Direct Mail: Hidden Profits
Properly executed direct mail audits uncover new profit-making opportunities by increasing response rates and cutting costs.
The term “audit” carries negative undertones, because the IRS and other enforcement agencies use audits to reveal fraud or abuse that carries fines and other penalties.
But a well-done direct mail audit provides the reinforcement you need to execute some of your ideas and reduces the risk of taking a wrong turn by leveraging the perspective of an independent professional direct marketer.
The dictionary defines the auditing process as “an official inspection of an organization’s accounts, typically by an independent body.” So, the direct mail audit uses an authority on the subject to inspect an organization’s program by using an independent resource.
Companies that maintain a customer database, track all sales by promotional code and perform testing on a regular basis stand to gain the most from a direct mail audit. In other words, companies that do true direct response marketing will benefit the most from this analytical process.
But how do you know when you should perform an audit? The following scenarios signal it’s the right time to take a closer, objective look at the status of your program:
- Response rates continue to decline, and you want to confirm or discover why.
- You have lost some of your best people due to layoffs or other reasons, and you want assurances that your remaining employees are applying best practices.
- You are seeking an objective outside opinion about your direct mail advertising growth opportunities.
Keys Areas to Include in Your Audit
Most direct mail programs benefit from deeper scrutiny of the following program elements:
1. The master file. First, clearly delineate acquisition vs. customer or inquiry file activities. Even though the way you acquire customers dramatically affects the lifetime value of your customers, the consultant needs a clear understanding of your program as a whole to identify the opportunities.
The auditor then will put together your database segmentation strategies along with counts for each segment. A file layout for your master file reveals its flexibility.
The consultant also will want a random sampling of raw data for 100 records or so of your customer and inquiry database. Understanding the master file, such as its completeness, and business rule applications often reveals areas that require attention before the program can grow to its full potential.