Take small, manageable steps on the way to big direct mail profits.
How do you eat an elephant? One bite at a time. A step-by-step approach can turn seemingly impossible tasks into manageable projects. That's something forms distributors need to remember when considering the direct mail market, where high-volume, high-dollar projects can be a bit daunting.
Dick Kuntz, president of GBF Graphics, Skokie, Ill., pointed out that forms sales are fairly straightforward and tend to repeat, while direct mail almost always in-volves new copy—not to mention a proofing process and press checks.
"If a forms distributor gets a $10,000 or a $15,000 order, it's been a good day, but a $10,000 direct mail account isn't worth the trouble—unless it's a steady customer or a test case," said Kuntz. He added that direct mail costs are typically never less than $40,000 or $50,000, and actually tend to fall in the $300,000 to $500,000 range.
Dan Reid, marketing manager for Thorn Hill Printing, Freedom, Pa., offered this perspective. Since the printing costs are approximately 12 precent to 15 percent of the overall cost of a direct mail job, $5,000 to $7,000 would be the cost on a $30,000 to $40,000 job, and the remainder of the cost goes to postage and handling.
"Forms distributors are very accustomed to working with print orders for that amount," Reid said.
Pushing the Envelope
When it comes to making it in direct mail, Reid believes the key is for distributors to form strong partnerships with the right suppliers and to ask customers the right questions.
Some of those questions might be the total number of mailers, the number of inserts (typically two or three), if anything is going to be lasered—such as a letter or membership card—and if window envelopes or business reply envelopes are needed. Chances are the customer has experience with direct mail and knows what's involved. It's also likely that the distributor and customer worked together before.
"Making sales is all about relationships. A customer isn't going to call up someone he or she doesn't know to handle a direct mailing," said Jonathan Polley, an account executive with MSP, Freedom, Pa.
He added that suppliers also depend on the relationship between the distributor and the customer to penetrate accounts they otherwise wouldn't have access to.
Since the customer knows his or her products and services the best—as well as the objective—the customer is the best one to design the mailer. "Direct mail customers are not looking to the distributor to function as an ad agency, but as a broker," said Polley.
In addition, Polley added that it is the customers who are constantly testing the market and conducting research to see what works with consumers—they throw out what bombs and build on what works.
Not surprising, the events of September 11 have impacted mailer design. Polley noted that formerly, the trend was to disguise the piece to not look like a direct mailer.
"Now companies have their names all over the pieces and they're avoiding anything secretive so recipients won't be fearful or suspicious," said Polley. He noted that postcards and self mailers have also become quite popular lately.
Although there have been occasions where customers wanted design assistance, Reid agreed that customers generally design the mailers themselves. Four-color pieces, in particular, are predesigned. The customers then give the distributors a disk along with some general ideas.
It is these disks containing customers' address files, according to Reid, that can present the biggest obstacles on a direct mail project because they are often not usable or the information is outdated.
Said Reid, "If the customer file contains old information, distributors can end up with a 10 percent to 15 percent undeliverable rate—what is acceptable is in the 5 percent to 7 percent range. For that reason, he warned distributors to never guarantee response rates.
Obviously doing a little research and gathering general information will help distributors transition into direct mail sales.
"Distributors don't need to be postal code wizards, but they should know a little about the laws," said Polley, adding that they should also ask around to find out how lettershops and mail houses work. In addition, Polley recommended that new distributors never assume anything.
Recently, Polley had a distributor bring in a 30,000 piece job, which he said was to be mailed first class. When Polley gave him the postage quote, the distributor almost had a heart attack.
"Luckily the job wasn't printed yet because we had to change it to 3rd class," Polley said. "It was a 10 cent difference, which is huge on a mailing of that size."
Kuntz, Reid and Polley all reinforced a cardinal rule of the industry—no jobs are accepted at a mail house until the postage is in hand. They said that postage is the biggest expense on a direct mail project, and no lettershop or mail house wants to be responsible for a customer's bill.
Kuntz recalled the day his accounting clerk came in waving a check and suggesting they run away together. "It was for $985,000 just to cover the postage on a direct mail project," he said.
Because there is a lot of money involved in direct mail, distributors must be prepared to invest much of their time in assuring customer satisfaction, especially during the proofing process.
"Direct mail customers are very fussy, and it is not unusual for customers and distributors to come into the plant from New York, Texas and California just to OK the press run," said Kuntz. In fact, he added that one time an account manager from a well-known ad agency spent an entire day at GBF Graphics, agonizing over a press check of a large car phone ad, which included a 2x3˝ photo of a man in a blue suit using the phone. Market research indicated that a certain shade of blue produced the best consumer response and they were having trouble matching the exact shade.
As Kuntz explained, the only option was to pull the film and have it redone at a cost of $5,000. The account manager paced and fretted and finally pulled the film, only to come back a few days later with the change, all because of the suit.
"The average person wouldn't have even noticed," said Kuntz. "But the customers are always right."
By Maggie DeWitt
- Companies:
- Thorn Hill Printing
- Places:
- California
- Skokie, Ill.