SECRET WEAPON. Small Business Marketing s. Targeted Direct Mail Done Right

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1 Small Business Marketing s SECRET WEAPON Targeted Direct Mail Done Right An educational guide with ideas, insights and affordable steps for anyone seeking to make an impact. Specialists in Direct & Digital Marketing

2 Why Direct Mail? It Works It s interesting that the Father of Advertising, David Ogilvy, made all his new hires work in direct response advertising for at least a year so they could learn sales techniques that work. He s the guy who said those who work in direct response are the professionals and those who work in general advertising are not because the direct response guys deliver measured results to the dollar and the generalists don t really know what they accomplished. He called direct mail his secret weapon and went on to build one of the world s largest agencies and become a legend in the field. Oh, and he s also the guy who said around 99% of all advertising doesn t sell much of anything because it isn t properly focused on driving sales. It s also interesting that even though Mr. Ogilvy passed away in 1999, new age companies like HubSpot still provide links to his videos that talk about the power of direct marketing. Seems they know what current research continues to find: direct mail works and direct mail done right works better than just about any other marketing channel or tactic.

3 Targeted Direct Mail Done Right Consider just some of the more recent research findings: In general, an investment of $1 in direct marketing ad expenditures is predicted to return, on average, $12.18 in incremental revenue across all industries. (June 2012, printinthemix.com) Direct Marketing produced $2.05 trillion in sales in representing roughly 8.7% of US GDP. Direct mail yes junk mail via snail mail still reigns supreme, offering response rates of 1.1 to 1.4% versus 0.03% for , 0.04% for Internet display ads, and 0.22% for paid search. (May 2013, hbr.org) Direct mail is the preferred channel for receiving marketing from local shops (51%) and banks (48%), while is preferred for events and competitions (50% each). (October 2013, thedrum.com) Spending on direct marketing, which uses consumer data lists, continues to grow at a healthy 5% clip, accounting for more than $163 billion last year, or half of the total advertising spending in the U.S. (October 2012, adweek.com) According to a Ritter s Communication study, 50% of people say they pay more attention to direct mail than any other media. (October 2012) Direct mail has the highest rate of success in new customer acquisition at 34% compared to other marketing channels. (marketingcharts.com) Targeted direct mail boasts a 4.4% response rate compared to s 0.12%. (DMA, 2012) 40% of consumers say they have tried a new business after receiving direct mail and 70% have renewed relationships with businesses they had previously ceased using. (Mail Print) The power of direct mail is impossible to deny. But that doesn t mean you can drop any old thing in the mail and succeed. Thanks to the measurability of direct mail, there are time-tested guidelines and techniques to follow. There are also new norms for tying your mail to your Internet presence to really up performance. The rest of this guide will provide some insights we hope you find useful. 1

4 50%-30%-20%: The Measured Approach to Direct Mail Success Because direct mail is so measurable and has been measured so long there are tried-and-true methods and guidelines to follow for success. In order of importance, the three essential elements of direct mail are: 1. The list 50% of the battle is targeting effectively 2. The offer generally given 30% of the credit for success 3. The clarity and credibility of the creative given 20% of the credit when done right Obviously, it does little good to try and sell croquet mallets to hockey players. Most direct marketers select audiences based on a combination of two factors: what they ve done (behavior) and who they are (demographics). Of these two, behavioral characteristics will always be the more powerful predictor of success. But sometimes behavioral data isn t available so you are left to make selections based on the demographic characteristics of your past customers age, gender, income or business type, number of employees, job title and geography. These can perform well, too, as long as you ve done the work to evaluate your customer base with specifics. 50% TARGET AUDIENCE 20% CREATIVE 30% OFFER 2

5 Targeted Direct Mail Done Right The Mailing List: Contributing 50% to Your Campaign s Success When planning your effort, you ll select from any or several of three types, ranked here by responsiveness. 1. House lists. Essentially your own internal database, this list is comprised of customers and other contacts with whom you have a prior relationship. You can build your house list with names you ve collected from product orders, sales receipts, contest entries, website registration forms, trade show contacts or simply a register here jar on your sales counter. Familiar with you and at least somewhat interested in your goods or services, people on this list are 5-10 times more likely to respond to your campaign than those on any other list. 2. Response lists. Available for lease or purchase, people on these lists have responded to some other offer and may be sweepstakes entrants, event attendees or mail order buyers. A popular method of response list compilation is through subscriptions, since magazines provide an excellent means of targeting individuals in specific industries (e.g., Modern Tire Dealer) or with distinct areas of interest (e.g., Better Homes and Gardens). Prospects on these lists will respond at 3-5 times the rate of those on compiled lists (described below). 3. Compiled lists. Also offered for sale or lease, the names of prospects on these lists have been culled from telephone directories, government records or other sources. These lists are often subdivided to make segmenting prospects easier. Various selects such as age, marital status, household income and occupation will enable you to focus on consumers who best meet your target criteria. While prospects on compiled lists generally respond to offers at rates lower than in the first two groups, this type of mailing list can be particularly useful if you are trying to reach a well-defined segment. For example, a private high school may find a list of higher-income parents with teenage children who are living within a specific zip code a cost-effective solution to reaching potential new students. SRDS: For List Rentals, a Great Place To Start The Standard Rate & Data Service gives you sources, selects, costs and other information with which to find lists, evaluate their potential and refine your strategy for direct marketing campaigns: Master resource of 65,000+ lists available for rent today 230 consumer and business market classifications Targeted Direct Mail vs. Blanket Coverage For all our emphasis on targeted direct mail, local businesses can often benefit with Every Door Direct Mail from the U.S. Postal Service. With it, auto repair centers, dry cleaners, restaurants and other neighborhood-focused marketers can specify delivery to homes or homes and businesses on mailing routes selected by address, city, state, ZIP Code or up to a five-mile radius around your location at postal rates as low as 17.5 cents apiece. Every Door Direct Mail and EDDM are registered trademarks of the U.S. Postal Service. 3

6 Beyond Names and Addresses: Collecting Consumer Data to Sharpen Your Appeals As you build your house list, look for ways to collect additional information. Why? Consumer data can help you better craft your appeal, e.g., Our records indicate you may be due for an oil change. What s more, collecting sales/purchase, demographic and other information will help you better understand who your best customers are. And by applying these insights to the compiled list selects described on page 3, you can choose the tactics most likely to find more prospects just like them. Business-to-consumer (B2C) marketers should collect the following consumer data: Age Birth date address Family data (kids, pets, etc.) Gender Hobbies Household income (HHI) Marital status Occupation Purchase history (first time, what product or service, how often) Similarly, B2B or business-to-business marketers can enhance their understanding of prospects by compiling: Communications history Date and purchase details of first inquiry or order Frequency and purchase history by date, dollar amount, or product Number of employees Purchase involvement by product/service type Responsiveness to your marketing programs SIC (Standard Industrial Classification) or NAICS (North American Industry Classification System) code Size of firm/annual sales Source of their inquiry or order 4

7 Targeted Direct Mail Done Right The Offer: Counting for 30% of Your Mailer s Effectiveness Make one that readers can t refuse. A great offer is one that has high perceived value. This does not necessarily mean it has a high monetary value (and requires a big budget) only that your target thinks it s valuable. It also must be simple to obtain (or fulfill), easy to explain and readily understood by your audience. This Weekend Only! In direct mail, the best offers are delivered with a sense of urgency. You can limit the time (This weekend only!) or the number of items available (While supplies last!) to stimulate an immediate response. Among the most common types of offers are these: Discount offers Buy one, get one free (or at a discounted price) Dollars off Introductory price Promotions Free downloads Free sample Premium on inquiry Payment-term offers Bill me later Free shipping Free trial Percentage off Rebate Seasonal discount Premium on order Premium on payment Sweepstakes or contest Installment billing Money-back guarantee No-money down Valuable information (for B2B marketers) Best practices white paper Case study Cost calculator Research report Subscription to a newsletter (print or ) 5

8 The Creative: Driving 20% of Your Mailer s Results Apply these five best practices to improve your efforts. Over decades of testing and refinement, several practices in direct marketing copy and design have proven themselves time and again. Follow these tips to greater success. Best Practice #1: Copy is more important than art. Why? Direct marketing is less about creating an impression and more about selling. So focus your efforts on creating attention-getting and compelling copy. In direct mail, the role of the illustrations and design is secondary, and should work to deliver the message clearly. Best Practice #2: Employ a friendly, me-to-you tone. Write the way you speak, with sincerity and without formality. Direct mail is not mass advertising; rather, it is one person talking to another. So as you compose your message, remember: the most powerful word in direct marketing copy is you. Best Practice #3: Focus on only one thing: Sell the offer, not the product or service. Don t try and sell two ideas at once; keep your message clear and simple. The golden rule in direct response copywriting? If you confuse, you lose. Best Practice #4: Avoid the hard sell and don t over promise. Instead, be credible. After all, most people won t respond to someone they don t trust. So make sure your direct mail offer is believable and your tone warm, confident and personable. Added tip? Include a testimonial or add a guarantee to reassure your readers. Best Practice # 5: Communicate the benefits rather than the features. Explain why the customer should care with a, What s in it for you approach. You may offer a scientific multi-step lawn feeding service, but prospects will be most interested in the benefits of a beautiful yard, achieved with ease while they pursue their own leisure activities. Get personal to get more responses. Today s variable data printing lets you personalize direct mailers with not only your target s name and address but also text, images and even special offers based on past purchases or other information. And that s a good thing for direct marketers: Personalized appeals gain four times as many responses as same-to-all messages. NAME. Connect with customers by using their name or company name in communications. <NAME> %OFF OFFER. Change the offer based on past purchases or other information you know about the recipient. PERSONALIZED VISUALS. Vary images QR CODES & URLS. based on the prospect s Use personalized age, gender or interests. response mechanisms for intrigue and continuity. 6

9 Targeted Direct Mail Done Right Beyond the Basics: Increase conversions by personalizing a URL. A personalized URL (PURL) is a unique Web address that directs mail recipients to a landing page designed specifically for them. For example, your letter to John R. Doe might refer him to a PURL that greets him by name and tailors a message especially to him. Special offers, text and images can be varied for each recipient based on what you know about them, including interests and purchase history. The goal of your PURL is to provide each customer with more complete and relevant information, while excluding content which is not relevant to their needs. With a personalized landing page, you can also: Increase response and conversion rates Track and measure responses readily Boost response rates with QR Codes. Capture additional prospect information Drive cross-channel integration QR (Quick Response) codes are machine-readable arrays of black-andwhite squares, typically used for storing website addresses, URLs or other information for scanning by smartphone cameras. Print one on your mailer and you ll give readers a quick way to reach your URL or website home page. Better yet, use a QR code to link recipients to a landing page specifically tied to your mailer s offer, such as one describing your limitedtime discount. Video content is also very powerful. Ignore smartphone users at your own peril! According to Statistica, the number of U.S. smartphone users will grow from approximately 160 million in 2014 to more than 193 million by And among them, QR codes are popular; 47% of people have used their mobile device to scan one. Show prospects the way with variable maps. Described briefly on page 6, variable data printing also enables direct marketers to individualize pieces with maps relating to the location of the recipient. So if your goal is to have John Q. Public visit your nearest outlet or attend a nearby special event, a variable map can guide the way. They re also used by manufacturers to direct potential buyers to local-area retailers that carry a specific product. Four 13.4% Average Number of Media Types Used in a Direct Mail Campaign Don t know One Five or 7.6% more 8.8% 3.7% Two 30.2% Three 36.4% Key Average number media types used in a campaign: 3 47% of printed marketing materials linked to online digital channels in past 12 months Optimize results with online options. Offer your targets the choice of responding online to a general campaign website landing page or, better yet, a personalized URL or PURL. Your audience will appreciate the convenience; 42% of mail recipients prefer to respond to offers online. Boost responses with a cross-channel approach. Don t limit your lead-generation efforts to a single medium. Those employing two, three or more types in a cross-channel marketing effort can improve response rates by as much as 35%, reports InfoTrends. 7

10 Beyond the Basics: Measure and monitor to make it better. One big advantage to direct mail over most other media is that it s possible to track results, assess your campaigns and fine-tune your efforts for greater achievements going forward. Amazingly, many marketers forego this useful tool. According to research from the Kellogg School of Management at Northwestern University, 57% of marketers don t use a centralized database to track campaigns. Even worse, 82% fail to monitor their efforts with readily available automated software, such as marketing resource management (MRM). To know if your campaigns are profitable and if you are wisely investing marketing dollars, you need to establish a process for tracking results. Begin by determining your direct mail campaign objectives. Do you want to drive traffc to your store or website? Increase sales? Generate leads? Boost attendance at a tradeshow? Once you understand your goals, you can incorporate tracking mechanisms to measure response. Tip: Put your plan in place before you launch your campaign. In doing so, you will ensure all results are properly tracked and can be easily accessed and integrated into your reporting and drive improvements. Tracking Mechanisms To measure the effectiveness of a campaign, you can track how many direct mail recipients have: Accessed a unique campaign URL or personalized URL (PURL) Mailed back a reply card or response envelope with a tracking code Mentioned a promotional code when responding online or by phone Called a special toll-free number you ve set up for specific mailings Contacted an address created for the campaign Redeemed a specially printed coupon or gift card? Registered online or responded to a free download offer What to Measure? Many direct marketers commonly monitor factors including: Response rates: How many mail recipients took action (e.g., ordered, registered, enrolled) as the result of your direct marketing campaign? Conversion rates: Did sales increase as a result of direct mail effort? And, if so, was one call-to-action/response method 800 number, website, business reply card more effective than others at facilitating replies? Behavior: Perhaps your objective was affecting consumer activity other than a purchase. Did you seek, for example, to steer recipients to a website instead of a customer service call center? And, if yes, what kind of cost savings did you achieve? Data capture: Were you able to obtain updated or additional information from prospects and customers that will help you with future marketing efforts? 8

11 Targeted Direct Mail Done Right Just Getting Started? Focused Elsewhere? Or Seeking Results Right Away? Truth be told, almost any marketer can achieve success with direct mail. But not every manager has the time, resources or the luxury of a learning curve. And that s where CORE comes in. CORE is focused on two strategies that deliver now, beginning with digital marketing. Why? Because in today s world your first need is a bulletproof web presence a solid be-where-they-go strategy when prospects look online for your goods or services. To reach farther and succeed faster, you also need a pro-active, gowhere-they-are strategy in pursuit of your most promising prospects. And that leads to the second CORE certainty: Direct marketing. Here s how we can help At CORE Marketing Central, we employ top pros in direct response copywriting and design. Our mail experts have access to all the best lists and know all the tricks to keep costs down and deliverability high. And you ll work with one experienced, responsive and reliable resource. Meanwhile, you ll forego the hassles of getting a postal permit, buying or leasing a list, and learning often-changing post offce regulations. Specialists in Direct & Digital Marketing 9

12 Small Business Marketing s SECRET WEAPON Making Every Marketing Dollar Count in a Direct and Measurable Way Keeping up with what works and what doesn t in today s complex marketplace requires advisors with decades of experience and a small army of specialists in traditional and new marketing channels. But who can afford to hire a marketing services firm with all those resources and talent? At long last, you can. Welcome to CORE. All of our services are executed on a pay-as-yougo basis by CORE Marketing Central our award-winning team of planners, writers, designers, web specialists and direct marketing experts. Neither of us pays for this resource until we use it. And pricing is well below that of even small marketing agencies. The CORE result? Professional, effective and cost-effcient essential marketing services for companies and organizations with modest resources. To get started today with direct mail or any other marketing initiative large or small, give us a call. CORE Communications - Plymouth Specialists in Direct and Digital Marketing