Direct mail remains one of the top ways to advertise for increased response rate, sales, and profit. When direct mail succeeds, it can be lucrative. Since direct mail is unsolicited advertising or promotion, it should be done with care. It can take many test mailings to various prospects before you hit upon a profitable campaign. Still, small businesses using direct mail benefit from direct mail. In a Pitney Bowes survey, 85% of businesses were pleased, mostly due to new customer acquisiton.
Most direct mail is sent from rented mailing lists that contain leads of names and addresses of people who have usually never done business with your company. Successful direct marketing yields new orders and new customers or new leads to follow up with and convert.
Advantages of Direct Mail
- Direct mail, like no other medium, generates response from prospects that is immediate in high volume. Recipients can place orders, subscribe, update information and request samples, among other things. ·
- Direct mail quickly generates return on investment (ROI), especially with the efficient target marketing of qualified leads.
- · Direct mail response is measurable, unlike running an ad. Your business can track inquiries and orders through direct mail response, directing your target marketing for future campaigns. Suppose you spend $1,500 on a mailing of 2,000 pieces to 2,000, spending approximately 75 cents per mailing piece. If you generate around 45 leads, then you have spent about $33 per lead. The mailing should generate about 40 leads. Therefore, your cost per lead is $35 and your response rate is over 2%. If you follow up and persuade ten of the 45 prospects to buy, then your conversion rate is over 20%. If those ten spend $500 each, the revenue generated is $5,000--a $3,500 profit beyond the $1,500 investment.
While the resulting success of your direct mail campaign can be measured, it is not always clear why it succeeded or failed. Also, it is difficult to know the beneficial effects of the direct mail that reached the other 98% who did not respond.
- Direct mail, unlike regular advertising, can be tested before commiting to the campaign. Newspaper, radio, and television ads must commit to their campaign at high dollar amounts before customer response is evident. A direct mail piece can be mailed to just a few hundred or thousand people for just hundreds of dollars. It is only when the small mailing is proven successful that a direct mailer then commits to a higher volume mailing, confident that the ROI will be a high profit. Losses on an initial test mailing are minimal and leave room for refining the marketing campaign with varied testing.
- Direct mail is efficient. Once the mailing piece is developed and tested, rolling out the campaign only requires printing and mailing more pieces, and of course renting and tracking qualified lists. The work in the beginning may sometimes be more intensive, but the ongoing promotion is not nearly as involved as other forms of advertising like seminar marketing or telemarketing. A successful mailing piece will bring high conversion rates with consistent and even residual cash, but a smart business owner will continue to refine for even more success.
- Direct mail is targeted. Money is spent efficiently on prospects and customers who are potential buyers. Direct marketing works especially well for businesses targeting a market that is not too vast or otherwise, too narrow, but that is midsize with thousands or tens of thousands of prospects. In a midsize market, it makes sense to invest in a specialized mailing, but it is not so general that it is already saturated by print, radio, or cable medium that targets your particular audience.
- Direct mail is more personal than television commercials and magazine ads that are designed to reach millions. A recipient receives a mailing piece that looks like a personal letter that is written in a personal style. Because of the flexibility of the direct mail medium, special incentives, like cds or gifts can be included.
Direct mail can produce a high level of leads and sales, but producing an impressive ROI takes planning and care. Rising costs in postage, printing, and lists have actually lowered direct mail response rates in recent years, but professionals who target the right market and lay the proper groundwork will experience extremely high conversion rates and profits.
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