Direct mail is personally addressed advertising, delivered by post. It can be extremely effective for start-up businesses because it can be personalised, it commands attention and is often kept by customers to be followed up at a later date.
You can send what you want, when you want, to target customers. You can also experiment before doing a full mailshot and track and measure customer responses. Targeted business-to-business mailings are particularly effective if you can write a persuasive letter. Of course, email does much the same thing - for even lower costs. However, while email can be highly effective, it does compete with many other messages and your emails could be seen as spam.
This briefing explains:
- How to decide if direct mail can help you.
- How to plan and design a campaign.
- Preparing a mailshot.
- Handling the responses.
1 Who does it work for?
Consider three businesses, each trying to find new customers. Each of the three spends £250 sending a mailshot to a list of 1,000 names.
1.1 A travel company sells holidays for £1,000 each, £250 of which is profit.
- If one person books a holiday, the mailshot has paid for itself.
1.2 A sandwich shop makes £1 profit on each £2 sandwich it sells. Regular customers spend on average £5 a week, generating £125 profit each in a year.
- If the mailshot brings in two new regular customers, it has paid for itself.
1.3 A pottery makes £5 profit on each set of mugs it sells. But customers do not buy more than one set.
- The mailshot would have to produce 50 new customers to pay for itself.
To be profitable, a mailshot must give a large gross profit per customer or a high conversion rate (the percentage of target customers who make a purchase), or ideally both of these.
Handling the response
Prepare realistically for the enquiries and replies your mailshot will trigger. Response rates from trial mailings will help you to predict the numbers fairly accurately.
Stagger your posting dates, to control the flow of responses.
Make sure your employees know what they have to do.
Keep updating your mailing list, noting who has replied and which names and addresses are no longer correct.
- Measure the response to see how cost-effective the mailing has been.
2 What are your objectives?
Start by asking yourself what the mailing is designed to achieve.
2.1 Are you trying to make immediate sales?
- What volume, by what date?
2.2 Are you aiming to get names and addresses of potential customers?
2.3 Are you trying to bring forward sales to your existing customers?
2.4 Is the whole point of the mailing to allow you to make follow-up calls?
2.5 Is the mailing to provide information to existing customers?
The cost of a mailing involves several elements.
3.1 Compiling or renting a mailing list (see 6 and 7).
3.2 The mailshot. The unit cost could be as low as the cost of a second-class stamp, an envelope and a sheet of text.
- Costs — and, usually, response rates — rise in line with the number of enclosures you include (see 9).
3.3 Labour costs. By the time you have planned, carried out and followed up the mailshot, labour may be your largest cost.
How does the value of the extra sales you hope to make compare with the costs?
4.1 Response rates to mailshots vary widely.
- A 1% to 2% response rate is often regarded as normal. But a mailshot to your ten best customers, making them a good offer, could result in a 100% response rate (they all reply) and even a 100% conversion rate (they all place an order).
4.2 Timing is important.
- At what times of the year, month or week will customers be most interested in your product?
- For most businesses, the best time to receive a mailshot is midweek — when they are not too busy.
4.3 Experiment before investing in any mailshots, to find out what works.
- Results from one section of a list should scale up if it is representative of the list as a whole.
4.4 Responses may be delayed if mailshots are passed to other staff or filed for reference.
5 Mailing existing customers
Mailshots to customers can be used to introduce a new product or special offer, or simply to keep customers informed and build loyalty.
5.1 A travel company planned a schedule of three mailshots in the run-up to its busy January–March booking period:
- September — invitation to online Q&A session.
- November — list of holiday ideas.
- January — a letter promoting special offers with a specific timeframe.
5.2 You may not need to pay for a separate mailshot to reach existing customers, as you can enclose ‘stuffers’ with other mail you are posting anyway.
6 DIY mailing lists
A mailing list you compile from ‘warm’ prospects will usually achieve much better response and conversion rates than any rented list (see 7).
6.1 Make up a list from the following:
6.2 Do your own research, to add more potential customers to your list.
- Try web searches under relevant keywords to find possible outlets for your products.
- Search online directories and trade publications. But be aware that just copying a list of addresses and sending a mailshot to them is a breach of copyright.
- Trade associations, including Chambers of Commerce, have lists of members.
- The electoral roll, at public libraries and the Town Hall, lists individuals in the area.
6.3 Think about cross-selling, to get the benefits of someone else’s list as well.
7 Renting a mailing list
If you want to reach out to a larger slice of the market, renting a mailing list is usually the most cost-effective method.
7.1 Get a list of ‘list & database’ members from the Direct Marketing Association (DMA) (see 10) and search for ‘direct mail’ online. Some trade magazines rent out lists of subscribers.
- Be clear about the sort of person (or company) you wish to target.
- Know the number of names and addresses you need.
7.2 Shop around until you find the right list at the right price.
Lists can be very specific and tailored to your requirements. If you want a list of qualified female accountants in Ayrshire, just ask for one.
7.3 The best lists will offer:
- people (or businesses) who are similar to your existing or target customers
- people who regularly spend a lot
- people who have recently bought similar products
- up-to-date names, addresses and possibly telephone numbers
- a refund if a high percentage of mailings are returned or ‘gone away’
- exclusive use of the list during the period of your campaign
- in the case of businesses, the names and titles of the decision-makers as well
Check a few names you know to see whether they are on the list. The more recently the list has been rented by someone else and updated, the better it will be.
If you rent a consumer list, check it has been cleared with the Mailing Preference Service (see 10.3).
7.4 Be aware that you do rent the list.
List owners always ‘seed’ lists with a few names of their own people. If you use a list again without paying, the owner will know.
- Everyone who responds to your original mailing becomes ‘yours’ and can be mailed again, as often as you like.
7.5 If you want to blanket-mail every household in a certain area, using Royal Mail Door to Door may be your best option.
Contact the Royal Mail Customer Service Centre (www.royalmail.com/business/help-and-support).
- For a local tradesman or a pizza delivery service, this may be the best way to become known in the area.
8 What to mail
Look through the direct mail you receive each week and learn from other people’s mistakes.
8.1 Do not waste the envelope.
- White envelopes are smart, but cost more.
- Using hand-written envelopes usually guarantees they are opened, but it is time consuming.
- For larger mailings, a message on the envelope (eg ‘free gift’) can work well.
- Put your return address on the back of every envelope. This allows you to update your database if letters are returned.
8.2 Your letter should be written using the same techniques as an advertisement:
- use an attention-grabbing headline
- offer a benefit in the opening paragraph
- tell a clear, simple, convincing story
- finish by prompting the reader to take action, and explaining how to do it
- include all your key points of contact - address, telephone, website, email and social media
8.3 Personalising a mailing, automatically or manually, will often boost response rates.
Use the target’s name, rather than ‘Dear Customer’. If possible, personalise the item in more than one place.
- For a letter, use a typeface that looks handwritten for the salutation and scan in your actual signature.
8.4 Think about what to enclose.
- Whatever else you send, do not forget your brochure and your price list.
- Pictures of your products can answer a lot of the potential customer’s questions.
- Data sheets will help convince buyers.
- Copies of press cuttings and customer testimonials will give you credibility.
- Consider some form of special offer. This should be for a limited period, and include relevant terms and conditions.
- Include an order form and a mechanism to make replying easy.
A Business Reply envelope or card, or a Freepost address, will increase response.
A yearly licence (£86 each for up to 10 licences;) allows you to use the services. The only extra cost to you is the postage on the replies you receive.
A freephone number is more expensive. Charges may vary if you use your own number.
9 Using a mailing house
You should be able to handle a mailing of 1,000 items in-house — but a mailing of 5,000 items is probably best left to a mailing house.
9.1 Ask for a list of suitable mailing houses from the DMA.
9.2 Shop around for quotes.
- Choose a mailing house which is used to handling mailshots on the scale you need.
- Ask the mailing house to quote for supplying your envelopes and enclosures. The benefits of ‘one-stop-shopping’ may be worth the extra cost.
- Ask if the envelope stuffing will be done (more cheaply) by machine, and if your envelope and enclosures are suitable.
- Ask how many extra envelopes and enclosures (usually 5%) you should supply, to allow for unavoidable wastage.
9.3 Take advantage of the Royal Mail’s Business Mail postage discounts on mailings of at least 4,000 letters or 1,000 packets.
- Ask the mailing house to supply the list in mailsort order.
- You usually pay postage in advance, but there should be no mark-up on the cost.
- Ask for a copy of the Royal Mail posting docket as proof of mailing.
10 Further help
10.1 The Direct Marketing Association (020 7291 3300) is the direct marketing industry’s trade association.
It can answer most questions and direct you to many sources of specialised information.
10.2 Contact the Royal Mail for free advice and information (08457 950950).
10.3 The direct mail industry has set up registration services to let members of the public ‘opt out’ of receiving direct mail and other forms of direct marketing.