How to Reduce the Waste Factor in your Direct Mail

By: Dan Kennedy on: February 5th, 2010 8 Comments

Yesterday I covered list selection, which is the starting point of the direct mail marketing process.

Today, I want to hit on the development of a ‘matching offer.’

The offer you make in a direct mail package needs to be carefully thought out and matched as closely as possible to the interest, needs, and motivations of the list. And as a general rule of thumb the more specifically matched the offer and list are the higher the response rate.

Here are two simple examples to help you understand this idea.

Example one, John’s Sporting Goods Store mails a brochure about his upcoming sale on skiing and hiking equipment to every resident in his store’s neighborhood. His offer may be great, 25% to 50% discounts, a free gift for everyone who comes in, but his response will still probably be very low because of a high waste factor in his mailing.

Let’s say John mailed 10,000 brochures. As few as 15 to 25 people may come in. A response rate of only one half of one percent or slightly worse but that’s deceptive because of the waste factor.

Of the 10,000 residents mailed only 1,000 of them maybe interested in skiing or hiking. If that’s true and fifteen people come in that may represent one and a half percent response rate, which is usually acceptable.

Example two, John’s Sporting Goods Store mails the exact same offer as in example one but he only mails a thousand brochures to a list of people in his store’s neighborhood who are subscribers to Skiing, or Hiking, or Field and Stream Magazine.

In example two John’s list acquisition cost will be much higher than example one. In example one the resident list may cost only $35 to $40 per thousand names. $350 to $400 for the 10,000 names. In example two the list may cost a $150 or even $200 for just the thousand names and in example two the cost of printing the brochures will go up dramatically per unit.

In example one the 10,000 brochures may cost only a nickel each, $500 total. In example two, the thousand brochures may cost twenty cents each, $200 total.

However, in example two John saves almost two thousand dollars in postage by calling the waste factor out of his mailing. Overall he spends about 2,500 dollars less with the sophisticated approach in example two and gets the same results as he would with the costlier, less sophisticated example one.

Most small businesses and many big businesses waste substantial sums of money by taking the less sophisticated, easier approach. If the typical small business like John’s Sporting Good Stores conducts just four direct mail campaigns a year and there’s a $2,500 differential available each time that’s $10,000 a year that can be wasted or saved.

$10,000 is a lot of money to a small business. Part of the magic of the sophisticated approach is the list to offer match. But to be successful you must also develop a very good attractive offer.

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    ABOUT THE AUTHOR:

    Dan Kennedy is internationally recognized as the 'Millionaire Maker,' helping people in just about every category of business turn their ideas into fortunes. Dan's "No B.S." approach is refreshing amidst a world of small business marketing hype and enriches those who act on his advice. For more money-making marketing tips, tactics and strategies, go to www.GKIC.com

    8 Responses

    1. Charles Ra says:

      only mails a thousand brochures to a list of people in his store’s neighborhood who are subscribers to Skiing, or Hiking, or Field and Stream Magazine.
      list acquisition cost will be much higher than example one
      Part of the magic of the sophisticated approach is the list to offer match. But to be successful you must also develop a very good attractive offer.
      good advice Dan
      thanks

    2. Elizabeth says:

      Its amazing how many business owners don’t get this. A former client stopped using direct mail because of the cost an instead chose to use email blasts to a list he purchased of 50k email addresses for a fraction of the cost to print mailers and send them out. Not a segmented targeted email list either. He told me how the list broker tried to convince him to target specific prospects with certain interests and he didn’t see the point. Some people don’t appreciate the value of targeting the right market.

    3. Different “overlays” like “people that have a backyard pool” and an overlay of “people that play golf” would cost more money for the list, (close to $1 per name), but when you mail them a letter that addresses them on both fronts, you are that much more matching you r message to your market.. and will get a much better response!

      “Whether you are playing golf or swimming in the back yard pool.. you need a new security system from XYZ Security!”

      When the letter talks directly to the person getting it, the response is so much stronger…. a pity on the people wasting money mailing to wimpy lists!

    4. Donna Kopf says:

      It makes so much sense to only advertise to people who might actually be interested in what you’re saying. How did everyone learn to blindly market everyone in the first place? Thank you Dan for un-doing years of dumb, ineffective direct marketing advice.

    5. Small Business owners need to cut the waste out of their marketing costs now more than ever.

      We all have to resist the urge to “try and get as many customers as possible” or the feeling that “my offer is so good that everyone will want it” and discipline ourselves to more narrowly target our marketing.

      Thanks for the reminder, Dan.

    6. Rob Anspach says:

      yep more isn’t always better…focus on the quality not quantity of your marketing

    7. Tim Little says:

      Love your Website and Dan Kennedy!

      This only proves that you can never spend to much time researching the foundation of any campaign the List. Seldom do business professionals spend the time to analyze their best customers. The top 20% that spend 90% of the money that come back frequently or that purchased from you in the last 90 days.

      From this very basic information you could draw a profile of the best mailing lists and test the most profitable segments.
      Not allowing a professional to help you is like burning your hard earned cash.

      Tim Little
      Publisher, MArketingListBroker.com

    8. Neo says:

      Creative piece ! I loved the information ! Does someone know where my business could possibly get ahold of a template a form example to work with ?

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