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Is Direct Mail Useless for DMers?

Is direct mail useless at helping direct mail businesses
generate leads?

That’s the question I was asked last week by a
reader of Alan Sharpe’s B2B Direct Mail Tactics
newsletter. Here is her unusual challenge, and my
response.

“My biggest challenge in generating leads from direct
mail is to convince our marketing people that direct
mail should be used. This is a completely ironic
situation given that we are a DIRECT MAIL HOUSE.
Yes, that’s right. I’ve been told that ‘direct mail is
not good for our business.’

“Apparently, direct mail was tried once long ago and
had a bad response rate. Our other lead generation
methods include sales outreach activities
(prospecting, networking, etc.) and community
involvement - charities, boards, councils, etc. Our
word of mouth reputation is excellent - we’ve been in
business for 18 years, our turnaround time is
excellent, our customer service people are top notch,
our team really knows their stuff . . . . However, it
seems to me that a larger outreach should be done
as well . . . am I barking up the wrong tree here?”

Myth #1: Direct mail doesn’t work for us

The only way to convince management to use direct
mail over the long term to generate sales leads is to
prove that direct mail either outperforms other
methods or increases the effectiveness of other
methods. You can only do this through testing and
measuring results.

After all, the telephone, not the letter, is the number
one tactic to generate leads according to the Direct
Marketing Association’s 2005 Response Rate Report.

Your firm sounds like it is content to do business in
your city only. That’s why they rely on “networking,
community involvement - charities, boards, councils,
etc.” These methods of meeting prospective clients
are not sustainable nationally or even regionally.
They are too expensive.

Unless your management wants to grow the business
outside of your city, or grow the business in an
aggressive way in your city, you may have a hard
time convincing them to try DM. This is especially
true if your city is small, since your prospect pool is
so limited.

Myth #2: We tried it once and it didn’t work

You say, “Apparently, direct mail was tried once long
ago and had a bad response rate.” Business-to-
business lead generation using direct mail is a
program, not a campaign. It consists of a plan, a
year-long series of mailings, and a way of testing
methods and measuring results. I would suggest that
if you have not tried direct mail consistently for at
least a couple of years, testing different packages
against each other, testing DM against your other
lead generation methods, and measuring your results
to see which method is most cost-effective, you
have abandoned direct mail prematurely.

Myth #3: Direct mail delivers poor response
rates

You say, “Apparently, direct mail was tried once long
ago and had a bad response rate.” Direct mail
response rates are misleading if you read them
incorrectly. Your response rate only tells you part of
what you need to know. It tells you the percentage
of people on your list who responded and nothing
more.

Your response rate doesn’t tell you how much you
had to spend to generate one lead. Or how much you
had to spend to make one sale. Your direct mail
response rate does not tell you if the sales people
who followed up on the leads closed any sales. Or if
you broke even. Or if you made a profit.

So don’t be fooled by a low response rate. Unless
you measure these other things (cost per lead, cost
per sale, break even, return on investment) and
compare your results with your face-to-face
prospecting, community involvement and other
methods, you will always be relying on feelings and
not facts. One of the things that I like about B2B
direct mail lead generation is that it is empirical. The
numbers never lie. You can bank on it.

Recommendations

1. Show your boss a compelling business case for
   testing direct mail lead generation at your firm.
   Calculate cost per lead, cost per sale, break even
   and ROI. Show your boss the numbers
2. Start with a list of prospects that have been
   unresponsive to your other methods, or people that
   you cannot reach cost-effectively any other way
3. Think niche. Target a narrow group of prospects
   and go after their business with a year-long
   campaign, reaching them more times and in more
   ways than your salespeople ever could in a year

I wish you every success!

About the author

Alan Sharpe is a business-to-business direct mail copywriter and lead generation specialist who helps business owners and marketing managers generate leads, close sales and retain customers using business-to-business direct mail marketing. Learn more about his creative direct mail writing services and sign up for free weekly tips like this at http://www.sharpecopy.com

© 2005 Sharpe Copy Inc. You may reprint this article online and in print provided the links remain live and the content remains unaltered (including the “About the author” message).

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If the most important part of any
business-to-business direct mail package is the list,
how can you be sure that you have a good list
before you drop your money (and your reputation) in
the mailbox? Answer: Ask the right questions before
you rent that
list.

1. Who is on the list, exactly?
Let’s say your potential list is high-tech prospects.
Are the people on the list analysts, network
administrators, product managers, chief information
officers or sales managers? Knowing makes all the
difference. So make sure you can select names by
job title or function.

2. What is the source of the list?
Is the list a compiled list, where names and
addresses are compiled into a list from directories,
newspapers, trade show registrations and other
public sources? Or is the list an opt-in list (such as
subscribers to a particular trade publication, or
buyers from an online store)? Lists of names that are
compiled from phone books and directories usually
age more quickly than names from opt-in lists and
usually produce more undeliverable mail.

3. Are the names on the list known buyers?

The best B2B lists contain names of businesspeople
who have bought your product or service or one like
it, regardless of how they bought it (online, by mail,
retail).

4. How recently did they buy?
In the trade, we call this Recency. Prospects who
bought a product or service like yours recently are
better prospects than ones who purchased years ago.

5. How often do they buy?
We call this Frequencyhow often someone buys.
Naturally, someone who buys your product or service
often is a better prospect than someone who buys
less frequently.

6. How much do they spend?
We call this Monetary value, and it’s the third
component in the standard test of mailing list
qualityRecency, Frequency, Monetary value.
Buyers who spend the most are the best prospects
for your mailing.

7. Are the people on the list “direct-mail
responsive?”
Sometimes a list owner or list broker will know if the
names on her list respond to direct mail offers. A
good example would be a catalog merchant who
would know the percentage of names on his list who
buy through the mail.

8. How fresh are the names?
Some business-to-business lists decay at a rate of
25% a year. In other words, at any given time, 25%
of the names on a given list will have moved (new
address), been promoted (new job title), undergone
a restructuring (new email address) or quit. Ask your
list owner or list broker how often they update their
list.

9. When was the list last cleaned?
List owners “clean” their lists by comparing them
against the postal service’s National Change of
Address file. Ask how often this is done.

10. How often is the list rented?
If the list is rented often, it is likely a good list (but
one that contains names of prospects who may have

been inundated with offers like yours). If the list is
rarely rented, it is either no good or it contains a
highly specific group of prospects that no other
business except yours wants to mail to (not likely).

11. How many other mailers tested the list
successfully?
You should conduct a test mailing to a list before
rolling out your entire mailing. Ask how many other
businesses tested the list and then declined to
rollout, and how many tested the list and decided to
rollout. The answers you get give you an idea of the
value of the list to your business.

12. Who else rents the list?
Do your competitors rent the list? See if you can find
out!

—-
About the author
Alan Sharpe is a business-to-business direct mail copywriter and lead generation specialist who helps business owners and marketing managers generate leads, close sales and retain customers using business-to-business direct mail marketing. Learn more about his creative direct mail writing services and sign up for free weekly tips like this at http://www.sharpecopy.com.

© 2005 Sharpe Copy Inc. You may reprint this article online and in print provided the links remain live and the content remains unaltered (including the “About the author” message).

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Premiums are an effective way to increase your direct mail response rates. Whether you are selling a product or service directly through the mail, or whether you are using a sales letter to generate leads, premiums can help you boost response, increase conversions and motivate buyers to pay now rather than later.

A premium is simply an item that you offer to your buyer to take action. As Dick Benson has said, “a premium is a bribe to say yes now.”

Premiums are effective because, dollar for dollar, they are better incentives than cash discounts. Given the choice between receiving a free Apple iPod or a $200 discount on their order, most buyers will opt for the iPod.

Here are some tips on using premiums effectively.

Aim for desirability over relevance
The key to choosing the right premium for your audience is desirability. If the premium is related in some way with what you are selling, that is great, but whether your prospect desires your premium is more important than if the premium is associated with your offering.

For example, a firm that manufactures heavy-duty fasteners could offer prospective customers an oversize bolt in the form of a paperweight, or they could offer a $200 gift certificate to Best Buy (the home electronics store). The paperweight is relevant but undesirable. The gift certificate is desirable but not relevant to the firm’s business.

The best premium, of course, is closely related to your offering, is desirable, and makes your prospect look like a wise buyer.

Choose premiums with high perceived value
You want your premium to look as though it costs more than it does. A leather attach

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