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Crunch the numbers FIRST

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Direct Mail is one of the most expensive methods of advertising, in terms of cost per contact. But, it can be one of the most predictable, and because of that, it could be the smartest choice. Is it right for you?

The simplest way to decide is to figure the cost of sending a piece of mail (including design, printing, list and mailing costs) against the profit of a typical sale. 

 

 

Let's say you want to advertise your carpet cleaning business. You want to send an 8.5 by 5.5 inch postcard to 1000 homes. Here are your costs:calculator.png

 

Design costs $250
Printing Costs $350
Mailing List $250
Mailing Cost $125
Total Cost $975

 

As you can see, your costs for the mailing work out to nearly $1 per piece. You normally charge $99 for a three room cleaning, but for this mailing you wanted to offer a special price of $69. After your costs, you'll clear $27 in profit on the sale.

At $27 in profit you would need to make 37 sales to come out on top ($27 x 37 = $999).

Is that a reasonable expectation?

Sorry, it's not. The rule of thumb for direct mail is that 1% is a good sales percentage. You might even plan on only .5% to be on the safe side. That means you should expect only 5-10 sales out of 1000 pieces of mail.

At 1%, it's costing you $97.50 to get a customer!

But hold on for a moment...

There are some other considerations. If your carpet cleaning service is so good that you get lots of repeat customers, this might still be a profitable marketing program.

Say your average customer spends $225 doing a whole house cleaning, not just 3 rooms. And say they also call you twice a year for this service. On top of that, your average customer stays with you for 2.5 years.

$225 average ticket x 2 cleanings per year x 2.5 years = $1125. If you have a 40% profit margin, you'll clear $450 on a customer over her expected customer life.

At that rate, spending $97.50 to gain a customer is a profitable decision.

You need to be keeping track of your basic business numbers

Knowing the average lifetime value of a customer is invaluable to making advertising decisions. You should also figure what it costs to get a customer now (divide your advertising outlay by the number of customers you have).

Knowing the average sales response makes deciding whether or not to do Direct Mail a no brainer.

 
Get A List

rolodex.png Direct Mail is a simple enough process: send some people mail asking them to become customers.

But who will you send it to?

There is a large industry that has developed to create, manage and rent mailing lists. Businesses that rent lists are called List Brokers.

Lists can be created for just about any project. Say you want to send mail to people who are good prospects to buy a motorcycle from your shop. You can find a list of people who live in a specific radius of your store (say 50 miles), who subscribe to motorcycling magazines, or who own a motorcycle presently. Perhaps this particular mailing will be for a motorcycle that is targeted at 25-40 year old women, you can also specify those limitations.

Since mailings are very expensive, you want to consider who you're going to send to very carefully. It may cost more per name to tighten the qualities you're looking for, but it's cheaper than wasting postage and printing on someone who doesn't fit your potential customer profile.

McColley Marketing Media works with a number of brokers and we speak their language, so we can take the hassle out of getting an appropriate list for your next project.

We also have experience in dealing with databases of different formats and can combine them into one large list and eliminate duplicates before you send out your next mailing, which will save you money on postage. 

 
What should you mail?

What form should your Direct Mail be in?

(We're giving you examples of some things we've done in the past. Just click an image to see more detail.)

sunshine-vday.pngmobility-postcard.pngPostcards are the cheapest. We've created lots of postcards and they're popular because you don't have to worry about them getting opened. It's important to use color on both sides so you have an opportunity to catch the recipients attention no matter which side is up.

Postcards are limited as to how much you can say. You'll need a graphic to grab attention and then your offer must be easy to understand at a glance. Putting a couple of valuable coupons on the address side can boost the response rate and get people to save the piece instead of chucking it in the garbage can and forgetting it.

 
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front
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back

Fliers and Brochures. A folding "self-mailer" (no envelope required) can be great if you've got a little more content than will fit a postcard. This is still a graphic intensive piece (as compared to a letter) and getting colorful helps get people to open it up. Include a strong headline on both of the sides that will be seen after it's been folded. 

You've got some room for content on a flier, one thing I've had great success with in the past is to put in weekly offers to extend the shelf life of the piece. This is particularly effective for products with seasonal buying patterns (and for Christmas of course).

 

mamp-oh-ltr.pngmamp-oh-tix.pngLetters. They give you the freedom to explain complex sales like nothing else. You'll only use a couple of graphics in a sales letter, because you don't want to stop the the reader from going all the way through to the end. Because length isn't an issue (just add another page), you can really build a case. High ticket items and sales seminars are excellent choices for sales letters.

mamp-oh-lanyard.pngLetters can also be used to present a "package" of materials. For instance, an open house invitation can include a letter inviting the recipient to atten, a set of tickets to the event (they can be stuffed into a wallet or purse) and additional tickets or tokens for drinks or food. Coordinating the look of all the pieces is mandatory to build the value of the event. The example here includes the letter, the ticket & a piece we numbered, laminated, and put on a lanyard during the event.  The number was used when drawing for door prizes.

Another consideration when doing a letter is the envelope. You'll need something enticing on the outside to get the envelope opened. It could be a headline, or you could go the other route and have a hand addressed envelope (written in a feminine hand is best) possibly even with a drop of perfume and no return address.

Lumpy Mail. This is suited to very high end sales or when attempting to get an appointment with a prospect. The concept is simple, people will always open a package. It could be a sample of your product, or something that relates to your product. One idea might be to get an individual size Wheaties package, create a label that put your face (or better yet, your prospects face) on the package and an accompanying letter explaining how using your product will make them a champion.

Beyond mail. You could have even bulkier products hand delivered by a uniformed delivery person. In this case, think food, since that will draw people to your prospects office to find out more. Ice cream or pizza come to mind as something that will draw a crowd and force discussion of the offer.

 
This is even better!
easy-street.pngThere is one form of advertising that beats all others. It's the most effective, most cost efficient and easiest advertising method of them all.

And yet most businesses don't use it.

This form of advertising works to get your current customers to come back into your store to purchase again.

It's direct mail to your core customer list.

Most advertising must persuade people to do something they've never done before - visit your store. This is not easy. Studies have shown that people pay attention to ads for businesses they currently shop at. They do not to pay as much attention to businesses they don't know. To get a new customer, your advertising has to be much better, your offers much stronger.

Meanwhile, people who have already bought from you have already given you their trust. They are just waiting for you to invite them back.

Do you have a customer list?

Is it up-to-date?

Almost all POS (Point of Sale) Computer systems have it built in. All you need to do is be faithful in getting your customer's name and address entered correctly and the computer will do the rest.

Some estimates say that a general mailing to your customer list should result in response rates up to ten times higher than the same mailing to a targeted list of non-customers.

Work on your list, then call us for ideas on how to turn that list into cash on your bottom line.