Direct Mail Q&A's

How long should the letter be?
There’s an old adage in direct marketing that goes, `The more you tell the more you sell.` Many, though, believe that as more prospects are reared in the electronic age the patience for long messages declines.

You should test different length letters for your audience to see which works best. Often, the ideal solution is a letter that is both short and long. These are long letters with powerful headlines and sub headings and strategically highlighted text so that they can be quickly scanned by the reader.

How important is it that the letter be personalized?
According to a 1991 USPS study, 50% of all personalized direct mail was opened and read by the recipient - compared to only 40% for non-personalized mail.

What should I check for when considering a direct mail piece?
There are many things to check for, but here are some of the most important:

	Is there a letter?
	Is there a headline and ‘P.S.’ on the letter?
	Does every key element mention your offer?
	Is there an easy to use response device with the offer clearly stated?

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Direct Mail Response Rates

What can effect the response rate for a direct mail package?

Just about everything, including:

	the creative format
	the mailing list
	the offer
	the degree of personalization

How can the success of a direct mail campaign be measured?

It depends on what you want your campaign to do for you - which could consist of several weighted factors. That’s why this question is best answered by having you ask yourself some questions:

	Are you selling directly and looking for a cost-per-order that provides a certain profit?
	Are you trying to build in-store traffic?
	Are you attempting to create long-term customer loyalty?
	Do you want to generate requests for information at a certain cost-per-inquiry?
	Are you willing to settle for a break-even response rate if it means garnering a list of names that you can continue to sell to in the future?

In other words, the measure of your success is the mastery of your goals.

How long should it take for responses to start comming in?

For one thing, response time will depend on whether you mailed First Class or "Standard" (the replacement for Third Class). Also, ‘automatable’ mail - mail that is address corrected and barcoded, travels to its destination much more quickly.

For typical direct mail campaigns, the number of responses received by the time your weekly response rate peaks will often be half of all the responses you’ll receive. The second half, though, will arrive over a longer period of time.

Will the class of mail affect my response rate?

According to a 1991 USPS study, 58% of all First Class mail was opened and read by the recipient - compared to only 43% for Standard mail.

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Mailing Lists

How important is the mailing list?

Your choice of mailing audience is the most important decision (among many important decisions).

Sending political fundraising mail into an area that has a high concentration of members of the opposite party, for example, is probably not the best use of your resources. Likewise, a direct mail offer for a baby naming software package sent to a list of recently married couples might be a huge success.

Where can you get mailing lists?

You can rent lists from many sources. ‘Target Marketing’ magazine, for example, usually has many advertisements for list brokers.

Note that most list rentals are just that - rentals. You will typically be granted the right to mail to the list a single time.

You should also consider swapping use of your list with other companies.

What does it cost to rent a mailing list?

Mailing lists are usually rented based on a per thousand (also called ’per M’) rate. Prices vary significantly depending on the list. A $60 to $150 per thousand is not unusual but should not be construed as a guideline. Highly specialized, well maintained lists can cost upwards of thousands of dollars per thousand.

When renting a list, these factors will likely affect price:

	How specialized is the list?
	Are there alternative sources for the same market segment?
	Does the list include contact information or only an address?
	Are there phone or fax numbers included?
	How much information is appended to the list (size of company, etc.)?
	Are you paying for a one-time rental or unlimited use?
	What special selection (i.e. criteria) are you requesting?

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Testing Your Direct Mail

What is testing?

Testing is the systematic process of changing the elements of your offer and evaluating the results. Most direct mail professionals have come to respect the fact that, while experience is valuable, no one ever knows for sure the result of changing even slight details of the offer.

An example of a test is to split your mail offer into two groups (making sure that there are no statistical differences between the two) and using a different envelope for each group. Once you determine the most effective envelope, you may choose to use it exclusively or drop the weaker envelope and test the stronger against the new entry.

What can you test? You can test just about everything, only make sure to test only one thing at a time or you won't be able to determine what is causing the change in results.

Some things to test include:

	lists (never rent or buy a list without first testing a sample)
	price (does a 25% decrease in price cause a 200% increase in response?)
	offer (does offering a selection between two colors increase response?)
	premiums (does offering a free premium increase response enough to justify the expense?)
	creative (does changing the picture of the cow to a picture of a farm increase your response to a milk delivery campaign?)
	envelope (even though this is really part of the creative, it deserves special attention)
	seasonality (does your response change depending on the time of the year?)

How often should you test?

You should test on an ongoing basis, always looking to tweak response rates. Keep in mind that the market is always changing and the envelope that performed best a year ago when you tested it may not be the best candidate today.

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Profitability

How can you reduce costs? There are a number of ways to reduce the cost of sending direct mail:

Clean Your List
Dirty lists (lists with incorrect and/or outdated data) are expensive because they are like mailing directly into the trash can. You can clean your list several ways:

	Submit the list to a National Change (NCOA) of Address bureau who will update addresses of people who have moved.
	Correct and standardize your list with a USPS CASS certified software package, such as that used at HCP. This will significantly improve the deliverability of your mail and can earn you significant postal discounts.
	'Deduplicate' your list using merge/purge software, especially if you are combining multiple lists. This will allow you to remove duplicates and reduce materials and postage expenses. This has the added benefit of eliminating the embarrassment caused by sending duplicate offers to the same person.

Presort Your Mail
The USPS offers significant discounts (up to more than 30%) for businesses that prepare their mail according to postal regulations. Presorting software, like that used at HCP can easily presort you addresses and prepare barcoded labels or envelopes for maximum discounts.

Consider a First Class Mailing to Your House List
You should regularly send a First Class mailing into your entire house list on a regular basis in order to find problem addresses. Unlike undeliverable "Standard" mail that is discarded by the USPS, undeliverable First Class mail will be returned to you.

Test the Pieces of Your Mail Package
Make sure that everything you include in your envelope is pulling its weight in costs. This is especially true when the mail package closely exceeds a weight/rate threshold. Be sure to test only one thing at a time so you can reliably evaluate the results.

How do you determine profitability?

The equation for break-even is simple:

Multiply the number of positive responses by the net revenue per response and subtract the entire cost out of the mailing to determine if the mailing is profitable.

Be sure to include all costs: materials, postage and labor. Don't forget fixed expenses, such as the cost to design the creative, one time printer charges, etc.

When figuring the net revenue per response, don't forget to subtract the cost of the product or service delivered and the cost to deliver the product (packaging, shipping, etc.).

You should also consider the 'lifetime value' of a customer (see the Q&A on 'lifetime value' below.)

What is 'lifetime value' of a customer? Rarely is a customer who spends $1 with you only worth $1 to your business. Once an individual or business purchases they are much more likely to return and purchase more. By evaluating your market and customer base you can estimate the customer`s lifetime value.

For simplified example, a car dealer knows the following based on historical (and perhaps industry) data:

	Customers who purchase cars from them come back, on average, and purchase one more car over the lifetime of the relationship.
	First-time purchases average $9,500, second-time average is $15,650.
	Each customer spends an average of $650 on service during the lifetime of the relationship.
	One in four customers recommend the dealership to a friend who will also buy a car.

Over the lifetime of the relationship with your customer (on average), he will spend $25,800. He will be responsible for 1/4 of a new customer worth $6,450 ($25,800 / 4). The lifetime value of this car dealer`s customer could be estimated to be $32,250* -- far more than the $9,500 he is likely to spend initially with the dealer.

(* In fact, that 1/4 customer that buys based on a recommendation will also recommend 1/4 customer, and so on, so the lifetime value is actually somewhat higher.)

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More Information

What are the primary associations for direct marketers

	Advertising Mail Marketing Association - (202) 347-0055
	Mail Advertising Service Association - (703) 836-9200
	Direct Mail Association - (212) 768-7277 Call Doctor Dan, DDAT.com for a Consultation, and to have your mailing done FOR you! (508) 479-0392

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