Direct mail is one of the most effective forms of promotion available. Direct mail returns, on average, $12 for every $1 spent by advertisers. When done right, the response rates and returns, are far greater than other digital channels and targeting is much more accurate.
There are still some simple tips that can help us increase response rates and return on investment (ROI) even further. Here are five that you can use to improve your results.
Use the right class of postage.
The two primary types of postage used for direct mail at First Class postage and Standard A. Standard A used be called bulk mail; the USPS is now re-naming it Marketing Mail. First Class postage is the fastest – it can usually reach any household or business in America in ~3 days. There is also a return service, so if the postcard or letter is not deliverable, the USPS returns it so the original list can be updated. On the other hand, it is much more typical to see delivery times of 7 – 10 days with Standard A postage. If the mail piece can’t be delivered with Standard A, the USPS will recycle it (e.g. no return service).
The trade-off in service level does come with a price. The retail price for First Class postage is $.55/piece and there are size/weight restrictions. The price of Standard A varies based on mailing (carrier route) density; however, a savings of ~$.10/piece over First Class rates is typical. The response rates for Standard A can also be slightly lower if recipients view the use of discount postage negatively (e.g. appears to be unwanted junk mail). Over a long period of time, with regular mailings, the postage savings can add up. In many cases, the difference in response rates between First Class and Standard A when using an indicia (see below), are negligible.
One simple trick, when mailing on a regular basis, is to start out sending both First Class mail and Standard A for the first couple of weeks. Then in week three, just cut over to Standard A postage. The First Class mail will help generate near-term responses, while the Standard A fills the funnel for future responses. Once there is a steady stream of responses from the Standard A mail, it will not matter if it takes 7 – 10 days, it is just topping off the funnel, and the postage savings should start to accumulate.
Try to mail at least 500 pieces when possible.
70% of the cost in direct mail can be traced to postage. There are two ways to save money on postage for short-run mailings. The first comes from using an indicia rather than a stamp. A postal indicia is the box (message) printed where you would usually place the stamp on a personal letter. An indicia allows the USPS to charge the mailer or direct mail service provider electronically. The indicia is printed directly on the envelope and avoids the labor (cost) associated with placing a stamp on each envelope. A mailing must have 200 pieces or more to use an indicia.
The other way to reduce the cost of postage is by pre-sorting the mail. Pre-sort is a work share program offered by the USPS to mailers who pre-process the mail to assure accuracy and efficiency. The mailer (service provider) must process the list to assure accuracy. Coding Accuracy Support System (CASS) software is used to standardize addresses and assure they are deliverable. The list is also processed using the National Change of Address (NCOA) database. An Intelligent Mail barcode is assigned to each piece to speed automated processing and allow for tracking. The mail is then sorted and bundled depending on its 5-digit or 3-digit zip code, each tray is inserted into a sleeve, and then the tray is strapped and tagged based on USPS rules. Pre-sort requires 200 pieces for Standard A (bulk mail) or 500 pieces for First Class postage.
Start small, find a winning formula, then step on the gas.
It can be frustrating to send out a mail piece you know is a winner, and then there is nothing but the sound of crickets – the phone just doesn’t ring. It is even more frustrating (and expensive) if this first campaign is 10,000 pieces or more.
Creating a winning mail piece usually requires testing and tuning. The best way to do this is by sending out smaller batches, experimenting with the variables (e.g. list, creative, call to action, mail format, …), and finding a piece that produces reliable results. With that formula in hand, you can start increasing campaign size, being careful not to overwhelm your capacity to service responses. In other words, if you have a call center with 4 agents, you probably don’t want/need 200 calls at once. In an ideal world, demand would be regulated so that each response can be serviced at the moment it arrives.
It is usually best to start testing with small campaigns of 500 pieces (or more) to take advantage of discount postage rates. Several different concepts (A/B testing) can be mailed at once to speed the testing cycle. The results of each campaign need to be tracked. This can be done by using a response code, tracking the names from the lists used, or using a different toll free number for each campaign. The results should be analyzed to identify those that pull the best, and then the winning concepts should be used as the foundation for the next batch.
Once you have a reliable formula, you can start to systematically increase volume. Still, testing should never really stop, we should always be on the lookout for techniques that will do even more.
Avoid features that don’t produce a return.
Creativity is often essential to break through the clutter. However, the goal in direct response marketing is to maximize return on investment (ROI). ROI is calculated as (sales produced – costs incurred) / costs incurred. Anything that increases expenses without growing sales reduces ROI.
One example of this is full bleed artwork. Digital printers require a small white (clear) space around the edge of a print piece. This allows the press to grab the material for printing without damaging the print. In order to produce full-bleed materials, the mail piece has to be printed a larger size and then trimmed to fit. This increases the number of production steps and the cost of the piece. Creatives or artists often insist on full-bleed artwork to preserve the integrity of “the design”. Based on the experience of our clients over two decades, we have seen no measurable increase in response rates from full bleed art.
There are other tradeoffs that should be considered as well. Should you use color or black and white printing? Color costs more, and there are studies that say the use of color increases response rates, but how much of an increase will you get with your target audience? Does it really pencil out?
Note: Personalization has been shown to increase response rates. Personalization does not cost extra with Zairmail (www.zairmail.com). Personalize away and enjoy higher response rates for no additional cost.
How about the trade-off between First Class postage and Standard A? There are studies that say First Class postage produces slightly higher response rates. Is this true for your audience?
How do we know? Well, …
When in doubt test.
See our earlier tip (above). Don’t leave it chance, when in doubt test it.
When you think you have it all figure out, then test some more.
Continue to look for ways to improve response rates.
Continuous improvement is your friend.