Reduce Direct Mail Spend Without Hurting Your Business
Direct marketers fear cutting costs too deep and impacting the ability to generate revenue, forgoing potential acquisition, losing market share, or just damaging the franchise or customer relationships. Regarding direct mail spend, marketers can do a number of things to cut costs and increase ROI while minimizing the impact on overall revenue and key customer acquisition and retention metrics.
1. Shift to e-mail, particularly as a substitute for follow-up mailings in a multiwave campaign. E-mails are not always ideal for initial prospecting. However, they can be terrific and much less expensive for follow-up communications and, in conjunction with an initial direct mail piece, often increase overall response rates for a campaign. They also provide more options for tracking responses in a more granular fashion—e.g., opens and forwards. A membership association did this very effectively for its renewal mailings. It found e-mails were effective in getting the majority of its members to renew as well as to drive them to the Web, where the cost of renewal was lower. It now reserves direct mail for the laggards who do not respond to e-mail reminders or cases where it does not have valid e-mail addresses. This has driven down renewal costs significantly.
2. Provide multiple response mechanisms within the direct mail piece for the respondent, including personal URLs (PURLs). This not only increases response rates, but also reduces the need for follow-up mail, again reducing costs. As an example, in the fundraising space, it is typical to ask donors to increase the amount of their giving by reminding them of their last contributions and suggesting that they give a little more. Both the direct mail piece and the PURL can reflect this by making the regular contribution the default but highlighting the desired amount. PURLs also can make it easier for contributors to suggest others in their network, who are more likely to give if they have been referred by a friend.
3. Make it easy for your customers to indicate how they want to be communicated to by setting up preference centers online. If they prefer e-mail or texting, you can save as much as 90 percent per customer. Besides, customers appreciate being asked, feel more in control and are more likely to respond to communications through their preferred mediums.
4. Be more aggressive in cleaning up your lists prior to mailing. There are various filters that can and should be used to scrub your outbound mail before it goes out—National Change of Address (is your screen as comprehensive as it can be?), suppression lists based on prior customer preferences or national do-not-solicit lists, and, above all, recent responders. Nothing irritates customers more than getting a solicitation after they already have responded.
5. Use targeted models more aggressively. The most effective way to cut spending is to stop mailing to folks who are not likely to respond. Use active and passive control groups to identify segments and treatments that are not likely to yield the desired results, and focus on the most likely responders. Don't skimp on champion/challenger testing—in the long run it can save you more money than any other technique. Skimping on test cells is penny-wise and pound-foolish. In almost every instance where Quaero clients have resisted setting up control groups, they have regretted that choice on the back end when trying to measure the true effectiveness of a campaign or when they need to justify the cost of the next campaign.
Naras V. Eechambadi, Ph.D., is senior vice president and general manager of Charlotte, N.C.-based Quaero, a CSG Systems company. He can be reached at (704) 414-0200.