by Bill Cherry
Introduction
What is direct mail and how is it used?
Of all of the major types of advertising that businesses use, direct mail can be the most effective; inexpensive to print, inexpensive to mail, and you can target the small business customer better than any other medium. The goal of direct mail advertising is to get the recipient to read it and act.
Direct mail doesn’t work
“I tried direct mail advertising once and it didn’t work.” I have heard those words hundreds of times from owners and managers of businesses. The fact is, all major advertising media work when used correctly and used at the right time.
Junk mail
Direct mail is often referred to as junk mail because most of it is thrown away by the recipient. In fact, only a small amount of direct mail advertising is read by the consumer. A typical scenario is a consumer gets his mail from the mail box and starts glancing over each piece. The mailers he has no interest in (which is most of them) are immediatly thrown into the trash. The ones of interest are kept and read.
When a direct mail campaign is sent, only ½ to 2% of the mailers are read, the rest are trashed. How can advertising be effective when almost all of the recepitants don’t look it? Simple, mail a large amount to get a large return. I’ll show you how in a minute.
Just like all advertising direct mail has advantages and disadvantages; a right way and a wrong way to use it.
Advantages of direct mail advertising
1. Targets customers better than any other kind of advertising, period.
2. Direct mail advertising is the only one of all the major kinds of advertising that its effectiveness can be measured exactly. You know the exact amount of customers a business gets from each mailing.
3. Direct mail advertising works.
4. Direct mail is still a growth industry as apposed to traditional broadcast and print advertising. If it did not work, advertisers would not continue to use it.
That may not seem like very many advantages, but when it is as powerful as it is you only need one advantage, it works. All other kinds of advertising cannot reach a specific target customer and only that target customer without “wasted circulation.”
Wasted circulation
Wasted circulation is the amount of people reached with a medium that are not interested in the product or service being sold. For example, let’s say you want to reach members of 5,000 households who own pets. With direct mail you can mail your advertising to each home that has a pet. With TV or any other medium for that matter, a TV spot may reach 20,000 viewers each time it airs. There are 15,000 viewers who are not pet owners and are not part of the target audience. That 15,000 is called wasted circulation. The business that paid for the TV spot paid to reach 15,000 people who were not potential customers, wasted circulation. With direct mail you reach only those target customers you need, no wasted circulation.
Disadvantages of direct mail advertising
1. The cost per customer reached is very high.
2. You get a very small reach; typically ½ to 2% of the pieces mailed are read.
3. People think of it as “junk mail” so they assume it couldn’t possibly be effective advertising.
4. You usually need to mail large quantities to get much response.
5. You must obtain a specialized mailing list in order to reach the specialized target customer.
The goal of direct mail advertising
The goal of direct mail advertising is to get the recepiant to read it and Act, meaning go to the phone and call the business, or to the businesses’ website and order the product, or to actually go to the business and buy the product advertised.
The design of the direct mail piece
The design of the mail piece is critical to the success of the mail campaign. The direct mail industry has done more research on what causes people to respond than any other medium. They know which colors work the best. They know whether a post card or letter work the best. They know which kind of headline and copy works best, (in advertising and publications the text is called copy.)
The kind of design used for a direct mail piece depends on who the target customer is and what you want him to do. Do you use post cards or a letter? Will one color of ink or four color process (full color) work best? What kind of paper should it be printed on? What should the headline and copy say? What offer will the mailer give? How do you want the recipient to respond? These are all critical elements that will affect the success of the campaign.
The mailing list is critical
The most critical element of a direct mail campaign is the mailing list. You must have an up to date list of addresses, phone numbers, or e-mail addresses, to which you are mailing. In most cases you can get a good list from either a list broker or a direct mail company. (You can find both in the yellow pages) You don’t buy a mailing list, you rent it. You pay for the list each time you mail to it.
The list must be clean
That means it must be up to date with the most correct addresses and without duplicates or names that are not in your target list. You must depend on where you get the list for its correctness. You can rent lists with names and addresses, with phone numbers, e-mail addresses, or all of them. E-mail lists cost the most.
How many names can you rent for a campaign?
Mailing lists are rented in groups of a thousand. Often there is a minimum amount of 5,000 names. The cost is based on a per thousand amount such as $25 per thousand etc. You can rent any amount of names from 5,000 to millions.
An example of a direct mail campaign
For our purposes here I will not go into all the details of the process but you will get the idea.
1. We are selling men’s high end retail clothes; Cherry’s Hot Digs.
2. We decide we will mail to 25,000 males in a four zip code area.
3. The target customer is men age 25 plus, average income of $70,000 a year plus, middle to upper management, lives in affluent zip code areas of the city, etc.
4. We decided to advertise a special group of expensive fine wool sweaters at a 50% discount.
5. We decide to use post cards rather than letters for a variety of reasons.
6. We write a compelling headline and copy to get the attention of the reader and add attractive photographs.
7. We have the printer print the post cards
8. We rent the mailing list in the target zip code areas. (Cost is $40 per thousand names)
9. We deliver the printed post cards and the list on a CD to a direct mail company.
The direct mail company addresses, applies postage and mails the post cards.
After about three days customers start to respond and we get a response rate of 2%.
Two percent of 25,000 is 500 customers. Of those let’s say three hundred customers buy and are also sold additional items for an average sale of $250.
Total revenue for the campaign is 300 respondents X $250 = $75,000. Subtract the cost of the mailing, approximately $5,000, and you have net revenue for the mailing of $70,000. Not bad for a two percent response rate.
Direct mail can be a very powerful advertising medium when used correctly.
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