Effectiveness of Direct Mail Marketing
Direct mail may not be a popular medium but most definitely is an effective one. It can be personalized, flexible, allows for early testing, gives you time in the marketplace with your prospect before the competition knows what you are offering, cost effective, and breaks through the marketing clutter. The effectiveness of direct mail marketing is something to be considered when trying to reach qualified prospects.
Although the cost per thousand to target prospects is higher than with other media, the prospects reached are more qualified for purchases as well as charitable contributions.
The keys to effectiveness of direct mail marketing can be reached by scrutinizing 5 main elements:
To increase sales and profits are the usual objectives to any marketing campaign. Direct mail can also achieve other objectives such as lead acquisition, brand recognition, educating consumers, strengthening current customer relations, and reinforcing buying decisions. To increase the effectiveness of direct mail marketing, It is important to know what it is that you want to accomplish with your mailing beginning with the end in mind.
Prospect Selection (Target Market)
A prospect turns into a customer when the magic three line up: ready, willing and able to buy. The sales cycle length can vary based on your industry and brand recognition of your product. Direct marketers usually apply the R-F-M (recency, frequency, monetary amount) formula when targeting prospects. How long ago was their last purchase? How many times have they purchased? How long have they been a consumer of this type product?
Models can also be built on the data of your current customers to anticipate certain buying propensities to build a prospect list. Take for instance if the average age of your customer is 38-47 then you can easily eliminate the 65 and older prospect to maximize the effectiveness of your direct mail marketing.
What is it that you want your customer to act upon and how do you want them to accomplish this task. If you are selling a product – then the easiest way to fulfill this offer is to give the customer an order form. If you sell a service – then the offer would be to action upon the benefit to the feature of your service to the prospect. Phone response, email, PURL (Personalized URL), QR (Quick Response) code, or online ordering are all ways for your prospect to fulfill the offer for your direct mail marketing piece. Reducing the time and ease of use for your prospect is a key to increasing effectiveness in this area.
By the nature of the design of direct mail marketing, it gives the advantage of the ability of testing under real market conditions. Measurement of response with first class mail can happen as soon as 2-3 days. Elements available for testing include but are not limited to images, copy, offer, mailer type, envelope, prices, data list, and response mechanism.
Cost/ Measurement/ ROI
By adding up planned costs, average customer expenditure, average gross margin, minus the cost of customer acquisition and maintenance (discounting the opportunity cost of money over a period of time), a marketer can figure out the needed break-even response rate. Even if the direct mail campaign fails to break-even on an individual drop, the long-term profit on all future purchases can factor in profitability.
How many customers do you need to get this year (offsetting those you will lose) and what are you willing to invest to get them? Even the most savvy business owner/manager will lose customers that must be replaced. What is your customer worth?
Knowing and maximizing these areas of direct mail marketing make the most effective use of this medium. Direct mail is and always has been a workhorse in the toolbox of any marketer. Using direct mail in combination with other marketing mediums makes good business sense.
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