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PLANNING YOUR DIRECT MARKETING CAMPAIGN
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This month we'll explore a few of the most important aspects of the direct marketing planning process. After reading this tutorial you should have a solid understanding of the following:
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The primary components of your direct marketing mix |
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Priorities and how to allocate your time and effort |
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Estimating response rates and response rate breakeven points |
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How to obtain the cost of your direct marketing campaign |
Introduction
Direct marketing requires planning, testing and plenty of patience to get results. When you have a new set of direct marketing variables to work with, you must realize that it is only through experience that you that will come to learn what combination works best for that product or service.
So when you begin a new direct marketing campaign -- even if you have years of experience under your belt -- it's always important to expect that your first mailing will be your worst. Over the years, we have seen many companies give up after only one or two mailings. They get what they consider to be a "low" response rate and they conclude that direct marketing is not the right marketing vehicle for them.
We set ourselves up for failure because we think that the rate of return should be high. Yet, most managers have no idea what the average response rate should be for their product or service. In fact, many of our high-volume clients don’t even deal in percentages. They deal with rate per thousand. Many of them are ecstatic if they get back one response for every two thousand sent out. And we have also participated in mailings where we get 70% response because the offer was a confirmation for a free trade publication. So response rates are all relative.
For example, let's imagine that you have a $10,000 software product for sale. You launch a direct mail campaign that costs you $50,000 to mail to 100,000 managers. That campaign brings in just one customer. Your response rate is only .001%. Yet you have reached breakeven point, you have covered your costs and you have a new customer to cross-sell and up-sell to.
So don’t assume for even a moment that just because your first mailing wasn't successful, direct marketing doesn’t work for your products or services. Each new mailing will get better as you apply what you learned in previous mailings. And if you persist, direct marketing can pay you some of the biggest rewards, including a direct dialogue with your customers, excellent market data and the ability to directly measure the results of each campaign.
Here are just a few of the variables that will affect the results of your direct marketing campaign:
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The copy |
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The format |
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The timing |
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The offer |
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The mailing lists |
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The mailing list segments |
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The product and service marketing mix |
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The 40 / 40 / 20 Rule
There is a 40 / 40 / 20 rule in direct marketing that says the success or failure of any direct marketing campaign is due to the following mix of components:
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Your offer
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| 40% |
The mailing list
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| 20% |
Copy and graphics
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And today, many professional direct marketers feel this rule has evolved to 60% of the success or failure is due to your mailing list, 20-25% is due to your offer, and 10-15% is due to your copy and graphics.
Suffice it to say that 30 years of experience has shown us that your own mix will fall somewhere in between these percentages. Yet despite this fact, most companies spend approximately 80% of their time and effort on the last 20% -- copy and graphics.
And we must consider also that the offer is the most critical part of any campaign. For example, if you reach out to someone with an offer that says, “send me $50k and I’ll send you a bottle of coke”, no matter how good your lists, your copy, and your timing, nobody is going to respond. And many companies create offers that people just can’t respond to. Maybe your leads need another look before they respond. Maybe it’s just too expensive. Maybe they don’t have an easy way to respond. Maybe they need more information. It’s a leap of faith when people get a mailing from you to buy something-- especially when you have a high price point – so maybe they need to develop more confidence in your brand – get to know you a little better before they buy.
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