Direct mail boasts a response rate of 9%, according to the ANA, blowing other marketing initiatives like email (with a response rate of less than 1%) out of the water. If you’re spending outrageous amounts of money on your direct mail campaigns, however, that response rate may not be enough to keep you out of the red.
Finding easy ways to lower your direct mail cost will help you take advantage of that 9% response rate without bleeding your budget dry. If your current processes and technologies are wasting time and hurting your ROI, consider how you might reduce your direct mail costs with these tactics.
1. Understand typical direct mail costs
Before you can lower direct mail costs, you have to know what expenses you’re currently facing. Between design and delivery, direct mail involves a number of different costs.
Copywriting and design
Design and copy are the first things your audience sees when they take your mail out of the mailbox. Considering it takes less than a second for people to form a first impression, that design and copy better be good.
Both outsourced and in-house copywriting and design cost you time and money, though. According to the Editorial Freelancers Association, the median rate for copywriting is between $61 and $70 per hour. Designers have similar rates—upwards of $65 an hour. The best of the best can charge upwards of $150 per hour.
And if you’re going in-house, remember, employee time is money. Let’s say there are 1,920 working hours in the year and your average employee gets paid $60,000.
$60,000 ÷ 1,920 hours = $31.25 per hour
Just because that hourly number is lower than the average for contractors doesn’t mean going in-house is always more affordable. In fact, if your employees aren’t expert writers or designers, they’ll need more time to complete the project; not only will you be paying them for more hours than a freelancer, but you’ll also be taking them away from their other tasks.
To lower direct mail costs, have these freelancer rates on hand and calculate employees’ hourly rates to determine if in-house or outsourcing will be more cost-effective.
Even though the per-unit price of both stamps and printing often goes down as your mail quantity increases, your overall cost still increases significantly the more pieces you mail. But when you find a company that offers flat monthly rates for mailing, you can send more mail without spending more money.
A regular postcard costs $.36 to mail with the USPS. Pretty cheap. Now, for simplicity’s sake, let’s use Lob’s per-unit price of $.41. That would mean the postcard + postage costs $.77 in total. If you have 6,000 postcards to mail, you’re about to spend $4,620 on a medium campaign.
($.36 + $.41) x 6,000 = $4,620
Instead of paying for individual stamps, customers on Lob’s Growth Plan pay a flat monthly fee of $480 that includes up to 6,000 mailings. The volume of postage you need doesn’t affect your total cost, and the per-unit cost goes down. You can mail 6,000 postcards at $.41 each for $2,940 instead of $4,620.
($.41 x 6,000) + $480 = $2,940
That’s over $1,600 in savings for the same number of pieces.
Adding up these general costs will help you get a better sense of where your money is going, so you can find ways to lower your direct mail cost.
2. Evaluate direct mail costs against industry benchmarks
There is no one-size-fits-all direct mail campaign. Knowing what those in your industry spend on direct mail will give you a better idea of what your average spend should look like and help you gauge whether you’re overspending.
A local retail business sends 500 postcards a month to addresses directly around their storefront. Their budget might look like this:
A local politician running for city council sends campaign letters to 3,000 residents in their district every month. Their budget might look like this:
A bank sends forms to 100,000 of their customers every month. Their budget might look like this:
Still not sure what your budget should be? Tap into your network! Reach out to other marketers in your industry to find out what they’re investing in direct mail.
3. Use templates and professional designers
Hiring quality designers to create your direct mail may be somewhat expensive upfront. But it lessens the likelihood you’ll have to spend your time redoing their work (or paying someone else to redo it), which saves you time and money.
Even when hiring professional designers, there are still ways to save money — haggling with the designers is not one of them. Trying to do so can damage your relationship with your contractors, ultimately costing you more time and money in the long run if you have to scramble to find a replacement. Consider these better alternatives for saving money on design:
- Lower content design hours by finding a direct mail platform that offers HTML templates and the ability to test merge variables.
- Have a designer design a template that can easily be adjusted in-house for future campaigns. Make sure all templates are accessible and easy to use internally. For example, they shouldn’t be in Adobe InDesign files if your employees don’t have access to that tool.
- Ask your designers how much time they need to do their best work and avoid costly revisions, then give them that time.
Not sure where to look for a designer? Ask for references from your network or use trustworthy sites like Creative Circle to find quality designers you can trust.
4. Verify your address lists upfront
Getting that postcard marked return to sender is never fun. Verifying addresses upfront will help you make sure you don’t waste money by sending mail to an address that doesn't exist.
Verifying addresses manually can take hours or days, depending on how long your lists are. Instead, look for address verification software with flexible, pay-as-you-go pricing. Lob’s plans start with a flat rate for a set number of requests, then charge pennies or less for additional requests, so you don’t have to switch plans. Once you’ve verified your lists, refresh them regularly to ensure they’re up to date.
5. Update your processes and automation
Outdated, manual direct mail processes will make you slow and inefficient. That costs you time and money. Instead, find a platform that can automate the personalization, printing, and mailing processes. You can also lower print costs by using a platform that has a print delivery network (PDN). That way, you can send 100 or 1 million post cards—at the same rate.
Lob does all of this, and it can be integrated into your current systems to ensure your direct mail works in tandem with the rest of your marketing and communications technology. This digital transformation can lower your direct mail costs by saving you time through automation or replacing outdated and costly software.
6. Pay attention to regulations
Healthcare and finance industries have many regulations, especially when sending out personal information. Tier 4 HIPAA violations alone can land you with $1.5 million in fines in a single year. And in 2020, Goldman Sachs alone was fined €3.30 billion for AML non-compliance.
To avoid these fines, familiarize yourself and your employees with healthcare and finance regulations, like HIPAA, KYC, and AML, that impact direct mail. Consider investing in training programs for your employees, and find a platform like Lob that actually helps you stay compliant. No matter how much you lower your direct mail cost elsewhere, it’s all moot if you get fined.
7. Track results to optimize future campaigns
By tracking your spending and direct mail performance, you can continuously optimize your process and budget to save more money on future campaigns. But you can’t stalk the postal worker or your recipients—so how do you know if your direct mail is working? You test!
A/B testing helps you see what works so you don’t waste time and money just guessing. Add unique URLs, phone numbers, or QR codes to your direct mail. That way, you can see exactly how many leads were a result of your campaign. You can also find software that offers in-transit tracking features and integrates with your current technology.
Want to test more variables? Find a direct mail platform with modular HTML templates and multivariate testing capabilities that allow you to create multiple variations without redesigning from the ground up.
A/B and multivariate testing aren’t just for marketing, either. For those businesses that use direct mail for non-promotional communication, A/B testing can help you uncover what format, design, or copy gets a higher response rate and repeat those factors in future communications. That way, you can spend your money on campaigns that bring you the highest return.
Once you’ve gathered the results from the first campaign, use that data to optimize your next one. Repeat the process every time to continually optimize for better direct mail cost and ROI.
Is direct mail worth the cost?
Short answer: yes! Between the 9% response rate and the 29% return on investment, direct mail is worth every cost involved. And as we’ve covered, there’s room to minimize these expenses while still keeping your campaigns effective. Platforms like Lob can help you cut costs without cutting corners.