Direct Mail Sales Are Complex, yet Rewarding
Although direct mail projects may require a great deal of coordination, the payoff can be sweet.
With the national Do Not Call Registry freezing out telemarketers and spam overwhelming e-mail inboxes, businesses trying to solicit or retain customers must rely more than ever on direct mail to do the job.
That's good news for distributors, with their expertise in printed products, although it can also mean a bit of a learning curve for those inexperienced with this niche.
Although invoices and marketing pieces may seem to dominate the mailbox, there are myriad reasons a company or organization may need to send a mailing, according to Lindsay Gray, vice president of Acculink, Greenville, N.C. "You've got to decide why you're calling on a customer [for direct mail]," Gray said. "You don't just go in and drop your business card and say, 'Call me the next time you need variable imaging.' Tax notices get handled totally differently than car promotions. Even within a business, different departments might be doing different mailings—soliciting for 401k plan employee participation, for instance, or loyalty mailings to current customers," he said.
This multiplies opportunities for distributors, but means that they must knock on many doors within the end-user's business—department heads in marketing, billing, IT and sales, as well as owners and executives.
Churches and non-profit organizations may need to recruit members, as well as send contribution statements and information on events. Retailers need to announce store openings, sales and special promotions, such as giveaways and celebrity appearances. Corporations may be stuffing multiple communications in one mailing.
Mailing lists may be targeted by demographics, geography (a certain radius of a store location) or membership (such as for school alumni mailings or national organizations). And, there are always the everyday invoices, billing statements, and payroll, tax and fine notices. "The key is who is coordinating the project, whatever it might be," noted Allen Simon, president of Datatel Resources Corporation, Monaca, Pa.
In many instances, the distributor has no control over the content or design of the printed pieces, but brings value to the mailing project with sourcing expertise, Simon said. "Distributors maintain databases indicating which manufacturers are best for the different elements of a mailing. They usually have a lot more knowledge than the direct mail house or the end-user," he said.
Because one mailing may be comprised of a letter, an envelope, a plastic card, integrated labels and more, "It's unusual for one manufacturer to run all of the pieces," Simon noted.
In some cases, the direct mail house that's handling the stuffing, sealing, addressing and sorting functions can also be a source of business for the distributor, who can supply the right manufacturing partner, according to Simon.
Distributors may also find themselves working with advertising agencies who know how to create a razzle-dazzle campaign but often have few manufacturing contacts other than commercial printers. "It's amazing how little ad agencies know about print production," Gray said. "Distributors are more savvy."
Gray observed that the savvy distributor can also serve some of the same functions as the pricier ad agency by identifying a customer's needs, conceiving a marketing idea and helping to create an appropriate mailing list. "The unique thing about direct mail is that you don't have to wait for the customer to come to you with a marketing idea," he said. "You can create one and make more money since you've done all of the work."
For instance, the distributor could create a list of new parents, cross-referenced by income, to sell a mailing campaign to local realtors who need buyers for new homes, Gray said. Although a product may be simple, direct mail jobs still require multiple steps and a "lot of technology and expertise," he said.
Once Acculink receives a database, it goes to the company's IT department to be sorted for postal discounts and have the appropriate bar code applied. The art and digital printing departments take care of actual production, cutting the postcards in sequence, while the mailing department fills out the proper forms and packages the product for the post office.
Working with reputable vendors throughout the entire process is crucial, Gray stressed. "There are a tremendous number of list brokers, but some are more legitimate than others," he said. He recommended finding out how frequently a list broker's list is updated through the National Change of Address service and how important that is to a customer.
For instance, an alumni mailing needs to reach specific people, wherever they reside; a realtor may simply be trying to reach residents within a certain area.
Pre-packaged lists are another option, Gray said. "A distributor could make a great business with Accudata, which procures lists of church, veterinarians, Jeep buyers, etc.," he said.
Distributors also need to determine how much of the job each vendor can handle—i.e., commercial printing, letterpress, variable imaging, software programming, CASS (Coding Accuracy Support System) sorting, etc. Many mailing services, for instance, can't do four-color process printing, binding or other finishing processes, Gray said.
Before a piece is imaged, the database goes through two levels of sorting—standard presort and CASS, an automated system that applies the bar code and "does the work of the post office," Gray said. A vendor who is capable of doing both the variable imaging and CASS sorting can print the order in proper sequence and then box it for the post office. "Acculink is unique in that we can do everything," Gray said.
Another consideration in vendor selection is the volume required. Many mail houses are geared toward large, national campaigns with hundreds of thousands or even millions of pieces. But, there is a growing market for projects requiring volumes of 10,000 or fewer, Gray said. "Most variable printing projects are 5,000 or fewer. You can get a lot of results with a small mailing," he noted.
Small, targeted mailings require an emphasis on value—rather than cost—to sell, he said. A typical "shotgun" mailing might generate a 1 percent or 2 percent response. But, if that same database is broken down into demographics, buying patterns, geography or any other way the distributor and end-user want to slice it, "the return can be in double digits," Gray said.
Automated Mailing Programs
"Mailings are an incredible pain," Gray said. "You need a designer, there's a possibility of typos, the database needs to be clean and updated, postage is expensive, and the mailing must also be timely."
The good news is, the process can be automated—and the distributor who knows how to put such a program together for a vertical market can win loyal customers. By creating a template of a postcard or letter and linking it to a database of product photos (General Motors vehicles, for instance), the distributor can approach the sales managers of all General Motors dealers in his area. Using a Web site for order entry of the shopper's contact information, desired vehicle and associated salesperson, that variable information can be merged with the template and digitized signatures to produce custom mailings with quick turnaround.
"You're selling a solution to the owner of the business and the sales manager. It's one less headache for them," Gray said. "The key to selling one-on-one marketing is the ultimate return to the user; the last thing you talk about is the printing cost. The magic is in the highly pre-qualified database and the quality of the photo and printing on a digital short-run press."
With a digital press, printing costs are the same whether each piece is customized or identical. Lowered hardware costs and improved integration of variable imaging software have finally made variable printing profitable for distributors to sell, Gray said. The sizzle distributors can sell is in the flexibility offered with such a mailing program—even one response can pay for the entire mailing. "Distributors know a lot about adding value, and it's pretty easy to justify [additional processes] when the value of an additional 1 percent or 1⁄2 percent increase in response is very high," Simon noted.
Education can prepare distributors to sell direct mail programs, manufacturers say. Gray suggested researching the Web sites of The Direct Marketing Association and OnDemand Journal, as well as the United States Postal Service. "It's a challenge. Postal regulations are very complicated, and variable imaging can be very complicated," he said.
Simon noted that there are many sources—trade magazines such as BFL&S and Target Marketing, trade shows and the direct mail houses themselves. "Go to every seminar you can and talk to every supplier," he said. "Throw yourself into the direct marketing world in a real, active way. It's a wonderful opportunity for distributors."
By Janet R. Gross