Author: Hollie Fearer, Sr. Account Manager
In my past life I worked for two major brands helping them with acquisition and retention direct mail programs. During that time, I was able to gather valuable insights into different strategic approaches to direct mail and testing. I’ve taken that knowledge and applied it to my clients at Speedeon and have helped expand my clients’ customer acquisition and retention efforts. Overall, what I’ve found true is this, the ability to test and learn across various marketing channels and the ability to adapt to the ever-changing environment will strengthen your ability to target the correct consumer at the correct time with the correct offer, resulting in a more profitable campaign.
There are many channels and strategies available to marketers today. It is important to understand which work well for your core customers and which are better for acquisition. Choosing the right channel and strategy can be overwhelming, and the investment of both time and money, can limit one’s ability to try different approaches. However, matching the right channel with the right strategy can often only be achieved through testing various strategies and channels. Once testing has been completed, strategies can be optimized and strengthened to deliver powerful results.
Like any marketing channel, direct mail offers both challenges and opportunities for businesses looking to engage new or existing customers. I’ve found that for many marketers, knowing where to start is sometimes the hardest part. The following will walk you through the finer points of marketing directly to consumers via print. And more importantly, will provide you with more confidence in planning a direct mail campaign.
There are four key elements to consider when planning a direct mail campaign:
- Audience: who are the best customers and prospects to target?
- Message: does the message and offer resonate with the intended audience?
- Metrics: what will we measure success on?
- Budget: what is our budget and what considerations do we need to take into mind?
These four elements ultimately combine to create an ideal campaign that helps to accomplish your pre-defined business goals.
“Who are we targeting?” This question will be the basis of your selection strategy. The audience of a direct mail campaign has as much impact on the overall success as the message, format and offer. Also, a refined audience selection strategy will influence the message and format. For example, targeting someone who lives in an apartment with a lawn care service offer is not going to provide the best return on investment.
When identifying strategic partners, it is important to look at the data strategies and the level of analysis that is offered by each partner to get to the desired target audience. At Speedeon, our team of data scientists provide predictive analytics capabilities for our clients. This allows us to identify your best customers which then allows us to target prospects who look like your best customers. We can also leverage your business rules to select audiences that will be a good fit for your brand – from general consumer prospects, to new movers, or consumers experiencing a life event.
Have you ever received an advertisement in the mail and were unsure of what the ad was selling? The overall message on a direct mail piece will influence its performance. A clear call to action (CTA) lets the recipient know right up front what is in it for them. Wording such as “Free 7-day Trial!” or “Get 50% off When You Order Today!” provides the recipient with information they need to know if they want to proceed. Make sure the CTA is clear to the recipient. Ask yourself, what action do I want the recipient to take? Furthermore, CTA’s that have both action words and an urgency component tend to perform better, for example, “Save now!” or “Visit us today!”.
In addition to the wording of the message, the placement is also an important factor. If you are planning to do a letter, you should place the CTA in the area above the fold, similar to an email placement. Also, people tend to read top to bottom, left to right, so consider where the CTA is placed in addition to any offer code, phone number or URL.
Lastly, testing is an important aspect of any marketing channel, and direct mail is no different. Often marketers want to test different messages, creatives or formats to determine the best driver of response. When planning out this type of testing, it is crucial to understand how these messages will be tracked. For example, if you are looking to drive prospects to your website, it is important to not only include a URL on the mail piece but also emphasize the URL so the reader can clearly identify where you want them to go. Furthermore, if you are testing different messages to the same audience, it is important that those messages have a unique, trackable code. This could be a unique phone number or URL. We will dive deeper into trackability in the key metrics section; however, it is important to call out how direct mail is different from its online counterparts. While you do not have the visibility as to who opened the letter or interacted with the brand, Speedeon has the capability to perform matchback analysis after each direct mail campaign to understand if anyone purchased or interacted outside of the intended mail piece call to action.
Establishing a clear definition of success at the beginning of your planning will be instrumental in executing a successful program. Key metrics often include CPA (cost per acquisition), CAC (customer acquisition cost), CPC (cost per click), CPL (cost per lead) or a targeted response rate. These metrics can influence the format or data strategy. For example, if you’re striving for a more aggressive CPA, leveraging less costly formats may make more sense. If your overall budget is limited, testing multiple data sources or creative versions may make the overall campaign not statistically significant. Defining these metrics and what success looks like ahead of time will be useful both when planning and wrapping up a campaign because the definition of success has already been outlined.
Another reason why establishing metrics early on is beneficial to the program comes into play when testing marketing content. Direct mail is a great channel to test both creative and audience segments as it is easy to control the testing variables and not change too many pieces at a time. This provides a clear picture on which version outperformed the other. Using an email test as an example, you do not have to compare if one version only saw 10 opens but 5 click-through’s while the other version saw 5 opens and 4 click-throughs. With direct mail you have the quantity you mailed and then the quantity that responded; if you want to dive further into conversions or other metrics, the opportunity is available.
Trackability of the campaign is important in order to measure its performance during and post campaign. Trackable URLs, phone numbers, or unique coupon codes provide earlier results and the ability to directly associate a response to the mail campaign. While not necessary, this additional measurement can help to determine how people are interacting with your brand as well as the mail piece. For example, if you have both a unique phone number and a unique URL on the piece, you can get a better understanding of who is calling the phone number or going directly to the website.
If trackability is something that isn’t available at the moment, Speedeon also provides matchback reporting post campaign. Matchback reporting involves taking a customer file and directly matching it back to the mail file with the goal of understanding if that specific customer interacted with your brand during the campaign window.
The last element of key metrics and testing are control groups, sometimes referred to as holdout or no-mail control groups. I always recommend doing a control group on any marketing campaign. The use of a control group during the marketing campaign involves intentionally excluding a statistically significant portion of the selected audience from receiving any communication. This allows us to understand the incrementally of the campaign. For example, if the control group outperformed the mail group, we can conclude that the mail piece did not have any incremental impact on response.
While there is more to think about than just a CPA or response rate when planning a campaign, the ability to clearly understand the analysis process will allow for quicker and more detailed reporting.
I’ve found that for many marketers that are new to direct mail, they often have a skeptical view of this channel. This skepticism usually comes from a perception that you need a large budget to test into direct mail or they feel like direct mail is a channel that lacks innovation. That is NOT the case. Yes, the costs for direct mail are typically higher than those of its digital or email counterparts, but what is the only channel that gives you the ability to directly target someone’s home address?
I bet that you likely go through every piece of mail you receive and make a direct decision on what to keep and what to throw away. This means that whatever decision you make with each piece of mail, you have to interact with every piece you receive. The same cannot be said for the email or digital channels. I’m somewhat embarrassed to say that one of my email addresses currently houses thousands and thousands of unread emails. I simply do not have the time to look at every marketing email that comes my way so many marketing emails go unread and unnoticed. On the other hand, I take the time to go through my mail almost daily. Yes, direct mail is more expensive, but no other channel gives you the same level of exposure, but there are ways to optimize costs and create a program that will help hit your goals. Below outlines what goes into a direct mail budget.
A direct mail budget typically consists of the following components:
- Printed Collateral
- Agency Services / Campaign Management
These components work together and help guide other key areas mentioned earlier.
Printed Collateral: There are various types of direct mail formats that can be utilized. These formats depend not only on the overall budget, but also the message. For example, if the message needs to be more personalized or confidential, a letter pack format is usually considered. If overall spend is an issue, cost effective formats such as a postcard can be utilized.
There are pros and cons with both letter pack and postcard formats. Letter packs offer the chance to add more content to the inside letter. Letter packs also can add additional variables such as buckslips or tip-on cards which can be used to promote offers or cross-sell opportunities. Postcards offer an instant impression and can showcase the message or offer directly to the consumer at their mailbox.
Letter packs require the extra step of opening an envelope so there is a risk that the overall message may be missed. However, stealth envelopes (envelopes that do not showcase any branding) can be utilized to entice a consumer to open the letter. With a postcard, the amount of content space is reduced, thus the call to action and messaging must be more precise.
Postage: Postage is typically the most expensive cost associated with a direct mail campaign and usually the cost that cannot be optimized or negotiated. There are 4 types of postage classes that can be used for marketing mail:
- First Class – Most expensive, delivers faster than Standard Class (delivery is usually between 1-3 days and delivery is guaranteed. In the event the intended recipient is not able to receive the mail, the mail is returned to the sender.)
- Standard Class – Also called Marketing Mail, standard class postage is less expensive than First Class however delivers slower (usually between 7-10 days) and undeliverable mail is destroyed.
- Carrier Route – A carrier route is the route that a USPS carrier delivers the mail. Usually done at the zip + 4 level this option allows for the cheapest postage rate however it requires more definitive quantities to be mailed.
- Commingle –Commingle mail involves multiple mailings from more than one company that are packaged together and delivered to the USPS to achieve optimum postage discounts. Delivery timeframes are longer with commingle postage of ~10-12 days. The longer delivery timeframes are usually offset by the cheaper postage rate for the overall campaign.
Speedeon will always recommend the postage option that keeps the costs at a minimum while maintain timely deliverability.
Data: The price of data can vary greatly. Specialty data and modeled data are typically more expensive than general consumer prospects selected based upon geography, age, income, etc. Typically, the cost of the data increases as the audience becomes more targeted. However, despite increased costs, the return on investment can be higher as a result of reaching a more targeted audience. Speedeon has multiple consumer data sets in its arsenal to help its clients target the right audience at the right time.
Agency Services / Campaign Management: Depending on in-house capabilities, clients may need to utilize a creative agency when designing a direct mail campaign. If needed, Speedeon can provide recommendations for credible creative agencies.
Direct mail can be an intimidating channel to launch and marketers regularly engage Speedeon for guidance on where to start in the planning process. Speedeon offers a full turnkey campaign management service specifically for direct mail. With this product, we start by understanding the overall goals and key metrics of a campaign, then transition to planning the format and audience selection strategy. Once the strategy has been finalized, Speedeon selects the best partners and printers to support the direct mail program. Finally, Speedeon wraps up the direct mail program with campaign reporting.
Direct mail can be a profitable marketing channel when utilized correctly. While planning an entire direct mail program may seem intimidating, Speedeon is here to help along the way. We work alongside our clients throughout the entirety of the direct mail process and your success, is our success.