StrateScapes - Using research to refine your DM strategy.


		Excerpted from StrateScapes - Volume 6, Number 2

Using research to refine your direct mail strategy.

Miss the mark on timing, and you’ve already lost more than two-thirds of your readers.

It’s easy to get tunnel vision — to look just at your company and your customers, then base decisions solely on this narrow (albeit valuable) zone of information. But if that’s all you rely on, you risk missing the mark and wasting time, effort and money on marketing materials that don’t take a more global picture into account. To create the most effective direct mail, your strategy needs to encompass not only data directly related to your company, but also statistics pulled from industry-wide and general-market research.

Of course, you may already have reams of research at your side and simply not see a use for it. After all, when you’re selling apparel, who cares what’s happening in the world of mortgages? And when you’re trying to promote credit card usage, why worry whether department store customers prefer percent-off coupons or free gifts? Because often, these seemingly irrelevant findings can have a major impact on your message and your method of presentation.

Statistic:
Sixty-eight percent of direct-mail readers feel that timing (when a piece arrives, plus the customer’s need for that product/service) is the most important factor in determining whether or not they even open a particular piece of mail.¹

Upshot:
Miss the mark on timing, and you’ve already lost more than two-thirds of your readers. But if you understand when your customers are most likely to buy — and what they’re most likely to buy at that time — and then you tie that knowledge to your mailing dates and packaging, you’ve already convinced 68 percent of your audience to at least open your mail.

Action:
When a gift and home-décor retailer wanted to promote its in-house credit card to college students, CCG performed a Market Basket Analysis and Seasonality Analysis to find out when these customers were most likely to buy — and what they were most likely to purchase at that time. In forming the campaign strategy, we also looked to additional statistics, such as the facts that 33 percent of college students obtained their first credit card in response to a mailing and 79 percent of this niche use their credit cards for personal expenditures.² CCG used this information, as well as customer demographic and lifestyle data, to create a promotional package to be mailed in the key summer and back-to-school seasons, with graphics showcasing merchandise most likely to be purchased by this audience at those times. (The first pieces mail this summer, so results are not yet available.)

Statistic:
Direct marketing sent by first-class mail typically pulls better responses than that sent by standard mail. For instance, securities offers sent by first-class mail yield a 19.3 percent response rate, compared to just 10.8 percent for those sent by standard mail.³

You can’t over-emphasize the importance of information you’ve gleaned about your individual customers.

Upshot:
Simply sending your direct-mail message first class nearly guarantees that it will receive more positive attention from the intended audience. Sure, standard mail saves you money up-front, but you could lose in the long run, largely because of these three factors:

	•		Unlike first-class mail, standard mail doesn’t get forwarded, so you could send to “dead” addresses and never know it.

	•		Standard mail typically ships slower, taking up to 10 days to reach its destination, versus just two to three days for first-class mail.

	•		Standard mail tends to be perceived as “junk” mail, meaning it has lower priority and less credibility in the consumers’ eyes, so it’s less likely to be opened even if it does arrive at the correct address in the right time-frame.

Action:
First, let’s take a look at one financial institution that opted, like many businesses, to save money by sending their large-quantity mailing — to encourage use of their check card — by standard mail. While they did save money on postage, the campaign also pulled virtually no response — less than a half-percent. Post analysis points a large part of the blame at the use of standard mail, which probably limited the mailing’s reach and likely delayed arrival of the time-sensitive material. Conversely, CCG works with an apparel manufacturer who sees the value — and reaps the rewards — of using first-class, pre-sort mail. The manufacturer’s seasonal promotions typically reap a 4 percent response rate, as well as more deliverables, cleaner lists and on-time delivery of their time-sensitive messages. That said, it remains important to weigh the potential ROI of first-class mail versus standard mail for each campaign. In other words, will the expected results of using first-class mail equal, or exceed, the added postage costs?

Statistic:
Seventy-eight percent of the retail direct-mail-reading audience finds buy-one, get-one-free offers the most enticing incentive for action. Only 28 percent are enticed to open a piece of direct mail because of a gift-with-purchase offer, and fewer still (21 percent) are moved by an event invitation. If you narrow the audience down to department-store customers, 72 percent prefer to receive a percentage off their next purchase — an incentive that appeals to only 66 percent of the total market.¹

Upshot:
While common sense and ages-old advertising wisdom may tell you that “free” sells, you’re barking out the wrong message if you want to appeal to department-store customers — or nearly any other audience — with a free-gift tagline on your direct-mail package. In short, knowing the type of offer that holds the most interest for your particular target eliminates much of the guesswork when creating a package that people will actually want to open and respond to.

Action:
A department store chain wanted CCG’s help enhancing its customer relationships through a newsletter that combined direct-mail offers with value-added content such as fashion previews and consumer advice. To snag immediate interest, we announced percent-off incentives on the package exterior. We added to the appeal by using two additional bits of research data. Knowing that 59 percent of direct-mail readers find personalized envelopes an important factor in deciding to open mail,¹ we first laser-personalized the envelope, then took it a step further and personalized offers for each customer segment. And knowing that 79 percent of department-store direct-mail readers prefer to receive offers from companies whose products they own or with whom they already do business,4 we made sure the newsletter creative captured the essence of the retailer’s brand — reinforcing customer affinity for the retailer. Results of the mailings were positive overall, including a 6 percent response to an in-newsletter survey. In addition, the newsletter campaign helped drive an 11 percent sales lift for the chain.

CCG combines our clients’ knowledge with our industry insights and expertise to create direct mail that delivers on ROI. For information about our retail programs, call Dave Rinaldi at 800.525.0313 x104. For financial program information, call Greg Sultan at (513) 947.9102.

¹ Vertis (DM 2002 and DM RTS)
² Credit Risk or Credit Worth? College Students and Credit Cards, survey data March-April 1998, The Education Resource Institute
³ DMA Statistical Fact Book 2002
⁴ DMA Statistical Fact Book 2001

STRATESCAPES and STRATESCAPES SUPPLEMENTS are published by Customer Communications Group, Inc., a full-service agency specializing in relationship marketing and customer communications. Our comprehensive, turnkey services include data analysis, customer segmentation, strategic consulting, account management, creative execution, print production and multimedia solutions.