With higher postal rates and the increasing usage of the online channel, many direct mailers are adjusting their usage of premiums and freemiums. I spoke with Ted Grigg, principal of the direct marketing company DMCG, based in Lewisville, Texas, and he answered the many questions that affect these potential response boosters.
1. How do you think the decline in freemiums and premiums (due to higher postal rates) is going to affect direct mail offers in your sector?
Grigg: The impact will come as the allowable remains constant and postage goes up, leaving less money for production and premiums.
2. Do you plan on testing out of certain freemiums and premiums due to rate increases?
Grigg: No. When we renew our insurance [clients'] contracts with customers, there is usually a rate increase. We soften the blow by offering them the option to decrease their health benefits, for example, for the same price - or even less - than they were paying before the renewal.
3. What do you think marketers will try instead of gifts to up response?
Grigg: Gifts will not go away. They will ... find premiums that lift response enough to pay for the higher cost for postage. The pressure is always there to get more with less. But the bottom line is that overall circulation will drop by eliminating the marginal or less responsive names on control lists.
4. Do you think there will be an increase in "digital/virtual" freemiums like codes for online discounts?
Grigg: Yes. This lowers cost for the mailer and gives the mailer an opportunity to [upsell] during the Internet visit.
5. What about gift cards? Do you think they carry the same "weight" (pun intended) as actual freemiums?
Grigg: You would think so. But gift cards have less perceived value than product premiums that often retail for far more than it cost the mailer. In our experience, gift cards for free movie theatre seats work best.
6. Have you seen or tried using an added freemium, special shipping or a deeper discount for a digital reply as opposed to a mail reply?
Grigg: No. Because our analysis shows that there are three types of customers: the customer who still buys primarily through catalogs and direct mail including inbound calls; the second is the mixed customer who buys through multiple channels including the Internet; and then a third group that buys exclusively through the online channel. Trying to impact these habits is an effort in futility from what we see at this point.
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