Why is it that some people make BIG money with direct mail and others lose their shirts?
Is it the packaging, the postage, the copy content, the design or layout, the offer, the promise, the guarantee, the response device, the cost, the list, the database management or the timing?It is all of these things and sometimes none of these things. Big help so far, huh?Overview
Like all types of marketing, your efforts are only as good as the weakest link. Remember there is no guaranteed formula for success with anything. Every situation demands a different approach. You wouldn’t go about selling computers through the mail the same way you would toothpicks. Nor would you sell suntan lotion in Alaska the same way you sell parkas in Hawaii. The most important thing about a direct marketing program is to put yourself in the customer’s shoes.You may be saying to yourself, “Thanks Deo (that’s me),I already know that.” But you would be amazed at how many times I have seen “wishful thinking” replace logic in such situations. We must be willing to remove ourselves from the process when planning a marketing campaign, and truly take on the role of the prospect. This is why the perspective from an unbiased professional can be so valuable.With this in mind let us begin to look at some of the variables that contribute to success or failure of a direct marketing program.Packaging
The direct mail packaging typically consists of an envelope. Although some direct mail packages utilize boxes, bags, tubes, and an assortment of odd packages, these may be great for getting attention but they are costly. In the proper circumstances, however they can be very effective. I can show you some very unique direct mail packages that have generated 5 to 10% response. Remember that the front of the envelope or package is your first opportunity to get the prospects attention. It is also an opportunity to target your prospect.For example making a statement such as “FREE Seminar Information Enclosed” or if you are mailing to buyers of fishing equipment, making a statement on the envelope such as, “Great Deals on Fishing Gear and Tackle,” would be appropriate. It is statistically proven by the Direct Marketing Association that personalized envelopes generates 20 to 30% better response than non-personalized envelopes. This also helps with tracking response and cleaning the list.Content
The direct marketing package should be prepared in such a way so as to engage the customer. By this we mean that it first demands attention, gets them interested and then gets them involved. It should include some type of compelling imagery (photo or illustration), as well as a powerful headline. The best headlines are no more than five to six words. The best words to use are simple, easy to understand preferably one, two or three syllable words. Write your copy or headline so that it could be understood by your average 10-year-old.The content of the direct marketing package should clearly describe the product or service. It should also outline the benefits the prospect will receive once purchasing the product or service. Since people buy emotionally rather than logically, the best copy powerfully shows how the prospects life would change as a result of having the product or service. It satisfies the question of; WHY the prospect should own the product or subscribe to the service. Evidence is critical here.Testimonies, endorsements, examples of success are all great ways to build credibility in the direct mail device. Many direct marketing experts claim that a long letter and more material included in the package produces a higher response. Certainly this costs more, both in postage as well as development. It seems that many people believe that more is better. However I have seen very successful direct marketing packages that include merely a one-page letter, one page product benefit sheet, and a response device addressing the critical information. If you follow the above checklist, you should do well, even if you donâ€™t mail a ton of material.Response Device
The response device is a form that makes it simple for the customer purchased product or service. A good response device should include the space for information such as name, shipping and billing address, phone number, email, fax number, quantity purchased, unit cost and total cost. It should also include payment options. A good response device can be completed in less than 3 minutes and provides ALL the information necessary to ship the product or provide the service. It should also include a carrier (as it is known in the direct mail world). This is a return envelope so the customer can send in payment. It should be pre-addressed and postage pre-paid. I also suggest including a fax #, email address, and toll free number for order placement.Product or Service Being Offered
Products or services priced at more than $100 each typically are more difficult to sell via direct mail. They require a more sophisticated approach. This means building greater credibility, incorporating testimonies or endorsements, showing several photos of the product, and including compelling evidence that the product is worth the price.Direct Mail and Telemarketing
In many of these cases I recommend that my clients utilize a mail-call-mail type of direct marketing program. This mail-call-mail program involves placing a telephone call (See Telemarketing White Paper) following the initial mailing. This call should be placed seven to ten days following the mail drop, assuming that the mail is sent third class or Bulk mail.Bulk mail typically requires three to five days to reach its destination however in some cases it can take as long as seven days. The telephone call following the mail piece allows the customer to be reminded of the offer. It also allows the customer the opportunity of getting their questions answered, and motivates them by communicating the benefits in an interactive way. This telephone call can add as much as 50 to 250% to the response.Typical response rates for direct mail alone range from 0.5% to 2.5%. Response rates for direct mail WITH telemarketing typically range from 7% to 30%. The final mail piece allows the telemarketing salesperson to follow-up with the customer in writing. This, in itself builds credibility and permits the customer to receive any additional information that might culminate in the sale. This also helps to strengthen the accuracy of the database. And, in a mail-call-mail program it is critical to maintain an accurate database of prospects (See Database Management White Paper). This can be done with one of several inexpensive, off the shelf, contact management programs such as ACT!, Goldmine, Microsoft Outlook, or others.The Purchasing Process
I’m constantly amazed at how many people have attempted a direct marketing program without doing the slightest bit of research. How are your competitors selling your product or service? Is it typically purchased at a retail location? Does the customer typically negotiate price? How many stores do customers typically visit before purchasing the product or service? Answers to these questions are absolutely crucial in determining whether you’re going to make money or lose money on your direct marketing program.Results
Evaluation of your direct marketing program should not be based on the number of sales or even the percentage response. It should be based on your return on investment. Return on investment is simply calculated by taking the total cost of the project (which should include cost of design, layout, printing the mail piece, postage, letter shop, any costs incurred by the mail house, telemarketing costs, even your time) and dividing this by the total profit generated as a result of the direct marketing efforts.For example, if the total cost for direct marketing program is $5000 and profit is $1000, your return on investment would be 20% (1000 divided by 5000). Often times it will take two or three mail drops or telemarketing campaigns in order to generate profit from a particular list or geographic market segment. Typically the first drop and the first telemarketing campaign will generate zero return on investment, perhaps even a slight loss. The second and third attempts however should generate 25 to 50% return on investment. Successful long-term direct marketing programs can typically produce upwards of 200 to 300% return on investment. This often requires testing several solutions (See Testing White paper).Controlling Cost
The best way to the control cost of a direct mail program is to figure out what all of your costs will be and how many products you need to sell in order to achieve a specified return on investment. We call this the R.O.I. Pro-forma. This evaluative tool should be used PRIOR to the mailing to help determine how much to mail, how much to test, and how much to spend on the package and postage. By setting this budget you can predict the profit or loss at every point on the response curve. (We have many examples of these ROI Pro-formas that we can share with our members).There are many other tricks of the trade in controlling costs with regards to direct marketing. For example, ever wonder if the mail house dropped ALL of your mail? Be sure to request U.S. Postal Service Form 3602-R Postage Statement. This is the standard form used by mail houses when delivering mail to the post office.Another way to control costs is by getting the best deal on printing. Most customers have the mail house print their mailing material. It is best to contract with a printing company that is close to the mail house to print up your envelopes, carriers, letters, and brochures. They can then deliver them to the mail house, instead of having the mail house print this material. Since the printer specializes in printing they can provide the service at a lower cost than mail house. Your savings can be rather significant by doing it this way.