How to select the right direct mail offer
Other than your lists, nothing is more important to your success than the offer. Often overlooked until the last minute, many marketers fail to appreciate how much direct mail offers can drive response.
More than any other element in a direct mail campaign, the offer has the power to manipulate the response rate.
Put simply, the offer is the contract of a direct mail proposition. It is the deal, the exchange between the mailer and the mailing recipient.
It outlines exactly what each party will get if a response occurs.
Don’t let the offer be an afterthought
Too often in the development of a direct mail campaign, the offer is simply added to the package after everything else is done.
This is a mistake. The mailing creative should be built around the offer.
We see this frequently with traditional advertising where there is more focus on branding than on response.
Types of direct mail offers
Direct mail offers vary depending on the application of the direct mail promotion.
- Lead generation offers
Lead generation offers are typically free offers designed to get respondents to raise their hands and say “I’m interested!” The most common lead generation offers are white papers, special reports, information kits, brochures, booklets, catalogs, newsletters, videos, cds, dvds, webinars and seminars.
- Order generation offers
Order generation offers are paid offers. When people respond to these offers, they are using their credit card, writing a check or committing to pay at a later date.
- Continuity offers
Continuity offers are for companies that sell products on a monthly basis. Common examples are magazine subscriptions, book-0f-the-month clubs and health clubs. The offers used for these types of companies are usually free trials for a period followed by an agreed-upon monthly billing.
- Traffic building offers
Traffic building offers are most often used by retailers who want to see their stores filled with customers. The most common traffic building offers are discount coupons or free event promotions.
- Fundraising offers
Fundraising offers don’t sound like offers at all because it seems like a one-side proposition. You are asking for a donation. In return the donors enjoy a feeling of satisfaction for donating to a cause that is important to them. How you structure your “ask” amounts would be considered the offer. To provide additional incentives, fundraising promotions can benefit from premiums or free gifts.
How offers are structured
The offer is a contract between two parties. It needs to be structured in way that both the mailer and the recipient are clear about their commitments. Sometimes these commitments are explicit. Sometimes they are implicit.
In lead generation, if you are using a white paper as your offer, the white paper is just one part of the offer (albeit a big part). Other factors also need to be considered – like what information the respondent must provide in order to get the white paper.
For example, you might offer the white paper simply in exchange for an email address, or you might require full contact information including a telephone number and a best time to call, or you require that they answer some questions. Clearly the second and third options are more burdensome and will cause some people to hesitate, thereby reducing response. On the other hand, by requiring extensive contact information and/or the answers to important questions, the response you do get should be relatively high quality.
In order generation, if you are selling a training video for $99, the central part of your offer is the video and the price. But beyond that, you could require payment in advance, or you could provide a “bill me later” option. Getting your money up front is clearly preferred, but offering credit will increase the number of orders (although this will include some non-payers). Of course, you could also restructure your price so that payment is broken into three payments of $33 each.
What’s important to understand is that with both the white paper offer and the $99 training video offer, every variation you make to the conditions of the contract will, in effect, create a new offer.
In the above examples …
The white paper is actually three offers:
- Offer A – white paper with email address only
- Offer B – white paper with full contact info
- Offer C – white paper with full contact info and the questions
The video for $99
- Offer A – video for $99 – paid in full in advance
- Offer B – video for $99 – bill me later
- Offer C – video for $99 – paid in three installments ($33 each)
There are countless ways of changing these offers even more. For example, changing the title of the white paper could have a dramatic impact on response (although you won’t know in advance if it will improve or hurt response). For the video, you could offer a premium (a free gift) when they order the video. This should dramatically increase your responses, but the cost of the premium will also cut into your margin – reducing your profit per product sold – so it’s hard to say in advance if it will be a good move.
The key to all these variables is testing – trying out each offer with smaller quantities first.
The implications of the offer
For the most part, offers are explicit in the commitments made by both parties. However, offer also have their implicit understandings.
Take these two lead generation offers – a free white paper and a free consultation. Both offers are designed to identify future customers with an opportunity for the prospect to learn more.
But which offer will generate more response?
On the surface, the free consultation would seem more valuable. This would be an opportunity to meet with a company representative, talk about your needs and concerns and get some free advice on how to proceed. The white paper, on the hand, would be useful but not focused on your specific needs and concerns.
But the white paper will generate more leads – a lot more leads. Why? Because of the implications of the offer.
The free consultation is an implied sales call. It is understood by the prospect that a free consultation will require time to meet with a sales rep and most likely many repeat calls as follow-up. A free consultation has an implied commitment. The white paper, on the other hand, has no such implication. You download the white paper, get the information you want with maybe a follow-up phone call – but overall, a low commitment response.
When you think about the offer, think about the commitment that is implied in the offer. Remember, in many cases, a prospect’s commitment of time is sometimes more valuable than money.
Using the offer to predict response rates
When you make changes in your list or your format or creative approach, you do so hoping it will improve response. And you test to find out. Sometimes it improves response, but sometimes the response goes down. You just never know.
But with the offer – in most cases – you can predict which direction the response will go when you make a change.
Here’s why: most of the time when you change the offer you are adding or subtracting to the commitment you are asking the recipient to make.
In our earlier white paper example, suppose you started by requiring the full contact information, but then you decide to test an email only option. You can pretty much bank on an increase in response by requiring less contact information. The only uncertainty is whether the leads will be sufficiently qualified.
The same predictability can be applied to offers that delivered via a download or the mail vs. those that require a meeting or a time commitment.
For order generation, price is a major factor in predicting response. The higher the price, the lower the response. And if you throw in a premium with each order, you can almost guarantee a jump in orders. It doesn’t work every time, but it does in the vast majority of cases.
The real value here is that offers can be adjusted to match your lead volume requirements.
The “strong offer” myth
A “strong offer” is a term used to describe an offer that generates a high response rate.
The term implies that this offer is superior to other offers that may produce fewer responses.
This is not necessarily the case.
An offer that produces high response rates will almost always produce low-quality leads – which is not a worthwhile goal.
It’s not always important to produce the highest response rate. It’s more important to produce the right response rate for a given sales operation.
If you’d like to discuss an upcoming campaign – or if you’re looking for ways to improve an existing mailing program – call us and let’s schedule an introductory call.