Is Direct Mail Cost Effective?

Marketing is about digital these days. We’re blogging, emailing, Facebooking and Tweeting our little hearts out.  Therefore, direct mail (the type the postal delivery individual places inside your mailbox, remember?) has to be dead. Right?

Wrong! Sixty-five percent of consumers of every age has made a purchase as an outcome of direct mail, according to the DMA (Direct Mail Association) Factbook.

The most recent stats on the response direct mail response rate was 4.4 percent for both business to consumer (B2C) and business-to-business (B2B) mailings—significantly greater than industry expectations, as well as rising past email’s response rate of a mere 0.12 percent, according to Direct Mail News.

All of that is a sign that direct mail is alive and kicking, thank you.

Many businesses, especially high tech, are realizing that direct mail is undergoing a renaissance. They might’ve maximized their spend online and must discover another channel, or they might appreciate such a great response to direct mail that it is added to the mix from the beginning. The results, either way, are very satisfactory and direct mail is increasingly becoming a staple within their marketing strategies.

Direct mail is less expensive than email. Okay, less expensive maybe the wrong word. Underneath the proper circumstances direct mail will be more cost effective than electronic mail marketing.

Marketing experts understand that direct mail will be more effective within the prospecting stage of the sales process. All too often, it is excluded as a marketing channel due to its high costs as compared with other channels like direct mail.

It must be stated that both email and direct mail are critical channels and their use ought to be dictated by when each is more appropriate based on what you know in regard to the prospective customer segments you’re attempting to reach.

Electronic mail is utilized due to the logic that it’s so cheap as compared with direct mail. Still, a smaller conversion rate will generate a greater return on investment than direct mail. It’s an overly simple viewpoint of the two channels. Realistically, you ought to be basing your choice on sound details of what’ll work better for whatever stage of the sales cycle, as well as for which customer segment.

It is all about information. The more information you integrate into the process of decision, the better your choices should be. A highly thought out marketing approach will include a complete assessment of the numerous segments which comprise your prospective base of customers. Utilizing both your own, in conjunction with 3rd party information may permit you to attain an improved understanding of audience profiles, as well as their preferences.

Data-driven approaches to preparation will allow you to better comprehend customers’ tendency to buy, as well as their actual value. With such information, you’ll have the knowledge needed to guide your decision-making process. You ought to have the ability to do predictive modeling to pick the most effective channels of marketing to accomplish your marketing goals.

More than likely you’ll end with a combination of marketing messages and channels that address the numerous segments and sales cycle phases of your audience. A portion of your analysis is going to invole the lifetime value of the customer. As the initial return on investment might initially seem low, it might change as the lifetime value becomes added to the equation.

Direct mail may be the choice of medium for creating new customers. It clearly may be cost effective as accomplished in an extremely targeted way and as the lifetime value of the customer is included within the analysis of the ROI. Sophisticated direct mail enterprises utilize predictive modeling to decrease the volume of direct mail, i.e. reduced costs, by sending it to the ones with the highest propensity to respond.

When performed like this, direct mail may be the most effective channel of marketing. A well-planned campaign, of course, integrates direct mail efforts with additional marketing channels.

Do you factor in the lifetime value of customers as you determine the return on investment of a marketing campaign or channel?

How often do you use predictive modeling that targets the numerous segments you hope you will reach with your marketing efforts?