What? Direct mail has a higher response rate than it did a decade ago. How can modern marketers take advantage?
So what? The DMA finds that response rates from both house and prospect lists have increased since 2003.
Now what? A good list and thoughtful desin are crucial. Keep detailed data and segment your direct mail campaigns.
Far from dead, direct mail marketing gets a higher response rate than it did more than a decade ago. Here’s how marketers can take advantage.
Many marketers have long awaited the death of direct mail. Surely it couldn’t last much longer, they thought; after all, smartphones, video marketing and social media have all become vastly popular. Why would consumers still want to get physical mail?
Neil O’Keefe, senior vice president of marketing and content at the Data & Marketing Association, says that marketers began questioning direct mail’s endurance in 2007. That year, Statista reports that smartphone sales jumped 70% from the previous year to $8.7 billion. At the same time, the volume of mail sent through the U.S. Postal Service began to plummet: In 2006, people in the U.S. sent 213.1 billion pieces of mail, according to USPS; by 2017, they were sending 149.5 billion pieces each year, a 29.9% decline. By this point, smartphone sales had reached $55.6 billion. The price of postage and paper had skyrocketed, as did the number of internet users—everything seemed to hammer a nail into direct mail’s coffin.
But a strange thing has happened in marketing: Direct mail response rates have risen in the past 10 years.
The DMA’s 2017 Response Rate Report finds that the response rate for mail sent to people on house lists (subscribers who opted in to mail) was 5.1% for the year, and the response rate for prospect lists (potential clients) was 2.9%. These numbers are up from 2003, when house lists drew a response of 4.4% and prospect lists a response of 2.1%. And even though online shopping has surpassed purchases from direct mail pieces, the DMA reports that 100.7 million U.S. adults made a purchase from a catalog in 2016, compared with 209.6 million people who made purchases online the same year, per Statista.
“Mail is not dead,” O’Keefe says. “The volumes have changed over the last 10 years, but I think it’s more relevant and personal than ever. That’s why you’re seeing the uptick in the interest in the channel.”
Though direct mail isn’t dead, it also isn’t cheap. With more expensive postage costs have come more expensive responses. The DMA reports that each response from a customer on a house list costs companies $22.55, while a response from a prospect list costs $39.75.
If direct marketing works, marketers should have it in their mix. Here’s how marketers can use direct mail without suffering a budgetary death by 1,000 paper cuts.
Direct Mail’s Biggest Challenge: Measurement
Craig Simpson, a direct marketing consultant, says that he works on hundreds of direct mail campaigns each year and finds the most successful campaigns are those coordinated with other media. For example, if a brand sends a piece of direct mail to a consumer, who then receives an e-mail and retargeted ads as parts of the same campaign, Simpson believes that those campaigns will have the best results.
Marketers want to reach consumers across multiple channels with a consistent message. “They’re thinking from an omni-channel point of view, not just multi-channel,” O’Keefe says. But to be effective, brands must measure well and have good data. This is direct mail’s biggest challenge.
Marketers try to measure customer response to direct mail through personalized URLs and coupon codes, but there’s no guarantee customers will visit websites from a specific URL or buy products using a specific code. O’Keefe says that consumers will often receive a piece of mail, get inspired and Google the product they want to buy. The difficulty of attributing conversions may be a reason why the pendulum has swung toward digital, O’Keefe says.
Although there’s no panacea for direct mail’s attribution problem, Simpson says that he shores up his data by matching a list of recent buyers with consumers from the campaign’s direct mail list. This method is more inductive than deductive, in that he cannot be entirely sure the direct mail led to the purchase, but it allows him to have an idea of how effective a direct mail campaign has been.
Good data also allow marketers to learn important information, such as what demographics enjoy receiving mailers, what mailers get the best response and, perhaps most importantly, whether mailers work at all.
To find what campaigns bring in the best ROI, O’Keefe suggests that marketers test as many aspects of their campaign as possible, including frequency, number of pages and types of mail they’re sending. He also suggests that marketers get a baseline of their efforts, then test their campaign by holding off on sending mail to certain segments of customers. This can help marketers understand the true value of that segment. O’Keefe says that many marketers get nervous about losing touch with a potentially important customer group, but he believes holding off is one of the best ways to get statistically significant data on the ROI of direct mail.
“It takes good self-discipline to understand your customer segments, how much money you’re spending on them and … whether or not you’re getting the return your business needs,” O’Keefe says.
One hundred years ago, companies such as Sears, Roebuck & Co. and J.C. Penny Co. used customer data to send out catalogs and mailers. Back then, the companies possessed small sets of data, mainly names and addresses of customers. Now, marketers have mountains of complex data and are faced with a modern conundrum: How much personal data is too much to incorporate into the content.
Target Corp. inadvertently drew an early line in the sand between good data use and data use that was too personal for customer comfort. In 2012, Charles Duhigg reported in The New York Times that Target addressed a mailer, which featured coupons for cribs and baby clothes, to a high school girl. When her father complained to the company, yelling that his daughter was not pregnant, the company apologized; when the father called back a few days later, he was contrite. “It turns out there’s been some activities in my house I haven’t been completely aware of,” the father said, according to Duhigg. “She’s due in August. I owe you an apology.”
“Target was right,” O’Keefe says. “The algorithm worked. There was really no question about the accuracy or the power of data. But the question is how to deliver the message in the best way possible.”
Just because something is true, it doesn’t mean it should be sent to the customer. Good personalization is relevant and valuable, but it shouldn’t be too specific, O’Keefe says, citing Netflix and Amazon as good examples for direct marketers. These companies know what their customers want, but they don’t go over the top in telling them things about themselves they may not yet know.
One positive way marketers can personalize content is by giving customers control over frequency of the mail they receive, which O’Keefe says will likely earn marketers the favor of their best customers.
“[Customers] have raised their hand to say, ‘Keep sending me good communication,’” he says.
How Direct Mail Should Look
Junk direct mail should be extinct, but it’s surprisingly extant.
“The worst thing [marketers] can do is show up looking like junk mail,” Simpson says. Instead, he says, marketers should aim to look personal and unique with their mailers. “We have to find ways to stand out in that small mail pile to make us the priority piece.”
Simpson says that he can tell when a brand hasn’t put effort into designing a mail piece, but he can also tell when it puts in too much misguided effort. Direct mail shouldn’t look like a beautiful magazine ad, he says, as this kind of mailed content tends to draw little response from consumers. Instead, direct mail pieces should have good copy and the right offer for the right demographic.
Unlike online content, direct mail cannot be ignored. A catalog sits in someone’s inbox, earning attention whether the person buys a product because of the content or throws the mailer in the trash. “It’s worth it to put the time and energy in because you get to sell one-on-one to the prospect with very few distractions,” Simpson says. “That’s why I love direct mail.”
Find the Best List
Without a good mailing list of potential customers, it doesn’t matter how good the offer or copy is, Simpson says; the content won’t work. Marketers must look at the demographics of their best customers, put those customers onto house lists, then build prospect lists of customers that are similar to their best customers, he says.
Simpson’s next step is to include warm leads, people who have contacted the brand but have not yet purchased from it. “If people are already raising their hand and showing interest, we’ll have to go after them first,” he says.
Can Mail Endure?
While Simpson believes that direct mail can continue its surprising ascent, O’Keefe is skeptical its use will continue to rise. But even if direct mail stagnates, O’Keefe believes that it will remain an important part of the marketing mix.
“If marketers keep adjusting the format and making it more relevant, more personal and more valuable, they’ll experience an increase within their customer base,” he says.
The biggest challenge O’Keefe sees for marketers is balancing respect for customers’ privacy and access to the data that informs personalized campaigns. But without the data, they will lose access to the customer.