Customer acquisition is importantfor a company’s growth, and businesses need even more planning and strategicaction during an economic downturn. Tight marketing budgets and cost managementare name of the game when sales are slow.
Even under such toughcircumstances, direct mail can play a huge role in getting and retainingcustomers.
Direct mail is one of the mostcost-effective ways to bring in new customers. According to a DMA studyconducted last year, direct mail averages $10 in sales for every $1 invested.Another study by Pitney Bowes found that direct mail generated a higherpercentage of Internet sales than Internet advertising, TV and radio.
The best way to guarantee thesuccess of your direct-mail campaign is to measure the resulting increases insales and profits. Campaign success is measured as ROI, or return oninvestment. Other standard measurements, such as cost-per-piece orcost-per-lead, are helpful but will not provide the big picture you need toevaluate. The most accurate ROI calculation takes into account a customer’slifetime value – the amount of sales generated by that customer over time.
Direct mail allows you to controlyour campaign and direct spending with your target market. To maximize theresponse level of your mailing, pay attention to the following factors:
1) What is your goal – sales,awareness, traffic to your store or Web site?
2) Who are your best customers?Market to people exactly like them. The list is a very critical part ofresponse-rate success.
3) The offer(s) must appeal to theprospects you are targeting. The goal of the direct-mail piece is to enticecustomers to contact you somehow, so you and your staff can turn them into aloyal customer.
4) The mail piece design needs toappeal to the prospects you are targeting.
The first step is to run smalltest mailings to get a feel for your response rates. To calculate how well itdid, take the total cost of the mailing – including creative, printing,postage, database and labor – and divide that figure by the revenue generatedfrom an average sale. This will show you how many sales you need to break evenand cover the cost of your mailing. When you are confident of your results,extend your campaign to larger areas. In generating your response rate, don’tforget the lifetime value of each customer.
- By Angie Nielsen, CEO, Mail America Inc.
