Maximizing Direct Mail Marketing ROI

Despite the proliferation of digital channels, marketers are increasingly turning their attention back to a tactile form of communication - direct mail. The 2023 State of Direct Mail report reveals that marketers have never been more positive about the unequivocal impact that direct mail has on their results.

The driving force behind this shift?

A compelling return on investment (ROI). Direct mail is not just holding its own in the marketing mix; it's outperforming other channels. A significant 74% of marketers agree that direct mail delivers the best response, conversion rates, and ROI of any channel.

But, let’s look at why direct mail ROI is high and why marketers need to invest in this channel that delivers results.

It's what consumers want from marketing teams

Every year, we like to survey both sides of the direct mail marketing equation: the marketers creating the direct mail campaigns and those receiving them. Not only do we find marketers praising the channel, we also see consumers tell us what they like about direct mail - as well as what gets them to take action on a marketing message.

Let’s look at some key statistics from the consumers’ side as to why direct mail marketing has a high ROI.

• The report shows that 80% of consumers share direct mail with their family and friends
• 64% of consumers say that direct mail has inspired them to take action including exploring websites and reviews or making a purchase
• 65% say an offer or promotion caught their attention. Offers are key to get recipients to open and read direct mail
• Personalization continues to be a key element for marketing success in direct mail. 68% of consumers are more likely to engage with a message/communication from brands that are personalized to them

Consumers are telling marketers exactly what they want when it comes to direct mail marketing.

Marketers’ goals meeting consumers’ needs

Not only do we poll consumers about what makes direct mail marketing successful, we also talk to our own internal team of direct mail experts on the Lobcast Podcast. Hear from Senior Customer Success Manager, Julia Lovett, about what types of direct mail campaigns have a higher ROI, are valuable for both marketers and consumers, and what metrics marketers should look at to better analyze and understand their ROI.

Highlights from episode 17 of the Lobcast Podcast: Marketing ROI & Mai Tais

• The most successful direct mail campaigns are in win-back, referral programs, and hand-raisers (also known as In-market leads)
• There are three key metrics to analyzing direct mail ROI: Response rates, lead rate, and sales rate

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Recommended reading: Direct Mail ROI: Ultimate Guide to Maximizing Results

The increase in direct mail marketing spend

We know consumers engage with and respond to direct mail. So, how are marketers investing in the channel?

In 2023, 58% of marketers reported allocating a larger portion of their marketing budget to direct mail than the previous year. This notable increase is a testament to the growing confidence in direct mail as a high-performing marketing channel.

A few factors are driving this increase in direct mail marketing spend:

• Rising Competition: One key driver is the escalating competition for consumer attention in the digital space. Amidst the digital noise, direct mail stands out for its ability to make a tangible, personal connection with consumers.
• Rising Inflation and Costs: Inflation and rising costs in other marketing channels are also contributing to this shift. As digital marketing costs continue to escalate, direct mail presents a cost-effective alternative with a proven high ROI.

The 2023 State of Direct Mail report also highlights that smaller companies, in particular, are more likely to increase their direct mail budget. This begs the question, what does that budget include?

Software platforms

Another significant catalyst propelling the shift towards direct mail is the adoption of software platforms for campaign execution. Based on the 2023 State of Direct Mail report, nearly one-third of retail companies (32%) are leveraging software or technology platforms to orchestrate their direct mail campaigns.

These platforms are game-changers, enabling marketers to automate their campaigns, tailor their messages to the individual level, and monitor their results with greater precision. The result is enhanced campaign effectiveness and a streamlined process to measure and manage direct mail expenditure.

81% of marketers who utilize a software platform for direct mail campaigns agree that it yields the best response rate among all the channels their company employs today. This high level of agreement underscores the effectiveness of integrating technology with traditional marketing methods.

However, the picture changes when we look at marketers who do not use a software platform for their direct mail campaigns. For these respondents, the agreement level drops to 70%. While this is still a substantial percentage, the difference is noteworthy. It suggests that using software platforms in direct mail marketing can enhance response rates, making these campaigns even more effective.

In essence, integrating technology into direct mail marketing is not just improving the efficiency of campaigns but also providing marketers with the tools they need to optimize their marketing spend effectively.

Bringing it all together

As the marketing landscape evolves, marketers are keen on modernizing their direct mail processes. According to the 2023 State of Direct Mail report, there are several key areas that marketers are focusing on for improvement.

Firstly, there's a strong emphasis on enhancing the design, copywriting, and calls to action in direct mail pieces. Marketers understand that a compelling design and persuasive copy can significantly increase the response rate of their campaigns. This ties back to meeting consumers' desires as offers are key to get recipients to open and read direct mail.

Secondly, marketers are looking to better integrate their direct mail efforts with their digital campaigns. This integration allows for a more cohesive marketing strategy that maximizes the strengths of each channel. This ties back to the finding from consumers that 64% of consumers say that direct mail has inspired them to take action including exploring websites and reviews or making a purchase. Perhaps direct mail is a more cost-effective brand awareness play to drive website traffic than variable PPC campaigns.

Increasing personalization is also a priority for marketers. A data-driven approach to personalization allows marketers to create highly targeted campaigns with messages tailored to individual consumers' interests. Remember, 68% of consumers are more likely to engage with a message/communication from brands that are personalized to them.

In essence, marketers are not just using direct mail as a standalone strategy. They are integrating it with their digital efforts, leveraging technology, and focusing on personalization to create more effective and modern direct mail campaigns that consumers want to engage with.

Recommended reading: The Real ROI of No-Code and Low-Code Marketing Platforms

Recommended reading: A Conversation with Lob Leadership on Consumer Insights on Direct Mail

Recommended listening: The Lobcast Podcast: Marketing Optimizations & Old Fashioneds

What do your customers want from direct mail?

Discover what consumers think about direct mail marketing and get some actionable tips to put those insights to work in your direct mail marketing campaigns by downloading the 2023 State of Direct Mail Consumer Insights report.