How to reduce the waste factor in your direct mail campaign

Posted August 1st, 2007 by Dr James Pratt

I have been talking about the three aspects of a successful direct marketing campaign. The first is the list or lists selection, which is the starting point of the direct mail marketing process.

Then second comes the development of a 'matching offer.'

The offer you make in a direct mail package needs to be carefully thought out and matched as closely as possible to the interest, needs, and motivations of the list. And as a general rule of thumb the more specifically matched the offer and list are the higher the response rate.

Here are two simple examples to help you understand this idea.

Example #1: John's Sporting Goods Store mails a brochure about his upcoming sale on skiing and hiking equipment to every resident in his store's neighborhood. His offer may be great, 25% to 50% discounts, a free gift for everyone who comes in, but his response will still probably be very low because of a high waste factor in his mailing.

Let's say John mailed 10,000 brochures. As few as 15 to 25 people may come in. A response rate of only one half of one percent or slightly worse, but that's deceptive because of the waste factor. Of the 10,000 residents mailed only 1,000 of them may be interested in skiing or hiking. If that's true, and fifteen people come in, that may represent one and a half percent response rate, which is usually acceptable.

Example #2: John's Sporting Goods Store mails the exact same offer as in Example #1, but he only mails a thousand brochures to a list of people in his store's neighborhood who
are subscribers to Skiing, or Hiking, or Field and Stream Magazine.

In Example #2 John's list acquisition cost will be much higher than in Example #1. In Example #1 the resident list may cost only $35.00 to $40.00 per thousand names, $350.00 to $400.00 for the 10,000 names. In Example #2 the list may cost a $150.00 or even $200.00 for just the thousand names and in Example #2 the cost of printing the brochures will go up dramatically per unit.

In Example #1 the 10,000 brochures may cost only five cents each, $500.00 total. In Example #2, the thousand brochures may cost twenty cents each, $200.00 total. However, in Example #2 John saves almost two thousand dollars in postage by culling the waste factor out of his mailing. Overall he spends about $2,500.00 less with the sophisticated approach in Example #2 and gets the same results as he would with the costlier, less sophisticated Example #1.

Most small businesses and many big businesses waste substantial sums of money by taking the less sophisticated, easier approach. If the typical small business like John's
Sporting Good Stores conducts just four direct mail campaigns a year and there's a $2,500.00 differential available each time, that's $10,000.00 a year that can be wasted or saved.

$10,000.00 is a lot of money to a small business. Part of the magic of the sophisticated approach is the list to offer match. But to be successful you must also develop a very good attractive offer.

In my next Success Marketing Strategy I'm going to identify the ingredients that can be used in order to craft an attractive 'highly responsive' offer.

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