Take direct mail to its full potential

by Paul Sumner, Communications Director at Go Inspire Group

What does truly effective marketing look like? And how many marketers are taking the time to find an answer? It is all too easy to assume that traditional media channels are obsolete, especially as mass email send-outs can be rapidly designed and cheaply dispatched at the click of a button. Reports can be automatically generated with no effort required, presenting open and click-through rates as measures of success. In fact, the average open rate across all industries is 16.19%, while the average click-through rate is 7.06%.[1] However, the average response rate is 0.12%, while direct mail fares better with a response rate of 4.4%.[2]

Modernising marketing metrics

Firstly, marketers should be asking whether these metrics carry value outside of the marketing department, and whether there are alternative measures. What if incremental revenue generated was used to gauge the success of a marketing campaign? Incremental revenue is defined as the additional spend directly resulting from a campaign, net of campaign costs. This is a measure of net commercial outcome that really strikes home the return on investment of a company’s marketing budget, and speaks to people across the business.

Secondly, rather than comparing direct email with direct mail, businesses should consider how to draw maximum value from each. At Go Inspire Group, we noticed there was a lack of media-neutral research available so we recently carried out a randomised control trial (RCT) testing the incremental revenue generated by direct mail and direct email campaigns, in isolation and when combined. The findings show that a combination of mail and email produces greater returns than either channel on its own.

The lasting power of direct mail

Clearly there is opportunity here that many marketers may be missing out on. Our next RCT took a closer look at direct mail in particular, and how personalisation can lift net revenues. To avoid bias in the RCT, we selected a partner client offering a product range that appeals broadly across the population regardless of age, gender, wealth or geography.

Before we look at the trial results, personal experience tells us that direct mail lasts longer. Most of suffer from email fatigue and receive far too many marketing emails, that often go straight to Junk. On the other hand, direct mail is received with more interest, since it is less frequent, usually more design care has gone into its development and it offers a tactile dimension. This is confirmed by external research which found that 57% of recipients immediately open their direct mail, and 24% put it aside to look at later.[3] Moreover, even after 28 days, 27% of direct mail is still ‘live’ within the household.[4]

Inspiring buyer action

So how can marketers increase the likelihood of a purchase? Almost any element of a direct mail piece – including the envelope – can be personalised; for instance, marketers can insert individual names, images relevant to the customer’s profile, personalised discounts and event different products according to customer potential. Companies can go even further by offering personalised barcodes that trigger tailored offers, producing personalised catalogues or brochures, or bringing together people of a similar profile with segmented even invitations.

Go Inspire’s RCT tested two levels of variability in sequential months against a control:

  • Different levels of design ‘vibrancy’ across all segments
  • Photographic and messaging creative variants tailored to recipients’ areas of product interest, historical behaviour and potential

The control was a generic mailer with no variation of content between recipients. The ‘uplift’ was defined as the improvement in incremental revenue between the control and the more highly personalised mailing piece.

The results

  • The RCT found that increasing design vibrancy of a direct mail piece, even if the messaging is not tailored to the customer segment, increases overall incremental revenue by 20%.
  • However, increased revenues resulting from improved designs should not be considered a given; increased vibrancy actually put off high-value, high-loyalty customers from spending, reducing incremental revenue by 50%.
  • Tailoring imagery to recipients’ individual area(s) of product interest lifted overall incremental revenue by 128%.
  • Here too, the importance of avoiding assumptions was apparent, as revenue uplift varied between product categories from 72% to 197%.

Conclusions

Crucially, response rates did not significantly change as a result of personalising direct mail, however, there was a notable change in behaviour, as better targeting increased spending levels per respondent. Generic mailing is therefore failing to produce optimal commercial outcomes, reducing the value of business’ marketing investment. The randomised controlled trial makes it clear that tailoring messages and imagery to ensure that each recipient receives relevant marketing has the potential to increase net commercial outcome.

Marketers should use this evidence as a base to conduct their own assessment of their product/service offering and how it appeals to different population groups. Emotional appeal, product necessity and brand attraction are all examples of factors that may influence outcomes. A greater understanding of customer behaviour across segments then highlights where marketers can focus spending. Lastly, bringing email into the mix can take revenues even higher if both direct mail and email are carefully designed and employed in tandem. Such an approach will encourage lasting loyalty, if customers consistently receive pertinent and interesting information in their online and offline mailbox.

[1] Average Industry Rates for Email as of December 2018, Constant Contact, 28 January 2019

[2] Why Direct Mail Marketing Is Far From Dead, Forbes, 30 August 2017

[3] 2018 Direct Mail Facts & Figures – Jicmail Report, Romax, 31 January 2018

[4] Why Direct Mail is Delivering, Direct Mail Association, 23 October 2018