Direct Mail Facts
Is Direct Mail Marketing Right For Your Business?
Direct mail marketing is a great way to “get the word out”, introduce your business product or services, develop leads for your sales team, and promote brand awareness. But, it’s not right for all businesses. To know if direct mail will work for your business, read below about how best to evaluate your business and marketing strategy from a direct marketing point-of-view.
Direct Mail Is Predictable
Unlike most advertising mediums, direct mail advertising is predictable. This means that if you get a 2% response in your test mailing, then mail to a larger audience, you should get a 2% response again and again and again. This is one of the many great things about using direct mail to promote your business. It’s predicable. Now, in order to know what response you should expect, you need to first establish a baseline response. This can only be done by mailing to a “statistically valid” sample. You need to test first by mailing to an audience of at least 5,000 or more. Additionally, you will need to mail to the same mail piece to the same type of people in order to expect the same response as what you achieve on the test mailing.
High Dollar Items Fair Better – Do the Math
It’s relatively simple math that determines if you should attempt to use direct mail marketing as a way to promote your business. It’s pretty easy stuff. Basically, you’ll need to establish a gross profit for every new customer you can achieve. If you’ve got many products and services, you’ll want to take an average. You’ll then want to determine your cost for the mailing. This would include all costs associated with the mailing, i.e., graphic design, mailing list, printing, mailing service, and postage. Total your cost and divide this total cost by the gross profit anticipated from each new customer. Your answer here would be the number of new customers you will have to win in order to “break-even” on your marketing investment. Naturally, the higher your profit per new customer, the easier it is to justify investing in a direct mail test. Conversely, the lower your profit per customer, the more customers you’ll have to win in order to break-even.
As an example, let’s consider two businesses. The first business is a publisher printing and selling their newest book. Each book will be sold for $25.00 with a $12.50 profit. The second business is a cosmetic surgeon with a new cost-effect procedure. The procedure will be sold for $2,250 with a $1,900 gross profit. Let’s say the direct mail campaign for both businesses is the same. They both will be mailing out 10,000 over-sized postcards and a total cost of $6,200. So, the publisher must sell 526 books in order to break-even, or a little over 5% of the total mailed postcards. The surgeon must sell a little more than 3 new customers in order for their return on investment begins to pay off.
The typical direct mailer will use a standard of between 1% and 1.5% to calculate the probable likely response for a given campaign. Many mailers achieve a higher percentage response and many receive less. If you’d like to discuss your plans with an experienced direct mail professional, please call us at 239-333-1430.