With Marketing Optimism Rising, It’s Time to Add Direct Mail to the Mix
The COVID-19 crisis posed unique and complex challenges for marketers. Even as the nation heads into, hopefully, a brighter future, memories of 2020 remain fresh.
“Our agency was hit hard from April through June, especially with business-to-business clients,” recalled Mike Gunderson, CEO and founder of Respond Fast, and president of Gunderson Direct, a direct marketing agency based in Hayward, Calif. “Who was open? Who was closed? And if the business was operating with everyone working from home, it was impossible to mail prospects at those businesses.”
Instead, Gunderson had to rely on address appends and alternative list sources to target remote employees, which, unfortunately, led to limiting the reach to new prospects. To make matters worse, many mills either closed or converted to manufacturing packaging cardboard, a move that Gunderson said is leading to a looming paper shortage that could impact production cycles and costs.
On the supply chain side, there was a period of scrutiny over USPS operations, with a volatile election cycle saturating the mailstream, and major delays due to COVID-related staff shortages. In fact, several marketers described the holiday season mail and shipping backlog as one of the worst they’ve ever seen.
“As face-to-face interaction was being replaced with online communication, shipping and mailing became the order of the day,” noted Thomas D’Agostino Jr., CEO of Smart Source LLC, a top 50 distributor based in Atlanta. “The USPS became a major delivery channel for organizations such as Amazon, which overwhelmed existing USPS resources. This impacted service levels in terms of in-hands dates of many time-sensitive mail pieces, further pushing the pendulum toward digital delivery of communications, when possible.”
There were early and substantial marketing slowdowns in obvious verticals like hospitality and events. But as Summer Gould, president of Eye/Comm Inc., a direct marketing agency based in Santee, Calif., pointed out, nonprofits continued to mail throughout the pandemic to generate vital donations. Other companies relied on retargeting tactics.
“They found that their direct mail response rates increased as people were home and in need of many things,” Gould said. “When people visited a website without making a purchase, a direct mail postcard was sent out to them to follow up with a special offer.”
Activity began to pick up when shelter-in-place orders ended. Up until then, banking, insurance and health care sectors had maintained strong branding positions. Now joining them were retailers with an online presence and food-related organizations that used couponing opportunities to promote grocery and home delivery services.
Gunderson’s business-to-consumer clients mailed smaller volumes before moving to full volume, and, in some cases, are being more aggressive than before. Why? Because direct mail works.
“Everyone is hot to get their message out—and digital is, and will become, even more saturated,” Gunderson remarked. “Consumers will gloss over emails and social marketing. Direct mail establishes a 1-to-1 communication with prospects and customers.”
Seek and Respond
There is a popular misconception that direct mail programs are too expensive, and the USPS’ recent request for a substantial postage rate increase, expected to take effect Aug. 29, isn’t helping to assuage concerns. A campaign can also take approximately four to eight weeks to launch from scratch. When done right, however, the additional upfront investment and steps (e.g., planning, list sourcing and printing of the direct mail pieces) lead to worthwhile returns.
“That’s because, unlike other channels, when you scale direct mail, your cost-per-impression and customer acquisition costs actually go down thanks to printing and list sourcing efficiencies,” Gunderson said. “Also, direct mail allows fixed-cost budgeting, so you can plan your budget and won’t be met with surprises that come with a bidding war.”
Gould agreed, and said that direct mail has the highest response rate, assuming marketers are appealing to the wants and needs of the right audience.
“Direct mail is very easy to target, which makes your messaging more effective because you are only sending it to people who would be interested,” she explained. “Many studies have proven how effective direct mail is at provoking a response. The tangible piece is easier to comprehend and is remembered better.”
That doesn’t mean marketers are completely free from heavy lifting. Understanding data, testing repeatedly and optimizing accordingly are crucial for better response and conversions.
“Direct mail is often the workhorse of a marketing campaign’s lead-gen effort,” Gunderson said. “It’s not sexy and sometimes referred to as ‘old school,’ so it is often left alone. Over time, this can be detrimental to the success of a program.”
In early conversations, the savviest marketers treat their clients as complete humans versus one-dimensional beings that exist only as job titles. By reinventing their approach to data, they can turn the challenges of the past year into gains. For Smart Source, the first question is always: Are you satisfied with your direct mail response rates? D’Agostino quipped that he is hard-pressed to find a prospect who says that they are receiving too many responses.
“We work with each client in focusing on the qualification of the audience,” he shared. “Based on the nature and content of the communication being sent, we assist in evaluating the power of the offer based on the perceived value of the offer by the recipient. And lastly, we address the construction and aesthetics of the piece, if hardcopy direct mail.”
Smart Source recently worked with a client in the manufacturing vertical that wanted to land in-person meetings with high-level decision-makers to discuss the capabilities of their large-ticket products. They opted for a highly personalized mail piece offering a golf club driver in exchange for 60 minutes of face time. D’Agostino said the response was a “tremendous success.”
The right offer makes all the difference. Gould suggested establishing a sense of urgency through limited-time offers, or using variable data printing as a way to do one mailing with many different offers.
Direct mail has benefited from the growing ability to personalize. But with more personalization comes more data, so commercial and direct mail printers need to be aware of data security—a topic that all three experts felt strongly about. Because Smart Source serves the health care and financial market segments, it is accustomed to the stringent requirements surrounding data handling for both.
“It is not enough to rely on our strategic partners that are producing the communications,” D’Agostino stressed. “As a company, we are the responsible party for data security in the eyes of the customer. Therefore, it is imperative that our team members understand and respect the various compliance requirements.”
Gunderson Direct uses a certified data processor to receive data directly and prepare data for mailing and analysis, and the agency insists that its printers are certified and use best practices to protect client data.
“Any data exploration is done via a secured environment with those vendors or anonymized data,” Gunderson said. “These days, it’s essential not to skip steps.”
Follow the Data
Marketers may find that the answers they seek through testing and analysis don’t always lead to direct mail. To promote higher-level connections, Smart Source educates its direct mail customers on the client data they possess—either through their billing system, CRM platforms or purchased data. In many cases, that data drives the medium of communication.
“For example, recipients over age XX receive [a] hardcopy versus recipients under age XX receiving digital communications, even drilling further as to receiving digital communication via text versus email,” D’Agostino said. “The more recipient-specific data used in the communication, the greater opportunity for a response to a call-to-action.”
Gunderson’s message to new mailers is to test intelligently and broadly to see if the channel is going to work for them. “I spend a lot of time justifying test budgets that we can learn from, as opposed to trying a one-time pinpoint targeting approach, which seldom works in the mail channel,” he said.
Oftentimes, direct mail performs best when it’s integrated into multichannel marketing campaigns. QR codes are enjoying a resurgence thanks to Apple making code scanning native to the iPhone’s camera. And through USPS’ Informed Delivery effort, over 39 million Americans can see and reply to their mail via an email before it’s delivered to their mailbox. As Gunderson mentioned, this is a low-cost and easy way to add a digital component in direct mail.
“Marketers should consider new and emerging response channels,” Gunderson said. “A Voice Activated Call To Action (VACTA) … allows prospects to respond to your direct mail using their Google or Amazon smart speaker. A VACTA can help enhance your direct mail message with an audio experience engaging your customers on a whole new level.
“These innovations are easy to implement and also offer 100% attribution back to your direct mail,” he continued. “Plus, the USPS is offering a 2% postage discount via the Emerging and Advanced Technology discount.”
Tactile elements are another way to boost engagement. Gould has seen heightened interest in coatings. From UV and aqueous to varnish, there are many options to choose from to give mailers a special texture.
“Spot texture is a great way to enhance an image,” Gould enthused. “You can take a basketball and with special coating make it feel like one, too.”
She outlined additional coatings to try:
- Soft Touch: Creates a velvet feel to mail pieces.
- Sandpaper: A sandpaper or grit-like texture with a rough tactile feel.
- Glitter: A large glitter flake, where the color is influenced by the ink underneath it. It comes in various colors and pearlescent effects.
- Metal Flake: Extremely fine metal flakes that are similar to auto paint, with many color choices.
- Glow in the Dark: High-gloss coatings that will glow in the dark.
- Tinted: Optically clear-color coatings with many colors available.
- Thermochromic: Temperature-activated coatings that come in multiple colors that turn clear when heated.
- Photochromic: Clear and are activated by sunlight to change color.
- Chalkboard: Available in black or clear, these emulate a chalkboard surface that can be written on with standard chalk.
- Scented Varnish: Scents are realized when rubbed, so these work best on pieces inside of an envelope or on the inside panel of a mailer. Not suitable for postcards.
With emotions still raw from the 2020 fallout, it’s hard to imagine a post-pandemic world. But one thing is clear to Gunderson: Direct mail is having a well-deserved moment.
“We are talking to more companies who want to explore the channel, we are seeing some really interesting new data sets emerging that are changing how we think about targeting and we are developing all kinds of new ways to analyze and report data to improve decision-making,” he concluded. “I’ve been doing this for 20 years and I have to say, it just keeps getting more interesting.”