Back to the future with direct mail marketing

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Many years ago, before the Internet’s advent, “direct marketing” usually meant sending mail. (Canvassing and telemarketing were also options, but these stretched into the scuzzy territory, especially for the poor or perhaps sociopathic souls who would actually do the door knocking and calling.)

Specialist marketers developed an array of techniques to reach the target audience, including effective direct mail writing formats. (For example, always use a PS, and think in terms of “you” rather than “me” in the messaging — and it is okay to write long, because the longer the story/copy, the more engagement and thus higher response rates).

And there were key variables that could be tested: The list, the marketing message, even the paper stock and format for larger mailings.  You would send a sample mailing to two random parts  of the list, and wait — because of course you couldn’t tell the results within minutes, as can be the case for online marketing.

These days, this marketing approach has been relegated to a secondary level, but still has a place in the ecosystem, unlike the old directories such as the Yellow Pages, that have disappeared into the Google ether.

And they certainly are effective, when applied properly.

Take, for example, our Ontario Construction News launch. Although I visualized a role for Google ads, strategic alliances, and association tie-ins in our initial marketing plans, I only realized the need/value for direct mail when, after an initial flurry of orders, things dried up.

It dawned on me that we had a serious “reach the market” problem. The people ordering the specific legal notices we could at a significant discount probably weren’t reading our online newspaper, and they wouldn’t be directly engaged with relevant trade groups or associations. The few orders we had received came from proactive construction office managers, or because someone senior in the organization had directed the office employee to consider the option to the long-standing and routine process. (We discovered this key information by informally polling our earliest clients — and I’ve baked into our systems a more formal new client survey to help assess things further.)

These observations led to a eureka moment. Like our publication, the competing organization (there is only one — we are breaking a former monopoly, which certainly simplifies the marketing challenge) needs to post the key information from the legal forms on a public database. This information contained the business name and street address of our potential clients, but didn’t offer personal contact information, phone or email addresses.

The data is updated daily, Monday to Friday.

My solution: I asked my offshore administrative assistant to begin compiling the data from the daily public report. We discovered one important thing very quickly; many potential clients are high volume users of the service; sometimes upwards of four to eight times a month. This detail certainly made marketing decisions easier, because we could quickly determine the top 100 key potential clients.

But rather than being selective at the outset, we began sending a daily batch of letters, including a cover note, a flyer, an a copy of the relevant legal form, to the addresses on the list, blindly to the “office manager” at the contractors.

It took a couple of weeks, but then the calls (and orders) started happening. Not a flood. Although we are not tracking things as well as I’d like, I’d estimate response at between 1 and 3 per cent of the sendings, which is a traditionally normal level for direct mail marketing.

With postage and copying/paper, plus an allowance for staff time, I would estimate our initial marketing cost at about $1.50 (Canadian) per letter. At 2 per cent response rate, that means we would need to pay $1,500 to reach 1,000 people and obtain 10 to 15 orders.

Here is where the numbers get interesting. Each order is $250 so there is an immediate yield, less the obvious business expenses. But where the story gets interesting is the lifetime value of the orders. Several of our new advertisers have already purchased two, three or even four notices. Each high value new client becomes a long-term and often high-volume addition to our revenue stream.

Following the initial letter marketing, I arranged to send a postcard to v1,000 names for an additional $1,000 fee. I would like to say the results here have been equally impressive, but despite intending to build a tracking method to the marketing, I cannot measure the results. (My error in designing the tracking tools.)

The next campaign will be to the “Top 100” — names we know have purchased multiple advertisements in the competing publication, who have not done business with us yet. I’ve devised a more expensive marketing piece, including a gift card for a cup of coffee — and expect the mailing and other costs to reach $4.00 to $5.00 per piece.

But we can tell the lifetime value these clients, so even a one per cent response rate would be highly profitable.

I realize these methods work best when the order size/volume is low enough to induce action without multiple stages of communication, and virtually all marketing forms are a challenge when you are selling high-cost services to a small and highly focused market. (If you are selling $15 million school construction projects, I doubt you’ll get too many orders with a direct mail postcard.)

On the other hand, these models can be effective if you know your market. It can include previous clients, for example, for whom you wish to offer maintenance or upgrade services, or a group of owners or contractors who could reasonably benefit from your consulting, sub-trade or supply services.

When you can measure the results, you may find old-fashioned direct mail marketing isn’t so old after all.

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