Is Direct Mail Marketing
Right for Your Small Business?

by James on October 16, 2008

A lot of small businesses use Direct Mail marketing.  But, is it the right tactic for your small business?  It can be, but Direct Mail is not as easy to execute successfully as you think it is.

Sure, it’s easy to put a flier in an envelope, pay for postage, and off it goes.  All those potential customers receiving your message.  But wait, have you thought it through?  When you consider creative development, list rental, production and postage, Direct Mail can cost $650+ per thousand.  Are you getting the ROI you think you are?

Some things to consider:

  • All consumers aren’t responsive to Direct Mail marketing. In fact, very few are and the number is getting smaller every day.
  • All consumers aren’t your customers.  Only a portion of the consumers you reach with Direct Mail are in your category and only a portion of them are in the market for what you are offering.
  • All consumers aren’t of equal value to you. If you acquire a heavy user Direct Mail might pay out but generally speaking you don’t and it won’t.

Now a question, do you have a CRM (customer relationship management) program in place; do you have a follow-up program designed to secure subsequent sales, and is this cost included in your calculations?

Now that I’ve tried to convince you Direct Mail is a bad idea, here are some tips that will help you use Direct Mail successfully.

List, Offer, Creative

The Direct mail lists you select are the single most important element of a successful Direct Mail program.

A house file or direct mail list of current and former customers is best. If you are renting lists, find a reputable list broker. They will save you money in the long run.

The offer is key. You are asking recipients to buy a product or service, sight unseen, from someone they don’t know, you. The Direct Mail package needs to work hard to overcome their obstacles and the offer can put the sales message over the top.

Creative is third but still important. Design supports copy, copy sells.

For acquisition, Direct Mail to rented lists, a full package will generally perform better than a postcard or self mailer. The Direct Mail has to work hard, so give it the landscape.  The exception is for brands that are very well known.  Be safe, assume yours isn’t, unless there is overwhelming evidence to the contrary, and then you should still assume your brand isn’t well known.  (That last sentence was a bit Palinesck but you get the idea.)

Hire a consultant who know Direct Mail, who know how it works.  It will make a difference. Good Direct Mail isn’t DIY.

For current customers a lower cost postcard or self mailer is usually enough. They know you and, assuming all has gone well so far, they will be receptive to your sales massage. The exception would be for a new product or category that they don’t associate with your company.  Then you will need to work hard to convince them. In customer communication keep the tone of voice friendly and personal. They have bought from you, don’t talk to them like perfect strangers.

Numbers are your Friends

Before embarking on a Direct Mail campaign do a pro-forma P&L. What will the effort really cost? How many packages will you send? How many responses do you expect? How may of the responses will convert to customers? What’s a customer worth?


Is the ROI positive or negative?

RFM is your Friend

Direct marketers say, “The most important sales isn’t the first sale, it’s the second.”

RFM (Recency, Frequency, Monetary) is a time honored analysis technique used by direct marketers to increase the efficiency of customer communication. The theory is: the customer who bought from you most recently, buys from you most frequently and spends the most with you is the customer most likely to buy again. In practice, this means analyze your customer file so you don’t send direct mail to every customer, you send direct mail to the customers most likely to respond.

Hip Shots

  • List is number one. Start with a house file and use a list broker to manage list rentals.
  • It’s the offer stupid.  Make sure you have the most compelling offer you can afford.
  • Copy sells.  Give it the landscape it needs.
  • Understand the financial implications of Direct Mail before you launch the program.
  • Follow-up customer communication will maximize repurchase among and increase the value of new customers and best customers.
  • RFM is your friend. Track responses. If they don’t respond after a few attempts take them off the mail list. If they respond, record what they purchase and mail another relevant offer right away.
  • Use lower cost Direct Mail (postcards or self mailers) for customer communication.  Your have a relationship with your customers, you don’t need to work as hard to sell them.
  • When you’re talking to your customers, leave the plaid jacket at home. Don’t use a sales-oriented acquisition package when you mail customers. Talk to them like you have a relationship with them, because you do.

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