While direct mail might have seemed to be e-mail’s first casualty, the old tried-and-true marketing resource is as vital as ever. By effectively planning your campaign and either doing things yourself or adopting a carrier’s successful strategies, you can learn to make direct mail a sure bet.
The good news in those figures is that direct mail can still capture recipients’ attention. The bad news is that your direct mail piece could easily get lost in the stack of incoming envelopes. So what can you do to increase the likelihood that your offers will attract notice and generate a response?
Plan your campaign
Before committing your resources, determine why you’re mailing. Are you trying to build name recognition among prospects? Or is the goal to maintain loyalty and cross-sell with existing clients? Pat Deck, executive vice president of sales and client services with direct marketing consultants IWCO Direct in Chanhassen, Minn., says that direct mail works best in several specific scenarios. “Acquisition, loyalty and engagement objectives are particularly well-suited for direct mail,” says Deck. “When I say loyalty, think of airline loyalty programs as one example. Engagement programs would be welcome kits or those type of things, where you are engaging the customer. Direct mail is also effective for objectives such as cross-sell, up-sell or win-back opportunities.”
Deck believes there are three strategic foundations to successful direct mailing. The first is targeting. Who do you want to reach? The second element is your offer. A poorly designed piece is doomed for the trash. “Format is critical,” says Deck. “You can use postcards, an envelope that has no window, oversized envelope there are lots of different options and formats.”
A do-it-yourself approach can save money but you’re often better off outsourcing because marketing agencies and direct mail firms have the expertise to select a format that fits your campaign and optimizes responses. Also, it’s vital that the piece has an effective call for action. “What do you want that consumer to do?” Deck asks. “Do you want him or her to pick up the phone and call you? Do you want them to send back in a reply card or to go to a Web site?”
A third foundation is the timing of the direct mail piece. If you mail a piece on IRAs when taxpayers aren’t thinking about taxes, recipients are likely to groan at the reminder and toss it.
Tactical decisions should support your strategy, says Deck. These include the piece’s production, list selection/cleansing and postal choices. “You can expect that 50 percent of the overall cost of the program is going to be encompassed in postage,” says Deck. “The other 50 percent will be creative development, list purchase, and production, and the split amongst those is about 10 percent, 20 percent, and 20 percent, respectively.”
Do It Yourself
Josh Anderson, a partner with the Allen Investment Group of Raymond James & Associates Inc. in Newtown, Penn., took the DIY approach when he started mailing in the summer of 2005. Anderson and his partner were new in town and wanted to build name recognition with prospects. They acquired the equipment needed to produce the pieces in-house and bought a list of local residents from the local county office for a fraction of what they would have paid to a list broker.
The mailings’ content varied. Some provided information about the Raymond James philosophy or discussed topics like developing an investment policy statement. Others offered invitations to dinners that focused on investment-related themes. Every envelope included a response card and an invitation to call the firm’s offices. They ran the campaign for about 18 months and Anderson says it accomplished its goal of building awareness and attracting assets. “The number of prospects that wound up becoming clients was actually fairly small,” says Anderson. “But our direct mail efforts resulted in a lot of assets through just three or four key relationships. Because we were mailing to the right community, one hit could be a huge win – it could be a home run. And in our case, we actually got that.”
Use headquarter’s resources
Outsourcing works for other advisors. Aaron Shelden, LUTCF, CLTC, a representative with New York Life in Westchester, N.Y., follows that route with his direct mailings. Shelden maintains a list of roughly 100 prospects and he uses New York Life’s LTCI “print on demand” program to promote his long term care sales efforts. It’s a small-scale effort but that’s because he’s skeptical about the value of mass mailings. “I don’t believe that volume gets results,” he says. “It’s the quality of the list, and the highest quality consists of people with whom you already have a relationship or who recognize your name. It’s also the quality of the company that is represented in the mailing, and it’s the quality of the message.”
It’s a straightforward arrangement: Shelden provides the list and the home office handles compliance, production and mailing. Postcards have been particularly effective at getting his message across. “Postcards are an effective tool, because to a certain degree, a picture is worth a thousand words,” he says. “People want to get information quickly today. If you send a postcard that has a little bit of information, it gets people to think about the subject, rather than long letters with a lot of verbiage that I think people don’t bother reading.”
After the response period, it’s time to evaluate the return on your expenditure. Deck says standard industry rules-of-thumb don’t always apply. “We’ve seen campaigns where the offers were so valuable that a response rate of under 1 percent made all the sense in the world,” he says. “We’ve seen other campaigns where if it was under 3 percent to 4 percent, it made no sense whatsoever. It’s highly dependent on the value of the product or offer, the cost of the piece and taking both those variables into account.”