In the digital economy, it can be hard to figure out where direct mail marketing fits. While most businesses use direct mail in some form, many companies struggle to benchmark their direct mail programs, or plan strategy. To help out, Lob talked to 200 marketing leaders from 8 different industries to find out how they use direct mail. Here are a few of the lessons for beginners.
It’s Okay to Start Small
We were surprised to find that all the marketers we surveyed reported that their companies were using direct mail. Despite working in a range of industries in companies with anywhere from 300 to 10,000+ employees, everyone used direct mail, everyone was getting good results from it. Volume varied greatly — from 10,000 pieces to 500 million annually — but the effectiveness of campaigns didn’t depend on volume.
While our study covered enterprises, our results were good news for small businesses considering developing their direct mail programs, as well as larger companies. You don’t have to invest in a massive campaign to get results from direct mail. In fact, you’re probably better off starting with a small, sophisticated campaign than trying to scale up right away.
Use Direct Mail Where Conversion is Important
Despite being more costly than email, marketing leaders agree that direct mail has outstanding ROI and response rate. 64.2% of respondents agreed or strongly agreed that “direct mail delivers the best response rate of all the channels I use today,” and 60.7% rated it as having the best ROI of all channels.
This makes direct mail an ideal channel for marketing efforts aimed at customer acquisition, upselling, or driving pipeline. While our study found direct mail is effective throughout the customer lifecycle, it’s a good idea to start by using it to complement digital channels to provide additional points of contact.
For example, you could send discounts in the mail to customers who start an order but don’t complete it in addition to digital offers, or send notes thanking customers for their loyalty and offering them a free gift when they’ve gone a while without placing an order.
Go More Sophisticated, Not Bigger
While enterprises are sending a lot of direct mail, many companies have not advanced very far in terms of sophistication. A majority of respondents said they were able to use some sort of personalization in their mail campaigns, but only 17.2% used personalized offers and coupons, and only 8.4% included personalized images.
This presents a real opportunity for small businesses able to develop a personalized direct mail marketing campaign. By sending customers tailored offers, you can provide a superior customer experience, even compared to market leaders in your segment — even if you can’t budget for a massive campaign.
Invest in a Direct Mail Platform
Our study found that technology usage is uneven in direct mail. Only slightly more than half (53.7%) of respondents said they use a software platform to execute campaigns. However, those that did were more likely to rate their Return on Advertising Spend (ROAS) as superior to competitors, and their companies as more profitable.
Investing in a direct mail platform can enhance your mail marketing, enabling better personalization, quicker execution and substantial cost savings. Additionally, it can significantly improve tracking and attribution, enabling you to better measure the effectiveness of your direct mail campaign, and tune your strategy for maximum impact.
Anyone with a mailbox knows direct mail is still a crucial part of marketing. But how well do those glossy offers, catalogs and thank you notes really perform? To find out, we conducted the most comprehensive survey of direct mail yet. Together with Comperemedia, we interviewed 200 marketing leaders across 8 different industries to learn how well direct mail is doing today. Here are a few of the things we found out.
How Well Does Direct Mail Perform?
Even we were surprised by how much love there is for direct mail marketing. 60% of survey participants believe direct mail is more effective than email, and almost two-thirds of respondents told us that direct mail delivers the best response rate of any channel they use. Even judging by return on investment, direct mail appears to be head and shoulders above digital channels, with 60% agreeing or strongly agreeing that it had the best ROI of any channel.
Will Direct Mail Performance Continue to Improve?
Respondents were also enthusiastic about the future of direct mail marketing. 60% of respondents agreed or strongly agreed with the statement that, "it will be easier to target consumers with direct mail than any other channel" over the next five years.
Respondents anticipate this continued performance to drive more direct mail usage. Over two-thirds believe the companies focusing on direct mail will become more diverse over the next five years, and 60% expect their own organization to send a greater volume of direct mail in that time.
Unsure how much direct mail you should be sending, or what to budget on the consumer mailbox? You’re not alone. While most companies use direct mail, there’s very little information out there to benchmark your DM spend and plan future marketing investments.
To give you more insight, we talked to 200 marketing leaders working in enterprises all across the US. Here’s how leading companies are budgeting their direct mail spend.
How Much Do Companies Use Direct Mail?
While every one of our respondents indicated their companies used direct mail marketing, the volume they sent varied a lot, from less than 10,000 pieces to over 500 million annually. Most respondents sent between 10,000 and 10 million pieces of mail per year, with the largest group sending 500,000 to 1 million pieces annually.
However, it doesn’t appear that huge volume is necessary for results. The channel performed equally well for senders, regardless of volume.
Spending Stats Show the Flexibility of Direct Mail
Like volume, spend varies a lot. Out of every 12 participants:
4 spent 10-25% of their marketing budget on direct mail.
3 spent 25-50%
3 spent below 10%.
2 spent above 50%
What’s more illuminating is the way companies divided up their mail spend. While historically, direct mail marketing has focused on customer acquisition, our respondents indicated acquisition only accounts for 30% of their mail volume — about the same as customer retention programs. The rest of spend is divided evenly between advocacy/referral and win-back campaigns.
This shows direct mail is no longer a niche tool for acquisition. Mail campaigns are getting results across the entire customer lifecycle, and companies are budgeting accordingly.
Budgeting for Direct Mail Technology
Technology is becoming an increasingly important part of direct mail campaigns. 53,7% of respondents use a software platform to execute their direct mail campaigns, and 48.3% work with a commercial printer. As companies continue to develop their mail campaigns, technology 1is likely to become an important differentiator, with direct mail platforms enabling companies to improve customization, cut costs and decrease campaign lead times.
Running an analog channel in a digital world can be a challenge.
To understand that challenge better, Lob partnered with Comperemedia, interviewing 200 marketing leaders on how their companies use direct mail. Across the US, we found strong belief in the marketing value of direct mail, with more than 60% seeing it as the channel with the highest ROI. However, as an analog channel, companies still face a range of challenges getting the best value from direct mail.
What Are the Three Biggest Challenges to a Successful Direct Mail Program?
The biggest single challenge was the cost of running a campaign, with 55.7% of respondents rating it as a major challenge. After that came maintaining reliable address lists (49.8%), and the time it takes to set up a campaign (45.3%).
Although it may not be obvious at first glance, all these pain points have something in common: they’re all related to outdated direct mail processes.
Several factors can make direct mail costly: inefficient in-house operation, the lack of bulk pricing and complex vendor management. Historically, the main way for companies to decrease direct mail was by setting up bulk pricing — something that isn’t appropriate for all companies. (Lob makes bulk pricing available to everyone, whatever volume you send.)
Long lead times and struggles with maintaining address lists are likewise signs of inefficient internal mail processes. Companies that have not adopted a sophisticated direct mail platform often resort to old-fashioned address management, manually copying and pasting addresses from spreadsheets (this also increases cost, as these companies typically lack the ability to reliably confirm addresses, leading to a lot of wasted mailings.)
Similarly, paper-based creative processes or complex vendor relationships with third-party agencies can significantly slow down the direct mail process.
What’s the Outlook For Direct Mail?
Despite the challenges, our respondents were optimistic about the future of direct mail. 61.9% believed that they would be able to overcome high campaign costs over the next three to five years, and 68.3% believed that they could resolve address quality issues as well.
A majority of survey respondents also predicted their organizations would send more direct mail over the next five years, and more than two thirds of respondents believed we’d see more diversity in the companies using direct mail as a core marketing channel over the next half decade.
This blog provides general information and discussion about direct mail marketing and related subjects. The content provided in this blog ("Content”), should not be construed as and is not intended to constitute financial, legal or tax advice. You should seek the advice of professionals prior to acting upon any information contained in the Content. All Content is provided strictly “as is” and we make no warranty or representation of any kind regarding the Content.
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