The Pros and Cons of Direct Mail Marketing | Fivestars Insights

Despite popular belief, direct mail marketing is not extinct. In fact, US organizations spent $46 billion on direct mail in 2014, up from $44.8 billion the year before.

In addition to digital marketing tactics and a loyalty program, of course, direct mail also provides an opportunity to attract and retain customers. is it right for your business? Take a look at the pros and cons of direct mail marketing below to see if it’s a viable option for your business:

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pro: target a specialized audience

In general, the more targeted your marketing efforts are, the greater your success. With direct mail marketing, you can send information to a select group who are interested in your product and increase your chances of closing a deal.

Of course, selecting this list can be tricky. Some companies collect customer information, including addresses, demographics, and purchasing behavior. With that kind of information, you can target past customers you’d like to sell more to, like this dealership does with an invitation-only VIP event for customers who want to trade in their previously purchased vehicle.

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If you don’t have that kind of information, you’ll need to rent a list of leads. There is still potential in a rented list, but there are associated costs.

pro: Provides detailed information

Direct mail pieces provide a lot of room to work with (front and back!), so you can give customers a lot more information, too. A detailed letter, event invitation, or brochure, for example, can outline your business benefits, local history, and offer special treatment for new customers.

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You have the opportunity to provide detailed information that cannot be conveyed in a text message, a tweet, a facebook ad or even an email. you can see here, the san francisco art exchange was able to convey a lot of information about their new beatles exhibit on this greeting card:

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pro: Easily track your response rate

Companies can easily plan to track redemptions. for example, asking customers to bring in a coupon to redeem an offer, including a promotional code or barcode specifically associated with their printed piece, or having the recipient fill out a prenumbered application that is included in the mail, are Common ways to track campaign success.

If you know your response rates, you can calculate your return on investment.

con: costs can add up

direct mail involves four main components: the list, the offer, the creative, and the delivery.

You may send promotional information to a list of contacts that you have collected or rent a list from a third-party provider. if you rent a list, you’re looking at $50 to $250 per thousand names.

shipping requires an offer or incentive of some sort. To be attractive and worth a customer’s time, the offer must be enticing. that means the offer could affect your results. companies have to create an offer that attracts the customer without diminishing profits.

whatever your offer, you must present it visually. Whether you’re creating a sales letter or a postcard, you’ll need to create the materials. if you plan to create them in-house, be sure to quantify how much time is spent doing it. If you have a design team that creates the materials, add direct cost to your equation.

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Research shows that an oversized envelope gets the best response rates at 5 percent, a postcard arrives at 4.25 percent, and catalogs get 3.9 percent. Of course, the larger the materials needed, the more expensive it will be to create and mail them.

That brings us to the final expense: postage. With shipping costs rising, all businesses need to cut costs.

While the expenses can certainly add up, the return on investment could outweigh the costs. Before you pull the trigger on a direct mail campaign, use this calculator to see if the benefits outweigh the costs.

con: response rates are often low

response rates for direct mail are quite low. some sources put direct mail response rates below two percent, while others suggest rates of around 3.7 percent.

In addition to low response rates, some recipients lump direct mail with spam. If they don’t recognize the sender’s address or don’t expect any information from a company, their mail could be discarded. research shows that 44 percent of direct mail is never opened. that means the time and money spent to create and send is never accessed, just thrown away.

have you used direct mail marketing? how has it worked for your business? Share your thoughts with others in the comments section below.

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