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Was Your Direct Mail Campaign a Success?

Did your direct mail campaign work…or not?

direct mail envelopes

Oooh Noooooo! This isn’t where you want it to end up

(This is the third post in a 3-part series on how to make direct mail work for you.To read the first 2 posts, click here)

There are several “myths” about direct mail that can be very misleading.  InfoUSA gives us these myth-breakers:

 Myth #1:  You should get at least a 1% response, or the mailing was bad.

The fact is, response rate alone does not tell you whether a mailing was successful.

What matters is, did you make money?  You need to look at your return on investment such as the example below.

Let’s say you have a big-ticket item — you charge $3K for your service.  Here’s how to work it out:   (stick with me on this — it only looks complicated)

Your service sells for $3000

It costs you $1000 to buy the supplies from your vendor

Your gross profit per order = $2000

Cost of mailing = $.70 per piece      so…

If you mail 1,000 pieces, your cost is $700.

1% response gives you 10 clients:

You brought in $30,000, and earned a gross profit of $20,000,

minus your mailing fee of $700 = $19,300.

MOST OF US COULD ONLY DREAM OF SUCH SUCCESS!

But what if you only got 1 response back out of those 1000 mailers?   Soooo disappointing — that is 1/10 of a percent return.  However, you got 1 client that spent 3K, grossing you $2,000 and netting you $1300.

You made $1,300, you covered the cost of the mailing ($700), and got 1 new client right off the bat (and probably more later).

Was this productive?   OH YES!

The lousy 1% Response Myth came from consumer mailings where the average order size was $20-30.  In the mailing shown above, the larger average sale means that a lower response rate can still be very profitable.

However, let’s work through it if you have a much less expensive item to sell:sweater photo

Let’s say you have a sweater that you think your customers will like, and it will get them into your store — you usually charge $50 for it, and you make a good profit on it — it only costs you $12 from your supplier in Argentina.  You can put it on sale for $36 to get people excited.  Here’s how to work it out:

Your item is on sale for $36

It costs you $12, so you make $24   (Gross Profit per order = $24)

Cost of mailing = $.70 per piece      so…   If you mail 1,000 pieces, your cost is $700.

1% response gives you 10 clients (10 x $36), so you took in $360, and your gross profit was $240.

OOPS!  This didn’t pay for the cost of the mailing. You’re feeling blue.  In order for this mailing to pay off for you, you’ll need to have a good salesperson on duty so that when those 10 people come in, you’ll sell them other things, and you’ll get them to come back and see you again — that’s what will make it work.    Most retailers know that they have to do some advertising all the time, and they would consider this a good mailing….but you also should be using social media marketing and other methods along with it, of course.

Myth #2:  I got back so many “undeliverables!”  That list was terrible!

Was it?  Think about all the changes that neighborhoods go through.  The question to ask is:  “Did you get any sales?”  It is results that matter.  Getting undeliverable returns of 5% of the mailing is common.

 Myth #3:  “I sent out 1000 mailers and only got 10 responses and no sales yet.  Mailings don’t work.”

In this case, you need to focus on the purpose of the mailing.  Was it designed right to generate a multitude of inquiries or to move people to action?  (more about calls to action in a coming blog)

What if you close two of those 10 responses within 1 month?  That’s only 2 new clients.  BUT what if an average client spends $3000 as shown above?  Every new client is worth about $2000 immediately, plus the possibility of more clients in the future AND the additional brand attention you got from the mailer even if people don’t respond right away.

You know you have to do something to keep getting new customers.  You need to consider which methods are going to work for you, and to do that, you need to answer THE BIG QUESTION:

WHO is your customer?

Demographics are incredibly important to you in determining which methods will work
so please keep reading this blog!

Please share with your fellow business owners and marketing friends,
and thanks for tuning in!

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comments

  1. Stuart says:

    Hello, I enjoy reading through your article. I like to write a little comment to support you.

  2. Thank you all for your comments! I’m so happy that you’re finding the info helpful.
    I am slow to answer your comments since I am traveling, but I’ll get back to each of you very soon.
    Thanks for reading!

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