The Definitive Guide to Direct Mail Marketing

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What is direct mail marketing?

Direct mail marketing, also known as direct marketing, is the use of postal mail to promote a product, service or organization.

In its earliest uses, direct mail marketing was also known as mail-order which was designed to generate immediate sales/orders through the mail. This included both single product sales and multi-product sales using catalogs.

Today, however, direct mail can be used for many more applications than mail order.

How is direct mail used today?

Direct mail applications usually fall into one of several specific objectives:

To generate sales leads
To generate direct/immediate orders
To generate retail store/restaurant traffic
To raise funds for non-profits

Direct mail marketing is almost exclusively used as part of a direct response strategy as opposed to a branding strategy which does not prioritize the immediate response.

Who uses direct mail marketing today?

For many years, even decades, direct mail marketing was shunned by the mainstream marketing and advertising world.

But in the early 1980s, many advertisers and their ad agencies began to embrace direct marketing as way to add accountability and measurement to their advertising efforts. Many of the largest agencies created specific departments for clients who want to explore direct marketing.

When the internet took hold around the turn of the century, many advertisers moved their attention and money to websites, email and online marketing.

Today, many businesses, out of frustration with online marketing, are returning to direct mail as a more effective way to promote their products and services.

What are the advantages of direct mail marketing?

What draws many marketers to direct mail marketing is its ability to target individuals (in their home or workplace) based on a wide range of demographic and behavioral data.

The mailing list industry is vast and complicated, but it can reach pretty much anyone you want to reach.

A second advantage is that, unlike email and digital marketing, direct mail delivers a physical mailer – something your prospects can hold in their hands and perhaps sit on their desk for a long period. Most agree this has a greater impact on the recipients than a digital message that can be deleted in seconds.

What are the disadvantages of direct mail marketing?

The main argument against direct mail marketing is cost. Plain and simple, direct mail requires more of an upfront investment than most digital marketing (especially those using the pay-per-click model).

Depending on the mailer format you use and the quantity you are mailing, direct mail can cost you between 60 cents and $1 per piece.

Postcards are the cheapest mailers. More expensive formats are multi-page booklets and catalogs or multi-insert envelope mailers.

Quantity is also a big factor. For mailings of 5,000 or 10,000, your cost will likely fall in the middle of that range of 60 cents to $1. Mailings with quantities under 1,000 is likely to exceed $1 per piece.

Businesses that are printing and mailing in large quantities of 100,000 or more can enjoy the very lowest per-piece pricing. In some cases, these businesses are printing in large volumes (to take advantage of pricing discounts), but they are warehousing the print and mailing in smaller amount.

Note: while direct mail may require a greater upfront investment than digital marketing, that doesn’t necessarily translate into a higher cost-per-lead or cost-per-sale. Direct mail’s ability to target and pre-qualify prospects often results in better qualified leads and an improved lead-to-sale conversion.

How do I know if direct mail is right for me?

There are several factors to consider:

One is the price and profit margin of your product/service and the potential lifetime revenue it will produce. Low-cost products with gross profit margins of less than $100 are not good applications for direct mail unless you have some type of recurring income or repeat business after the first sale.

It should be noted that many non-profits and mail-order businesses will produce a new donor or a new customer at a loss, but they do so with the understanding they will make up that loss with additional donations and purchases.

Another factor is the targeting. Direct marketing is best used when you can identify specifically who is likely to buy your product. If your mailing list is made up of people who generally might buy your product but have not shown any demonstrated interest (by buying similar products in the past), it could be a challenge to make the mailing work.

The goal with any type of marketing is to minimize waste – to try to reach only those who are likely prospects. You’re never going to be 100%, but if you can find a mailing list that can reach your target audience with the least amount of waste, you might have a winner.

This idea is best demonstrated when you mail to your own house list of past customers and prospects and you response rates much higher than when you mail to a cold list. Because your house list is made up of people who know, trust and like you, you get a much better response with less waste.

If you are using direct mail for the first time, you must be open to testing. You should understand that even experienced direct marketers cannot predict the correct path for a new product or service. And it’s best not to rely in intuition or gut feelings.

When we work with new projects, we can lay out a likely path with best practices, but until you put your mailer into the marketplace, you won’t know for sure what works and what doesn’t. For that, we rely on setting up a test strategy that allows us to live-test the most impactful components of your mailing. We often recommend that every mailing you do should include some testing of some element that can improve your results down the road.

What’s involve in a direct mail campaign?

Direct mail is typically produced in three stages:

Strategy

identifying the audience and eventually selecting the mailing lists
deciding on the objective of the campaign
choosing an offer/call to action
choosing a mailer format based on audience, branding and budget
determining the various response channels
exploring testing options
planning around potential response rates
setting the budget and timetable

Creative

developing the creative concepts based on the format selected
sometimes offering alternative formats
developing initial layout with heads and subheads
building out the full mailer with finished copy and design
taking feedback and making revisions
delivering the final artwork to the printer
also, developing the landing pages if applicable

Production

acquiring the mailing list(s)
preparing the list for mail sorting and postal discounts
organizing the list for testing purposes
managing the printing process
managing the addressing and mail handling process
managing the mail delivery to the post office
deciding on postal rates
hosting the landing pages if applicable
setting up the business reply accounts if applicable

What does all this cost?

Above we mentioned the per-piece cost of 60 cents to $1. This is your production cost – for your mailing list(s), printing, addressing, mail handling and postage.

This would be the price range you pay if you outsourced your mailing to a printer and mail house (often they are one in the same). And once again, the unit cost (price per piece) is going to vary depending on the mailer format you use and the quantity.

We are not a printer or a mail house. We use various printers and mail houses on behalf of our clients.

Our work is more focused on the strategy and creative services described above. Our fees – which I will detail below – vary greatly by the complexity of the project and by the type of project. We find that some industries are easier than others to implement direct mail.

What type of mailer format works best?

That’s hard to say because every client and every promotion is different. Most direct mail falls into three broad categories:

Postcards – multiple sizes, from 4.25×6 inches to 6×11 inches
Letter envelopes – one-page and multi-page letters plus other inserts and an outer envelope
Folded self-mailers – multiple sizes, varies by number of folds

Postcards are everyone’s favorite because they are cheap and they are visually appealing. But many direct marketers have found letter mailers can often generate a generate a higher response (even though they come with higher production costs).

The only way to know which format works best for you is to test.

How do I find a good mailing list?

There are millions of mailing lists on the market today. These are lists you can rent or buy to help you reach just about any target audience with different levels of specificity.

Before you start looking for a mailing list, you need to know who or what you’re looking for. You need to have in place your target customer profile. Your target customer profile helps you define your audience.

For consumers, we define your audience by age, income, family type, homeownership, home value, car ownership, interests, hobbies, political party, donations and purchase history.

For businesses, we define your audience by industry/SIC, company size (sales volume or number of employees), job function, job title, profession, association membership, conference attendees and purchase history.

But you should know none of these lists are going to be as effective as your own list of leads and customers – known as your House List. Your House List is always going to generate the highest response rate because the people on that list already know, trust and like you.

What is the direct mail offer and why is it so important?

Other than the mailing list, the direct mail offer is what drives the response. It is what defines the exchange between the mailer/advertiser and the target prospect. It is the “deal” or the “contract” between the two parties.

In an order generation/direct selling program, the offer starts with the product and the price, but often includes a range of enhancements (such as free shipping) to incentivize the purchase.
In a lead generation program, the offer takes a very different approach. The offer is usually an exchange of free information – delivered as a free guide, white paper, video, seminar, webinar, etc.

Different offers produce different response rates. As your program matures, you will be able to almost predict the level of response using a particular offer.

How does testing work in direct mail marketing?

Testing is an often-misunderstand element direct mail marketing. It is not a one-time activity that you put in place before you begin direct mail. Many newcomers believe you can mail a few hundred pieces and get an accurate test of the market. You can’t.

In direct mail, testing is done as part of your mailing. You incorporate your test into the mailing – so, if you are mailing 10,000 pieces, you might split the mailing into two test cells of 5,000 pieces.

But even after this mailing is done and you have a winner, the testing shouldn’t stop. You should take that winning mailer and test it against something else – and so on and so forth.

Testing should never end. There’s always something to test to improve your results.

What should I test?

You should always test the elements that will produce the greatest impact. In direct mail marketing, the two most impactful elements are your list and your offer.

The mailing list alone has many things to test – the audience profile, the list source, the segments within the list. With many lists, it’s not question of whether you will be able to reach your target audience; it’s a question of waste, that is, which list can reach your target audience with the least amount of waste?
The offer also provides you with a wealth of testing options. Offers vary depending on the objective. An offer for direct sale/order generation program is most often the price and related items (like shipping). And offer for a lead generation program is generally some type of informational download like a lead magnet.

After the list and the offer, you will want to look at testing different mailer formats, messaging, headlines, teaser copy and personalization.

How do I measure testing?

Many people simply look at their raw response numbers – how many reply cards, phone calls and landing page signups did the campaign produce?

But this can be very misleading because each mailer comes with different costs.

If you are testing a postcard vs. a letter mailer, and both produce the same number of leads, the postcard wins because it was cheaper to mail. Hence, the cost per lead is lower. So, don’t forget to factor in the cost of each mailer.

Also, remember not every lead is equal. Some have a better chance to become customers than others – so you want to measure not just how many raw leads each test group received, but how many qualified leads each received.

Taking this a little further, you could measure how many leads turned into appointments or quote requests. Or how many leads turned into customers.

What is a reasonable testing quantity?

Any amount you test is better than no testing at all.

But to have some confidence in your test results, you need to have a test group (or test cell) of 5,000 to 10,000 pieces.

You can go smaller, but your confidence level will drop. If you’re on a limited budget, you could test in groups of 2,500, but you may want to retest to build confidence in your results.

How long will it take for me to implement my campaign?

You’re asking four questions here.

How long does it take to prepare my mailing? Typically, 3-5 weeks.
How long does it take to print and mail? Typically, 2-3 weeks.
How long does it take to deliver the mail? This varies with postage – 5-7 days for first class; 10-20 days for standard class.
How long does it take for my leads to start coming in? Phone responses and landing page responses will start coming in immediately – as soon as the mail is received. Mail-in responses might take another week or more for the first response to come in.

What kind of response rate can I expect from direct mail marketing?

For years, 2% was the number everyone used to project a response rate. Today, for various reasons, that “average” response rate is closer to 1%.

But either way, these “averages” only apply under certain conditions.

First, it had to be a lead generation campaign with a free offer such a free guide or white paper. If you are using an order generation campaign which ask your target audience to buy something, the number will go to into the small fractions of 1%.

Second, the “averages” on represent a mailing to a cold list meaning a third-party list you might acquire. If you are mailing to your list of past responders (leads and customers), you can expect those response rates to be much higher.

How do you charge for your direct mail marketing services?

Like many marketing agencies, large and small, we charge a fee for our services (which is often estimated in advance). This would include our work in developing your strategy and creative, and the supervision of your direct mail production.

Depending on the complexity of these projects, our fees can run from $5,000 to $10,000 for development, and then an ongoing monthly fee to supervise the production and continue to build up the strategy and creative.

But we also work under some different business models for different applications.

For businesses that need to run frequent campaigns to generate a consistent flow of leads for a large team of sales reps, agents, dealers, or franchises, we can structure a different compensation model that puts less emphasis on the fees and more on the production volume.
For businesses interested in developing a multi-step lead generation system in which direct mail is just one of several marketing activities, we can structure a month-to-month relationship that allows us to implement your program over time.
For businesses that serve a local market, we can structure a marketing program that uses a range of marketing activities, including SEO, Google Ads, Facebook Ads, follow-up email and retargeting display ads. Direct mail may or may not be part of the marketing mix. We typically charge a monthly fee to manage local marketing programs.

Direct mail marketing, also known as direct marketing, is the use of postal mail to promote a product, service or organization.

Today, however, direct mail can be used for many more applications than mail order.

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