Direct Mail Marketing FAQs

How important are mailing lists for direct mail?

Mailing lists are a critical component for a sound direct mail campaign. If you don't have the "right" list, your mailing will not perform - no matter how great the creative. The nature and selectivity of your list choice has to dovetail with the product you are marketing. More refined selections can help in mailing effectiveness by drilling down deeper into your mail file and being very targeted. Any recency, frequency, monetary or gender selections would further improve your response to the campaign.

There are two types of lists that are generally considered for marketing efforts:

  1. Direct Response Lists: made up of individuals that have previously responded to a direct marketing offer by mail, phone, space advertising, television or catalogue.
  2. Complied Lists: made up of individuals from almost every available public source but does not have the qualifier of whether these prospects have purchased by mail. Such public source materials used are phone directories, real estate directories, professional listings, business & industrial associations to name a few.

Keep in mind that direct response lists typically perform better than complied files, however the cost of the two types of lists will vary significantly.

Where do I find a mailing list for rent & how much do they cost?

Lists are available through list management companies, list brokers or sometimes directly from the list owner.

The cost of the list depends on the source and value to the mailer/market. List data cards show some complied lists at $45 per thousand names and some highly targeted direct response lists as high as $200 per thousand names. And there are additional costs per thousand added if you are drilling into the list further.

What is a good offer in direct mail?

Quite simply, a good offer is one that will compel the consumer to take immediate action. It must be relevant to the consumer, the brand/product and the creative concept being utilized. Offers don't have to cost a lot, but they must have high enough perceived value that it pushes someone to act.

Keep in mind the following criteria when evaluating your direct marketing offer:

  • Do lots of brainstorming & evaluation before you decide on the final offer and if a large initiative, pre-test offers with consumer groups.
  • What is the incremental cost to provide this offer?
  • Is it relevant to the target market I want to reach? To lower the risk of alienating existing customers, use targeted communications.
  • Is the offer compatible with my brand & product? Steer away from offers that may cheapen the value of your product.
  • Is the offer simple to understand and how easy is it to fulfill for both our customer & my company? Ensure that the offer is trackable.

Examples of direct mail offers: Free Information, Sweepstakes, Discounts & Rebates, Free Gift, Samples, Free Trial, Special Events, Free Seminars/Workshops, Pick your Price, Bundled Offers, Two for One, Loyalty Points, Terms of Payment, Money Back Guarantees and Extended Warranty.

How can we maximize the creative impact of a direct mail package?

There are many ways to maximize the creative impact of a direct mail package - too many ways to get into the space allotted. However, here are some "best practices" to consider when you're developing and evaluating creative:

  • Personalization. People are more likely to engage when their name is incorporated into the creative.
  • Size of Package. Oversize breaks through and gets noticed.
  • Consistency. Make sure the concept holds together all the way through the package. Relevance. If the creative strategy isn't relevant to your target audience, it's junk mail.

Are there any direct mail formats that consistently perform better than the others?

The truth is, testing is the only way to determine which format works better for your particular product or service. However, you can make some assumptions by asking yourself the following questions:

  • Is it a consumer or a business-to-business mailing? For B2B mailings, dimensional packages tend to get through the "gatekeeper" by looking more substantial.
  • Is your product or service promotional, or does it tend to be more serious and personal? A #10 envelope tends to look more business-like. Self-mailers tend to be more promotional. However, this logic doesn't hold 100% of the time.
  • Is the objective of your mailing acquisition or retention? You should be talking to your current customers differently than those prospects you're trying to acquire.

What's the difference between a "control" and a "test" package? What are the best things to test?

"Control" and "test" are terms commonly used to refer to a methodology of measuring the effectiveness of a direct mail package.

A control package is the creative used that is either closest to previous creative used or is the expected & most literal translation of a creative brief. It is also the largest in terms of quantity. A control package also uses more commonly proved creative, language, offers, customer segmentation and so forth.

A test package seeks to measure the effect of a single variable on response. This variable must differ from control. For example, the creative and list are the same but the offer differs between the two packages.

There are 3 main areas to test, with all the variations of testing falling within one of these groups:

List: Pertains to the audience who will be receiving the package. Who are you talking to? Could include variables such as segmentation, house vs. rented list, active vs. lapsed users, etc.

Offer: Pertains to the specific offer and call to action. Typically, offer testing will measure disparate incentives, timeframes or methods of response.

Creative: Pertains to a different creative package. Differences could be major in terms of formats or images or as subtle as copy or tonality differences.

What is considered a good response rate for direct mail?

A "good" direct mail response rate is dependent on many factors, but the three most important factors are: Target Audience, Offer and Creative.

Other factors which affect response rates:

  • Type of program - i.e. acquisition or retention initiatives
  • Value of product or service - i.e. high value or low value
  • Ease of response or redemption of offer
  • Seasonality
  • Competitive activity

Average response rates range between 1% and 3%, but can be as low as 0.25% for high value items or in a very competitive market, or as high as 25% when dealing with current customers.

What is ROI and how do I calculate it?

A direct mail campaign should be considered successful if it provides a reasonable "Return on Investment" (ROI), which is defined as the net profit from your campaign, which is calculated as follows:

ROI = (Allowable Margin - Cost/Response) / Cost/Response
ROI = (Total Margin from program - Total Program Cost) / Total Program Cost

To calculate Allowable Margin, which is the amount remaining after the cost of goods & other product related items have been subtracted from the product's price:

Margin = Selling Price - Cost of Product - Shipping
Margin = Amount Borrowed - Cost of Money - Operating Costs

How do I calculate BEP?

To calculate the Break Even Point, which is the minimal level of response or margin required to recover marketing costs:

Allowable Margin - Cost/Response = BEP
Total Margin from a program - Total program costs = BEP

Describe the importance of keeping your marketing database clean & up to date.

As everyone knows, information is power. And a marketing database contains a wealth of knowledge on a company's customer base. Quite simply - a database empowers marketers. To ensure a database can be used as a tool to positively impact the bottom line, the information contained in it must be up to date, clean and relevant.

To ensure a database operates at peak efficiency requires that data is reviewed on an on-going, continuous basis. This ensures accuracy of each customer profile. Database cleansing includes checks on demographic information (address accuracy, complete profiles, etc) and psychographic information (buying patterns, updated RFM analysis, etc). Using periodic customer surveys and conducting monthly cleansing ensures a database stays current. This in itself is a very powerful marketing tool.

When a database is clean and accurate, it can help to accomplish many key business goals such as:

  • The ability to target marketing efforts to only those people who are likely to be interested.
  • The ability to create long-term relationships with customers.
  • The ability to offer varied messages to different consumers.
  • Increased knowledge for future communications.

In summary, a database is a customer-based, information intensive, long-term marketing orientated tool. Keep care of it as it has the potential to directly drive bottom line growth.

What implications does Canada Post have on direct marketing campaigns?

Since the majority of direct mail in Canada is delivered by Canada Post Corporation (CPC), it does have one of the largest implications on your direct marketing campaign.

Before planning a mailing, you need to consider four key implications of CPC, which all can vary depending on service or classification being executed:

  1. Mailing Specifications: There are minimum & maximum sizes for each CPC mailing service and can include restrictions on weight, location of indicia & address information. All these factors will affect the creative and format that you produce and you should double check with CPC before finalizing any direct mail concept.

    The nature and/or content of your mailing can also determine what CPC mailing service you should use.

    When including a Business Reply Envelope (BRE) or Business Reply Card (BRC) you must also adhere to specifications or you will be charged extra to have your reply mail processed.

  2. Timing: Each mailing classification has different delivery service standards and will impact how long it takes your direct mail package to be received at your prospects mailbox. Here are some parameters for Addressed Admail:
    • "Local Delivery" within 3 business days
    • "Province Delivery" within 4 to 5 business days
    • "National Delivery" within 4 to 15 business days
  3. Mailing Cost: Postage can make up the single largest cost of a direct mail package, so you must factor this cost into your budget and ROI calculations. Here are the CPC classification rates:
    • Unaddressed Postage: lowest postage cost per piece for non-addressed campaigns.
    • Lettermail Postage: provides the fastest and most predictable delivery, is the most expensive postage service but is also the most restrictive for specifications.
    • Addressed Admail Postage: varies based on quantity mailed & density of the mailing list.
    • Dimensional Admail Postage: three-dimensional packages with special rates.

    Keep in mind that Letter Carrier Presort (LCP) software, a mail preparation service provided by your lettershop or mailing house, is required to pre-sort your mail file by CPC postal walk prior to delivery at CPC. Also required is a 95% address accuracy requirement which ensures your direct mail campaign list contain accurate & mailable addresses, or you will pay an additional penalty on postage.

    For planning and estimating purposes for your addressed direct mail program, an average of approximately $0.35 per package can be used.

    For exact details please refer to the Canada Post website: http://www.canadapost.ca

  4. Targeting: You can target to an individual address or to an entire postal walk (a letter carrier's route, made up of several postal codes).

Personalization is key to communicating to your customer in direct mail - what are the advances to date in this technology?

The personalization technology that supports the capabilities of direct mail production has advanced in great leaps over the past three years.

The greatest advances have been in the ability to take customer information in a marketing or operations database and use that information in a relevant way when communicating to a customer. Previously data would be collected at the level of the individual and later rolled up into a summarized grouping for the purposes of marketing communications. We were able to send targeted communications to a "like set of recipients" and not the actual individual.

The ability to use variable information in colour through the combination of robust software and digital printing processes has allowed us to target and "speak" to clients as individuals enabling true 1 to 1 marketing communications.

We can now customize individual communications with full colour variable data in the forms of visual graphics, pie and bar charts, photographs, multiple design templates and offers. The possibilities for personalization are truly endless with new software applications and hardware available in variable colour print-on-demand.

Is it true that a follow-up mailing (1 week to 10 days) to a direct mail campaign to existing customers will increase the overall response?

A well developed follow-up mailing generally increases lift, or response, on average by an additional 25% to 50% over the initial responses from the first mailing. As with any direct mail initiative, results will be contingent upon the same critical success variables; namely, quality of the data and/or list, creative and offer.

A follow-up mailing as close as possible to the initial mailing with a strong and immediate call-to-action serves as a tactical reminder for the consumer to respond. However, with immediate mail follow-ups, it becomes a challenge to separately measure the results of each of the two mailings, although, the total combined response rate of Mail #1 and Mail #2 should be higher. It is also more difficult to sweeten the offer for non-responders, as you would not necessarily have the data of initial responders prior to dropping the follow-up mailing.

Tags: Best Practices, Direct Marketing