresses can be added to records, allowing records to be selected based on previous use -- for instance, you can suppress and choose not to mail to any sites (company locations) that have received your last ten catalogs and not purchased anything. You can also suppress records by a wide variety of other parameters, such as companies whose mailrooms do not distribute third-class mail (you would mail first-class to prospects in this segment).

Another useful tactic is to identify which sites in your database are buying your products and which are not. The response to buying sites is anywhere from 2 to 10 times the response to non-buying sites. By mailing to buying sites and limiting mailings to non-buying sites with the best “firmagraphic”s (SIC, employee size, buying influences, etc.), you can substantially increase response rates and dramatically cut wasted postage and printing costs.

* Implement integrated marketing campaigns. In the merge-purge list universe, e-mail lists are largely separate from traditional mailing lists, making it difficult to coordinate a marketing campaign combining paper direct mail and e-mail.

The records in a private-use database can contain both e-mail and physical addresses, and you can track who has received postal mail, e-mail, or both -- and when. So you can easily do an integrated campaign combining print and the Internet to improve your results and lower your costs.

Many marketers use a combination of paper direct mail and e-mail marketing because it allows them to “touch” their customers and prospects more frequently and cost-effectively than paper direct mail alone. While e-mail marketing is unlikely to make conventional direct mail obsolete, more and more marketers are changing more and more of their promotions from print to Internet. Advantages of e-mail marketing include lower production costs, zero postage and printing, the ability to get campaigns out in days instead of weeks, and faster generation of leads and orders.

* Build your email list. Work diligently to obtain the e-mail addresses of as many of your customers and prospects as possible. On reply and order forms, offer periodic e-mail alerts on topics of interest, such as product upgrades, price changes, or service notices. The catch: to get these valuable free e-alerts, the prospect must give you his e-mail address.

When you run your house files through an e-mail address appending service, the match rate is typically 10% to 30%. If you have 50,000 customers and prospects without e-mail addresses, appending can find and add e-mail addresses to 5,000 to 15,000 of these records or more.

* Use selects intelligently. Mailing lists offer a wide range of selections. You can segment business lists by job title, number of employees, industry or SIC code, and types of products purchased. With consumer lists, you can select segments of the list according to sex, age, income, presence of children in the household, average size of order, credit card holders, sweepstakes participants, demographics, psychographics and many other factors.

Selections, which cost $5 to $10 extra per thousand, almost always pay for themselves, and often can boost results substantially. For instance, a company regularly mailed catalogs promoting its factory safety products. When they analyzed response, they saw that sales to Fortune 1000 companies were poor compared with orders from small and mid-size firms.

Reasoning that corporate mailrooms were screening their catalogs as third-class mail, they split their database into two segments: (1) Fortune 1000 and (2) “other” companies. The “other” companies got their next catalog sent third class as usual. But catalogs for the Fortune 1000 companies were put into an envelope and mailed first class. Sales increased substantially.

* Be smart when mailing to your house files and rented lists. Smart mailers are using a variety of tactics to get more productivity out of lists at less cost.

Direct marketers are doing more list swaps (exchanges). There is a tendency for mailers to refrain from mailing their customer and inquiry files too much.

When mailing to B2B rented lists, restrict mailings by company size and penetration. For smaller companies, mail to one contact per site. For larger companies, you probably want to mail to multiple contacts -- the key players in the decision-making process.   It is also a good idea to stagger these mailings so that no more then 5 pieces of mail hit the mailroom in a single day.

Someone once said, “Success is achieved by attending to details and doing the small things exceedingly well.”  In direct mail, the creative -- writing and designing mailings or e-mail promotions -- gets all the glory.

But being prudent with list and database strategies can often mean the difference between a promotion that barely breaks even vs. one that is profitable in testing and can be rolled out successfully. It’s not very glamorous, but it can make you a lot of money. And in any economy, that’s kind of exciting.