Direct Mail: Why It Works And How To Use It
by Tom Egelhoff
Suppose you were a real estate agent and every morning when you walked in your office, there on your desk, would be a list of people ready to buy a house that day. They qualified for the credit, and were ready to buy. All you need to do is show them your listings.
Would that make your life easier? What would a list like that be worth to you? Well, that's sort of how direct mail works.
Who Is Most Likely To Buy?
As far as I know, no such list exists. But what you do have is a direct mail list that will tell you, based on past history, surveys, industry studies and collected information, a profile of the person most likely to purchase a home.
The most likely home buyer might be X years old, is married, has X children, makes X dollars per year, has X years of education, favorite pastime is X, hobby is X, favorite car is X and so on.
Junk Mail: Don't Ya Love It?
Junk mail. Unwanted mail that fills your mailbox day after day that you must sort through to get to the real mail...the bills. Did you ever stop and consider, "How did I end up on this mailing list?" "Why are they sending this stuff to me?"
Why? Because you fit the profile of the person most likely to purchase that product based on past experience. Does your neighbor receive the same junk mail you do? Except for the Publisher's Clearing House mailing probably not. Why? Because you are different from your neighbor. You have a different model car, different clothes, different hobbies and interests. They may receive mailings on outdoor products and you receive mailings on books and indoor hobbies. They golf you hunt and fish. They like beer, you like wine.
How Did I End Up On This Mailing List?
The two most popular means of getting on mailing lists are: Using a credit card to purchase something or filling out a warranty card when you buy a new product. Third is magazine subscriptions.
Do you have an American Express Card? American Express allegedly keeps 450 pieces of information on each cardholder. Each time the card is processed, you decide by your purchases, which sales offers will be included with your next bill. Direct mail is major business. More money is spent each year on direct mail than any other media. Why? Because it works.
How Does Direct Mail Compare With Other Advertising?
Let's suppose that one of the magazines your target market reads is Time Magazine. I know as a small town business you aren't going to advertise in Time. Humor me to make this point. You want to place a full page ad in Time. Cost: $75,000. Let's say, for this exercise, that Time has 500,000 subscribers. So, our message is going to reach 500,000 people, right?
Well, it won't reach the people who just read a portion of the magazine that doesn't include our ad. It won't reach the people who go right past our ad looking for something else.
I also said that Time is ONE of the magazines our target market reads. Actually our demographics only fall within a small cross section of the total Time readership. Our target market might be ages 18-45. Times age demographics might be 18-65.
Your market is in there but it is a portion of the overall demographic. You are wasting your money reaching people between the ages of 46 and 65. They are not your customer. And last but not least, our ad is there with our competitors.
Why Does Direct Mail Work?
It's efficient and cost effective. If your research and profile of your target customer is correct you have eliminated contact with unqualified customers. Huh? What does that mean?
Each time you refine your mailing list you eliminate more and more non-customers. Every non-customer you eliminate lowers the cost of the mailing.
For example: My target market is left handed Italians, who live in towns of less than 9,714 people, in two story houses, on the south side of the street, own female Clydesdale horses and are married to women named Inga. Does this list eliminate most of the population? Yes it does. But why would I want to spend a ton of money on conventional advertising hoping I would reach this small market segment.
If I want to reach homeowners, why would I waste money advertising to renters? Don't you do this now with your current ads on the radio and in the newspaper? Are there radio stations renters aren't allowed to listen to that I could advertise on? Newspapers renters aren't allowed to read?
The more I know about my customer, the easier they are to reach and sell. The more non-customers I can eliminate from my list the lower the advertising cost becomes.
Why Does Direct Mail Work In Small Towns?
This is really a no brainer. Direct mail really becomes an effective weapon in towns of 50,000 or less. The smaller the better. In a town of 50,000, how many potential customers do you have? Let's say it's 20% for this exercise. The other 80% are the wrong age, don't need your product, deal with your competitor or don't buy from you for a variety of reasons. It's sort of the old 80-20 rule. 80% or your business comes from 20% of your customers.
Twenty percent of 50,000 is 10,000 potential customers. Do you mail to all 10,000? No. These are only potential customers. How many fit the exact profile of your ideal customer? The people who buy from you now and keep you in business. It may be 8,000 or it may only be a few hundred. But that's who gets your offer.
How To Use Direct Mail In Small Towns
If you are a regular here, you've heard me say many times, the purpose of any ad is either to promote name recognition of the business or a "call to action." By call to action, I mean, bring in a coupon, make a call, come down to the business, etc.
My favorite is postcards. Give the customer a reason to keep the postcard. A drawing, valuable coupon or some other reason to keep it.
Here are a variety of reasons why I like postcards so much:
Everybody looks at them. You have 3 seconds to make your point.
They are a miniature billboard.
They make perfect coupons.
People who would never think of picking up a letter off your desk think nothing of picking up a postcard and reading it.
Your message is exposed to many people as it travels through the mail and around the office.
At .20¢ they are a penny more than bulk mail and go first class.
At .20¢ you can do small specialized mailings without having to qualify for bulk mail. No pre-sorting or bundling.
In black and white on colored card stock they are inexpensive to produce.
Mail 500 or more with presorted bar coding and nine digit zip and the postage can go down as low as .14 1/2 cents. (check with post office for exact pricing and restrictions)
Add "Address Correction Requested" to your return address and undelivered mail will be returned by post office with new addresses updated free.
Even with printing and postage cost can often be less than newspaper or radio.
Some Final Thoughts On Direct Mail
The main thing to remember about any advertising is that nothing works in every situation. Direct mail is not the answer to all advertising problems and may not be the best option for your business. Compare costs and possible effectiveness of all types of advertising. Advertising is always a test.
Return to the "Direct Mail Advertising Checklist" Article
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Based in Bozeman, MT, Tom Egelhoff is the author of How To Market, Advertise & Promote Your Business Or Service In A Small Town, and The Small Town Advertising Handbook: How To Say More And Spend Less. He is also a seminar and workshop presenter and trainer. He may be reached at 888-550-6100 or PO Box 271, Bozeman, MT 59771-0271
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