Direct Mail: The Good, the Bad, and the Scary

Do old-school marketing tactics such as “snail” mail still work? You betcha, according to research gathered by the Direct Marketing Association (DMA) from an online member survey this past spring. Yielding average responses from 34 of every 1,000 pieces distributed, direct mail is nearly 30 times more effective than email and 340 times more effective than web banners, the 2012 study reported. “For email, the average response -- measured by taking the click-through rate and multiplying the conversion per click -- is 0.12 percent,” the report stated, citing Epsilon data, meaning that only one customer out of 1,000 would follow the email solicitation through to sale.

Meanwhile, paid search campaigns averaged a 3.88 percent click rate: The conversion-per-click rate, however, which indicates that someone took action after clicking on an ad, is less than 6 percent of those 3.88 percent who clicked. For Internet display, Bizo data showed average click rates of 0.024 percent and ultimate conversion rate of 0.010 percent.

For non-scientific proof, just look at today’s mail. With the holidays fast approaching and America’s mailboxes filling up, is there any doubt that direct mail still works? I regularly receive mailings from retailers such as Dick’s Sporting Goods and Kohl’s, where I shop frequently and have a credit card. On the same day earlier this month, Carson Pirie Scott sent me a polybagged set of three mini-catalogs and promotional flyers (including perfume samples) and a pre-Thanksgiving discount postcard for half off a purchase of $100 or more. The 9x6-inch piece was printed in full color, albeit on somewhat flimsy paper stock – parent company Bon-Ton Stores’ way of cutting costs, perhaps?

As part of a cross-channel, multifaceted marketing mix, good ole ink (or toner) on paper can work really well in tandem with cleverly creative uses of mobile/smartphone (QR codes) and tablet apps as well as other electronic media: TV, radio, YouTube videos, webcasts, podcasts, online landing pages, SMS texting, and social media platforms, including Facebook, LinkedIn, and Twitter.

Ahem, Not So Private

While Halloween has past, growing privacy concerns are the scary part about today’s direct mail regulation. Some industry watchers refer to it as “Big Data Marketing.” I received a letter recently from a credit card provider that read, in part:

Financial companies choose how they share your personal information. Federal law gives consumers the right to limit some but not all sharing. Federal law also requires us to tell you how we collect, share and protect your personal information…. This information can include:

• Social Security number and income
• account balances and employment information
• credit history and transaction history

Frankly, legalese like this frightens the dickens out of most consumers, myself included, and confuses a slew of others. “When it comes to the use of data, you need to be careful and respectful,” said Janice Reese, CEO of foldfactory.com, an industry leader in direct mail solutions, print finishing software, and resources. Reese’s firm is based in Nashville, known as the Silicon Valley of health care. “There are compliance and HIPAA [Health Insurance Portability and Accountability Act] rules to follow, but it’s also a huge opportunity,” she noted.

To help direct marketing providers better understand what they need to know, executives are rallying next month at the National Center for Database Marketing (NCDM) conference in Orlando. Industry leaders will discuss the many and growing threats to data-driven marketing in an agenda-setting panel on December 4. Participants are Susan Fox, VP of government relations at Walt Disney; Tony Hadley, Sr. VP of government affairs at Experian; and Brian Huseman, director of public policy at Amazon.

The panel discussion is part of the broader agenda of DMA’s recently announced Data-Driven Marketing Institute (DDMI), which is engaging the entire data-driven marketing industry in a coordinated campaign to set the record straight about the countless ways that data-driven marketing benefits consumers – and fuels the economy. Through research, advocacy, and consumer engagement, DDMI is working to advance and protect data-driven marketing; to increase understanding and improve perceptions of data-driven marketing; and to prevent needless regulation or enforcement that could severely hamper data-driven marketing and stifle innovation.

“In Washington, DC, and around the globe, regulators are seeking to put an end to the collection and use of consumer data,” said Linda Woolley, acting president and CEO of DMA. “In this informative panel discussion, attendees at NCDM will learn about the threats to marketers’ bottom lines, from executives on the front lines defending the responsible use of Big Data.”

The Numbers

Why does direct mail continue to work so well, despite such Big Brother paranoia? Because it is targeted, tied to geography and demographics, and it’s personal. Most importantly, it is measurable, said the US Postal Service. “When mail gets opened, sales get closed,” touted a USPS print ad. The aforementioned DMA survey found that direct-mail response rates have dipped some 25 percent over the past nine years, from 4.37 percent in 2003, yet have remained stable since 2010.

The continued effectiveness of direct mail has a lot to do with the quality of data and the ability to target mail more effectively, Yory Wurmser, DMA director of marketing and media insights, told Ad Age earlier this year. “The future of direct mail lies in that [data], but the quality of the response for direct mail also indicates that direct mail is not disappearing,” Wurmser said. “It’s not the situation you had with newspaper advertising where it just fell off a cliff. It’s probably stabilizing instead of continuing a steep decline.”

After upfront spending on paper, ink/toner, printing, and postage, however, is the 7 percent return on investment (ROI) good enough for direct mail? Cost per thousand for business-to-consumer letter mailings is around $556, while business-to-business is $919. In a post-DMA show blog last month, Pat Deck, chief marketing officer of exhibitor IWCO Direct, stressed, “Marketing budgets remain tight and ROI is more important than ever.”

The DMA survey found that email produces far better ROI at 28.5 percent, which explains why it will continue to attract a slightly higher percentage of marketing budget dollars in 2013. Eighty-three percent of the respondents use email in their promotional campaigns; direct mail followed, at 79 percent, and was trailed by paid search, Internet display, and telemarketing. In comparing direct mail ROI with email’s, Wurmser noted, “The cost is equivalent when we’re talking about getting a new customer, but for [a response from] an existing customer, email is more efficient, with ROI that’s four times higher than direct mail.”

Ignorance is Not Bliss

But counting ROI dollars can be deceptive, warned foldfactory.com’s Reese. Part of the problem, she said, is direct mail is not always measured and tracked accurately the way that other mediums are. “The software solutions do exist,” Reese pointed out, “such as the Intelligent Mail Barcode.”

And while statistics stack up in favor of direct mail, print providers might be surprised at how many prospects don’t even know how to start a campaign rolling, Reese added.“Our Trish Witkowski led a workshop series at GRAPH EXPO [in October], and what we found is that there is a lot of interest among marketers and agencies but many don’t know where to begin. They are in desperate need of guidance.” Witkowski, the firm’s chief folding fanatic and a graphic designer by trade, has become somewhat of an Internet cult figure for direct mail print, regularly blogging and hosting tutorial, grassroots videos online.

Witkowski and Reese believe that adequate print training has been somewhat neglected in the education of young designers and media buyers under the age of 30, many of whom don’t know what they do not know. “They’ve grown up with this tremendous access to images and ideas,” Reese notes, “yet many of them have no clue about the basic capabilities of digital printing, for example, or variable data and imaging, not to mention segmenting lists and doing test mailings. We have to make the younger generation feel like print belongs to them, too; that it’s not nebulous. They need to think of it as the art and science of their marketing message.” The self-proclaimed chief vision officer knows that younger people can develop an emotional attachment to and respect for print, citing related studies conducted at nearby Vanderbilt University.

To help make direct mail easier to understand, the foldfactory.com has developed a new publication series called “Direct Mail Simplified.” It presents the process of creating effective mail from strategy through to design and postal optimization, testing, tracking and measuring results. Initial reviews of the content by USPS and a long list of experts in print, direct mail, and design have been very positive, Reese reported.

More Great Responses

At last month’s annual DMA Conference & Exhibition (October 15-18) in Las Vegas, Macy’s and United Airlines MileagePlus were honored with the 2012 Marketer of the Year Award. Over the last few years, customer-centric strategies have been employed across the Macy’s organization — from localizing the merchandise mix to enhancing how the retailer’s associates engage with customers, both in store and online. Macy’s has extended this vision into its marketing plans by creating more personal and relevant one-to-one communications with its best and most loyal customers. Working with dunnhumby USA, it has employed advanced modeling and statistical techniques to segment and define its key customer groups, and to test and learn the best ways to interact with those core customers. Macy’s direct marketing has leveraged a multichannel approach, including storewide mailings, category-focused mailings, emails, and online display advertising.

With the merger of United and Continental airlines, United Continental Holdings has become the world’s largest airline, and now operates the biggest loyalty program of its kind: MileagePlus. This merger required combining 90 million accounts and 30 years of transactional history into a single database. But United’s Mark Krolick, managing director of loyalty marketing and analytics, and his team took the data initiative even further with a massive marketing and CRM campaign. This process included launching a highly complex series of communications to guide members of the two pre-merger programs through the combination of the airline operations and the launch of the newly revamped MileagePlus loyalty program. As a result, United gained an unprecedented understanding of its customers (both inside and outside its loyalty program), and the ability to leverage that data to drive revenue and change the customer experience.

ECHO Award Winners

The DMA International ECHO Awards annually honor direct marketing campaigns that have excelled in direct response strategy, creativity, and results. Here is a look at eleven 2012 winners, who proved again that direct mail still can work very well if done right, especially when integrated:

Arts Centre Melbourne (Australia) wanted to raise funds to help children experience performing arts firsthand, but it faced an audience fatigued by donation calls for disaster relief. Recipients were surprised by a children’s book about “Sally” and her first show. The book, which was based on real-life case studies, played to the audience’s desire to share its passion for the performing arts and its desire to foster a new generation of performers and patrons. The gold-winning campaign increased donations 132 percent, nearly doubling the initial goal.

Travelers Insurance hoped to encourage agents to use its self-service direct marketing portal to boost out-going mail volume. The silver-winning campaign targeted agents who were not using the portal or weren’t taking advantages of certain important features. A newsletter educated them on how to use the portal and on results it could help generate. Using mail and email, the campaign kept in touch with agents over months and continued to share benefits and testimonials from other agents. Included in the communications were links to podcasts, QR codes leading to videos, and an instructional booklet. Mailings also offered discounts and special offers. Mail volume increased nearly 140 percent, well above the 50 percent target.

Austria Solar won bronze for its creative use of print, using its annual report to send a message of innovation. The piece doubled as a direct mail campaign that reached out to opinion leaders and journalists. The annual report, produced by Stefan Meier print shop, was printed using environmentally friendly, photochromatic colors that can only be seen in the sun and disappear after two to three minutes once out of the sun. The result was the first solar-powered annual report, and public response was extraordinary. The association received more than 400 requests from around the world for copies.

Lah! Unexpected Restaurant in Spain wanted to attract urban, well-heeled 30- to 45-year-olds to its Southeast Asian cuisine. In a market overflowing with Asian restaurants, it created a concept and campaign that invited guests to satisfy their curiosity as well as their appetite. Every piece sent had a connection to an Asian custom. Instead of coupons, the initial mailing included spices to be used as currency. It also sent another mailing with flower seeds to plant. Physical mailings and emails were often complemented by a website. Every month, sales increased by double digits, rising an astounding 49 percent.

Paul Hartmann broke through social taboos to promote its incontinence products in Germany. The campaign was aimed to reach medical editors and journalists with a simple mailing. Instead of a large press kit, the company sent a leaky fountain pen asserting that “incontinence can happen to anyone.” The visual appeal of the pen, and the obvious link to journalists and editors, caught recipients’ attention. The mailing generated a response rate of 22 percent, with 14 percent agreeing to a consultation and 6 percent agreeing to include the topic of incontinence in their publications.

Birla Sun Life Insurance hoped to increase sales of life insurance policies in India, where only 15 percent of the population is insured. A campaign targeted young married couples with a mailing that looked like a typical wedding invitation. Once opened, the invitation played the familiar Vedic Saptapadi mantras that recipients would remember from their own wedding. As they read through each of the seven traditional vows in the mailing, they were reminded of the promises made to their partner. The goal was to remind recipients of their responsibility to protect their loved one. The mailing generated a response rate of 14 percent and a conversion rate of 8.6 percent.

Solutors of Denmark wanted to increase sales of its SMART Boards among secondary schools. To promote the electronic chalkboard system, it used a customized direct mail campaign that reminded principals that students coming from primary schools expect to see SMART Boards. The mailing showed a student browsing the school’s site and led to a website where principals could log on to see SMART Board usage at local primary schools. Since losing disappointed students also meant losing state funding, Solutor pointed out that a SMART Board could retain students and pay for itself. The campaign resulted in a return 29 times the cost of investment.

Ikano Bank of Finland hoped to prompt passive credit card holders to begin using their cards again. The bank realized the key was to educate cardholders that their cards were valid at multiple retailers, not just at the store for which they were initially issued. A colorful direct mail letter was really a poster that caught recipients’ attention with the message that their card was worth more each month, thanks to bonus discounts at a retail partner. A website allowed consumers to sign up for the bonus and reminder emails kept interest up. The banks credit card transactions rose 13 percent in the first month.

Tryg needed to reach parents who needed to ensure their children, given a new law that meant many school children were no longer covered for accidents at school. The firm played the role of helper, spreading the word that many school children were no longer insured and thus not safe. A campaign sent direct mail and email to customers with other types of policies, and used online banners, Facebook ads, adwords, advertorials, and more to reach other prospects. All were directed to the campaign microsite where it was easy to get quotes and other information. Sales rose to 120 percent of sales the previous year.

Elou demonstrated more bronze creativity, this time in the business-to- business space:

The CRM/direct marketing agency wanted to increase the number of invitations to bids it received from potential clients, and it used a dimensional mailing to carry out the task. A mailing played on how hard the company fights for its clients, enclosing boxing gloves and a championship belt. Three days later, a representative followed up with a call. The185 boxes delivered were a real knockout, landing 51 meetings that resulted in 11 invitations to bid and two new clients. The campaign’s total ROI based on estimated earnings was 5.14 percent.

Vestas Wind Systems sought to promote wind energy as a viable solution to top management at large, carbon-conscious companies. Knowing the top CEOs they were targeting found Bloomberg Business Week indispensible, the company created an issue with personalized cover art, a letter, and loose insert for 657 chief executives. The letter included consumer research along with details on the recipient’s own company’s renewable energy consumption, and the insert led to a personalized URL where they could find more details and research about other companies and consumers. The campaign cut through to reach some of the world’s most difficult-to-reach CEOs.

Integrating Print Media

According to Julie Shaffer, VP of digital technologies for the Printing Industries of America, digital printing now is so mainstream that the PIA has renamed its Digital Printing Council, calling it instead the Integrated Print Media Center.

“It has become ubiquitous,” Shaffer explained. “When the DPC started in the late 1990s, we called it a ‘council’ because there were not that many members with digital print expertise [at that time].” With its focus on linking mobile technologies with direct mail, the group’s next Integrated Print Forum (IPF) is scheduled for mid springtime, May 14-15, in Pittsburgh. (Hurricane Sandy shut down the IPF slated for late October.) Registration open Dec. 5: www.integratedprintforum.org

In late January 2013, the Print On Demand Initiative comes to Vegas -- early-bird registration ends November 27:

PODi AppForum

January 28-30, 2013

Las Vegas

www.appforum.org