Thursday, January 14, 2010

Increasing response using the 40-40-20 rule

In days gone by, businesses sent out a direct mail piece to everyone in their area. It was called a saturation mailing and is still done today in some circumstances. The problem is, a saturation mailing is just that. EVERYONE in your area with no regard to their actual interest or ability to buy what you are selling are sent your direct mail offer. In those days a 1 - 2 % response rate was expected and most of the time and effort in putting the mailing together was focused on the direct mail piece itself.

Well, times have changed. Typical response rates have dropped to .1 to .3% for untargeted direct mail. The increase in direct mail competition is high as you can see in your mailbox each day. So, with costs going up and response rates going down, what can you do to become more effective in your direct mail program? Like in real estate, direct mail has two key mantra's...FOCUS FOCUS FOCUS and TEST TEST TEST. What do these mean?

Basically, Focus centers on the shift from a design mentality (what it looks like) to an offer being sent to the RIGHT market segment. This is where the 40-40-20 rule comes in. You need to focus your attention on the following items:

40% of your time and effort should center on the offer, or what you are asking your prospective customer to do.

40% of your time and effort should center on the list, or who you are inviting to purchase from you.

20% of your time and effort should be spent on the design. What it looks like is much less important today than it was years ago simply because people look at the offer and who sent it rather than what it looks like.

As an example, I recently got a mailing to invest in a high dollar gold investment. The letter specifically states "...being a part of this exclusive high income group...." to which I asked myself...hmmmm, what high income? This firm purchased a list without really focusing on who they are sending it to and if the person actually meets the criterion they are looking for. Maybe the company was wrong in their selection criterion or maybe their list broker made the mistake. Regardless of the error, I should NEVER have gotten this letter. I don't remotely qualify for anything they are selling. Another direct mail piece in the trash! Wasted postage, printing and list costs.

What should you do then to become more effective?

First, look at what you're selling from your customer's perspective. In a retail world, ask where customers are from (zip code maybe?). Look them over. Are they older? younger? Affluent looking? There are keys you can see with customers that will help you better identify who you need to find. The list is important and even the kind of store you are will dictate who you want to reach. If you're selling wood working tools, you need someone into home improvements/wood working...not a woman into clothing. Define WHO you want to reach, who is your best customer and then find a list that matches that specific demographic.

Second, create a compelling offer. The use of Free, Save, Limited Time Offer, are just a few that have been effective in the past. The offer should identify why your prospect wants or needs what your selling. Copy should strike an emotional chord in their mind since an emotional image can be very powerful. Focus on the benefits of buying from you, versus your competitors. Finally and this is the most important point, remember, you need to be compelling to get them to buy!

Third, the design. Yes, I am not telling you that a quality graphic designer is unnecessary, or that you should send out a boring text only mail piece. But, make sure that what you are mailing looks attractive to who you are sending it to, AND that it incorporates some key elements. Those elements are:
  • Keycode area to effectively track who is receiving the mailing so when they use the mailing to buy, you know EXACTLY what group of people or list this came from.

  • Include images/copy that either addresses their interest in your product/services OR reflects past purchases that they have made with your company. Variable data printing was another of my blogs and can help you better understand the effectiveness of this technique.

  • Don't overwhelm the prospect with too much information. Pick one or two items that they may be interested in, and sell those. If you have a sale going on, focus on a few items that they may want and have them bring the coupon in with them for the discount.
ALWAYS have a call to action! Come in today to receive your discount. Limited quantity available. Limited time offer. Those are a few ways of getting people to respond in a timely manner.

Finally, direct mail, as with all advertising media is not an end all and be all for advertising. It can be highly personalized, targeted and can put YOUR company's products and services in front of a key prospect who is looking or interested in what you are selling. More is less in this day and age. The time when you sent out 5000 direct mail pieces and made money are over Today less is more. Send 500 to KEY prospects and if done correctly you will find your response rates are up, expense is down and your break even point is more easily reached! Once you have them as a customer, the lifetime value of a customer comes into effect, another blog!

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