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The ROI of Direct Mail

The ROI of Direct Mail Turns Skeptics into Believers

Krista Black

At IWCO Direct, we benefit from working with some of the largest direct mailers in North America. Many of our clients have extremely sophisticated strategies in place, powered by entire teams of direct mail veterans who are responsible for driving hundreds of millions of dollars in revenue for their companies from the direct mail channel. But every so often, we come across an organization that’s never done direct mail.

In that situation, we often hear frustrations such as, “I know we need to be doing direct mail. I know it will work. But I need to convince the rest of my team. And I have a limited budget; I don’t know if I can afford it. I’m overwhelmed trying to figure out how to get something off the ground…

We recently began working with a consumer products goods (CPG) company that found itself in this very situation, so we set out to prove to our client what they instinctively believed: they could drive significant revenue and improved return on investment (ROI) by leveraging direct mail. In spite of the fact that most CPG firms do not market directly to their customers, we set out to show them how they could make effective use of direct mail.

Gaining Buy-in with Data on the ROI of Direct Mail

Our first task was to eliminate any remaining hesitations held by the many stakeholders that our client needed to convince. The good news is we have a mountain of data backing up the claim that direct mail is thriving as a marketing channel, as well as countless case studies illustrating how we can help make it the most effective tactic in a marketing arsenal. This client voiced two main misconceptions:

  • MYTH #1: direct mail is too expensive.

While it’s true that direct mail can sometimes involve a sizable financial investment, it’s also among the most measurable and efficient channels out there. Unlike some mass media tactics, direct mail allows marketers to clearly measure both spend AND return.

By following a test-and-learn approach, marketers can mitigate risk, keeping the initial investment low, until a strategy and package is proven to produce the direct mail ROI they require.

  • MYTH #2: direct mail is an outdated way of communicating with our customers and prospects.

– The truth is…

  • 98% of Americans check their mail every day.
  • 66% of people have bought something because of direct mail – this is 30% more than from email.
  • People spend an average of 30 minutes reading their mail.
  • 56% of people say receiving direct mail is a “real pleasure” and 55% “look forward” to seeing what they’ve received in their mailbox.
  • 73% of U.S. consumers said they prefer direct mail for brand communications because they can read the information at their convenience.

Building the Plan

Once we had full buy-in, it was time to develop a test that would allow them to dip their toe in the water and take their first step toward achieving their direct mail ROI goals.

Our approach included:

  • Building an initial model: We built an analytics-driven predictive model using the client’s previous purchasers as the development universe that could identify likely buyers from a compiled prospect database and assign rankings that drove selection for direct mail.
  • Test design: The model was used to select an equal number of the client’s customers and modeled prospect targets. Each audience was split in half, allowing us to not only test the performance of the model, but also two creative packages. We kept the audience size as small as possible to contain costs, while maintaining enough volume to drive statistically significant results.
  • Creative development: Our client had a high-end brand and product offering. It was important to balance hard-hitting direct mail design best practices that we knew would drive response with the appropriate look and feel that would best represent the brand.

The Results Speak for Themselves

Our initial test delivered a $50 return for every dollar spent, and resulted in millions of dollars in sales. The best news was the test provided the proof our client needed to justify an ongoing marketing budget for direct mail going forward.

We also demonstrated to the client that targeted direct mail can be matched and bridged to the digital marketing world, enabling them to potentially send multichannel integrated digital campaigns to the same prospects. This multichannel approach exponentially increases reach and frequency, and can have a substantial impact on response and conversion.

Need help demonstrating the value of direct mail for your marketing program or measuring direct mail ROI? Drop me a line and we’ll help you get started.

link https://www.iwco.com/blog/2017/10/04/direct-mail-roi-for-cpg/
Krista Black

Author

Krista Black

Group Account Director. Graduate of the Carlson School of Management at the University of Minnesota. Savvy marketing veteran who always has a “nothing is impossible” attitude. Die hard U of M Football fan who tailgates with a group of 30 alumni before every game. When she’s not cheering on the Gophers, she is busy taking part in outdoor activities with her growing family.

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