Direct mail is a dinosaur in today’s high-tech digital marketing landscape. It’s also expensive. But some organizations continue to use it – and get a huge ROI for their efforts. Keep reading and we’ll tell you who the winners are.
But first, here are some surprising facts. Canada Post delivered 2.6 million pieces of personalized direct mail every day in the first three-quarters of 2023¹ at an average cost per piece of 60¢². Canada Post tells us that volumes are down slightly from a year ago due to inflation and a softer economic environment, but that “volume recoveries from existing customers” are off-setting economic declines. Existing customers are using direct mail more. That tells you it’s working – at least for some.
The direct mail winners almost always share these 3 key attributes.
1. High selling price and gross margins.
When selling relatively expensive products and services with healthy margins, or at least a high lifetime value, marketers can afford higher customer acquisition costs. Examples include luxury products, subscription-type services, donations, higher end travel experiences like cruises and casinos, financial service offerings like financial planning and investing, and many B2B offerings like software, equipment, and professional services.
For direct mail to be an effective marketing tool, you need to have a new customer acquisition budget of at least $100, and preferably $200 or more, per customer. This level of investment works for many high-end, big ticket consumer products and services. And for B2B marketers, the cost of acquiring a new customer can easily be several hundred or even $1,000+. In this context, investing $1.00 – $2.00 per prospect on a direct mail campaign (considering the cost of creative, list, preparation, and postage) is easily justifiable — depending of course on the response and ultimate conversion rates.
2. Clearly defined target market.
Direct mail is still the only channel where the marketer can decide precisely who they want to reach, and have a high probability of actually getting their message read. Email is targeted, but often isn’t delivered and very often isn’t read. And although social, SEM, and general digital marketing can be well targeted — it’s very difficult to compete with other advertisers to win attention and action.
Direct mail can be targeted better than any other medium. For example, no other channel allows you to define a precise geographical region and then target only non-customers. Direct mail can do this. It’s also the only channel where “saturation marketing” is still possible (reaching every prospect in a market –as opposed to just some of them).
Of course targeting is only useful if the people you’re targeting see your message. With direct mail, you can reach prospects in their home or office where you almost always have the stage to yourself. For those able to make the economics of DM work, this is a huge advantage.
3. Low commitment offer.
Last but of paramount importance is the need for a low-commitment offer. This is DM prospecting 101, but many marketers still get it wrong. Rarely is direct mail the place to sell your product or service. Instead, you want to sell the first step in the sales process. Often that’s something for FREE (think trial, report, demonstration, seminar, test, information session, etc.), where you get prospects to respond positively to an offer and engage at the top of your sales funnel.
These 3 “deal-makers” define the winners who consistently and successfully use direct mail for prospecting, happily spending an average of between $1 and $2 dollars per piece. You can validate this by looking in your own mailbox and asking yourself if the organization sending you a mailer meets these 3 criteria. If they don’t, you probably won’t see that mailer again.
Key Take-Aways:
1. Direct mail isn’t right for everyone, but for some it’s an excellent and profitable channel.
2. The best use cases for direct mail have these 3 attributes:
- High selling price, high lifetime value, and high gross margin
- Clearly defined audience
- Low-commitment offer
3. The main benefits of direct mail versus other options, are:
- Most precise targeting
- Highest probability of being read
- Ability to saturate your audience
- Little competition for attention
4. The disadvantages of direct mail versus other options, are:
- It’s expensive – postage alone is 60¢+ per piece
- It’s complex to execute requiring lists, creative, production
- Responses take longer to arrive
What Are the Next Steps?
To learn more about whether direct mail would be an effective channel for your organization, or how to get a great prospect list, talk to a Cleanlist data consultant. We offer free assessments to help you get started.
1 – Canada Post’s Third Quarter 2023 Financial Report. On page 18, Canada Post reports delivering 503 million pieces of personalized mail year-to-date. According to ChatGPT there were 195 business days in this period. 503 million / 195 days = 2.579 million / day.
2 – Canada Post’s Third Quarter 2023 Financial Report. On page 18, Canada Post reports delivering 503 million pieces of personalized mail year-to-date and earning 301 million dollars in revenue. 301 million / 503 million = 0.598 cents per piece.
