How to Protect your Direct Mail Return on Investment

The dreaded circular file – whether we choose to admit it or not, this is where the majority of your beautifully designed and printed postcards, brochures, and sales letters will end up. However, as a direct mail marketing veteran, you know better than to get discouraged over this fact of life. Let’s face it, if you received 4,900 calls the day your 5,000 postcards were delivered, you’d be in big trouble keeping up with the demand.

The great news is that we don’t need a 99% response rate in order to reap the rewards of a successful direct mail campaign. In fact, the average response rate according to the DMA (Direct Mail Marketing Association) is 4.4% for direct mail. It sounds low, but is actually pretty impressive when you consider the average email response rate of just 0.12%.

Despite the fact that we have realistic expectations about our response rate, there is no reason we should settle for just average!

How to create a successful direct mail marketing campaign

First of all, how do we define success? Why, in dollars and cents, of course! Every marketer is after one thing – return on their investment (ROI).

A very smart man once told me something that sounded rather obvious at first, but became more profound each time I thought about it. You can’t achieve what you don’t measure. This couldn’t be more important in the world of direct mail marketing. You’ll never know if your campaign is a success unless you can track it.

Track your response rate

1. Coupons – These are certainly nothing new. Coupons are great for some businesses, but doesn’t work so well for others.
2. Discount Codes – The digital cousin of the clippable coupon, collect them over the phone or through your website for a clear picture of your response rate.
3. Mention This Postcard & Save – You’ll mostly collect over the phone, but this works in the same fashion as the discount or promo code.

Have you noticed the common thread here? Yes, it’s INCENTIVES!

If you want people to do what you want them to do (hold onto your postcard, call you, visit your website, etc.), you need to make it worth their while. Adding value to your mail piece will make your ROI easier to track, and help avoid the trash can.

Properly budget your direct mail campaign

If you’re a math guy like me, you’ll enjoy this part. Here are the figures at play…

• Let’s take that 4.4% average response rate.
• Assume that you have a 50% closing rate once a customer contacts you for this particular type of product.
• Your average sale yields $500 net profit

If these figures hold true, you’ll receive 220 responses out of the 5,000 postcards you mail, of which you’ll close 110 sales, from which you’ll profit $55,000.

With profit potential like this, you can easily budget $25-$30,000 on your direct mail campaign. But what if your sales team is not doing so hot, and you can only expect a 25% closing rate. What if you only profit $250 per sale?

In that case, you’d receive 220 responses, of which you’ll close 55 sales, from which you’ll profit $13,750. With figures like these, you may settle on a budget of $6,875 for your campaign.

I’m not going to get too heavily into the pieces and parts of a direct mail campaign budget, but stay tuned. That will be an entire article in itself. 

Mind the creative

Spend some time creating a clear, emotionally charged marketing message. Just as a headline on the front page sells a newspaper, you must sell the mail recipient on the fact that your mailpiece is not dumpster-worthy. Allocate a decent portion of your budget to hiring a professional graphic designer and copy writer. Get feedback from your existing clients before committing to a design.

Remember: 0% of a million is still zero. Great design, high quality, a well-thought-out headline, and a clear call to action will help keep that conversion rate up.

Frugality is important, but you really must be smart about it, in order to protect your marketing return on investment.

Look before you leap

This one seems obvious too, right? However, all too frequently, marketers dump all their eggs into a single basket, only to later realize that they made a fatal mistake that killed their ROI.

The answer is A/B testing. Before you print your design on 100,000 postcards, print a thousand each of your top 2 designs. Send these out to a segment of your list, measure the response rate from those test segments. Which version was a better performer?

Now, you can pull the trigger with confidence, knowing which headline or cover photo was better at bringing home the bacon!

About the author

Wesley Black is a 13-year graphic design, web design, printing, and marketing veteran / life-long student. 2013 marks the 10th anniversary of his company. He currently resides in Jacksonville, Florida with his wife, Melanie and son, Conrad.