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by Renee Fellows

Smart Brief
What’s in a Measurement? Every direct mail effort should be evaluated for: Response Rate= Number of pieces mailed - # inbound responses Cost Per Lead = #$ spent ÷ # leads generated % Return = # of orders generated ÷ # of pieces sent Cost Per Piece = Total cost of mailing ÷ number of pieces mailed

June 28, 2007—A recent increase in U.S. Postal Service rates have caused small and large business budgets to sky rocket for everything from first class postage to first class flats such as catalogs. If you’re using direct mail as a marketing strategy, you may want to dust off those budgets and take a hard look at the quantity and type of direct mail you’re sending. Don’t get me wrong, direct mail is still a highly effective and, if done correctly, targeted way to reach your audience. But, how often you mail and what types of campaigns you implement can mean the difference between six mailings a year and as few as only three under the new rates.

The impact of postal increases affects companies across the board, but small businesses and catalogers are feeling the hit more deeply. Why? The increase in First Class Standard Flat Rate, which includes catalogs rose 20-30% depending on the size and weight of your booklet. While catalogers expected an increase somewhere between 9 and 12%, the 20% plus increase that the USPS Board of Governors returned has a serious and deep impact. For example, a company that currently spends $5,000 per month on postage, or $60,000 per year, will pay nearly $3,240 more annually with the new rates – but only if operations continue in a “business as usual” mode. What can small business owners do to continue supporting direct mail efforts while keeping their budgets within acceptable limits?

Split your list

It’s no newsflash that scrubbing your direct mail list before you send out a piece will save you a considerable amount in bad address returns and wasted printing costs. Did you know that targeting to very specific segments of your list enables you to tailor your message and receive a higher return on your investment? For example, consider that you’re introducing a new line of antioxidant teas into the New York City market. By narrowing your list demographically and psychographically, you can focus on the decision makers such as working women, age 25-49, with children, who live in Manhattan and have interests in organic and environmental products. From this segment, you can also cull a population who shop at organic food stores, receive organic and naturopathic magazines and most importantly, have purchased teas in the last six months (either online or direct from the retailer). The result will be a list with a higher population interested in the potential benefits of teas and ultimately a higher response rate to your direct mail piece.

Analytics isn’t a dirty word

If your forte rests in bold creative and snappy copy then think about recruiting a staffer who loves statistics because a solid direct mail campaign truly resides in the numbers. Analytics can make or break your direct marketing effort and help you defend your efforts by providing solid facts to your creative direct mail efforts. Start with calculating the return on your investment (ROI) and ask whether ROI will be achieved for each campaign. Ask the ROI question frequently during the planning phase of your campaign. Often times, the question isn’t even asked until well after the campaign has launched leaving marketers hanging for solid results when it’s too late to make impactful changes. Look in areas like Cost per Lead, Response Rate, Conversion Rate and Cost per Sale and try to implement measures in each campaign to generate trends and cross-campaign comparisons.

Shape Matters

Unlike previous postal increases, the most recent changes enacted by the USPS on May 14, 2007 focused their efforts on the shape of the mail being processed. What does that mean to you? According to an article in DM News, the direct marketing industry’s trade publication, the direct marketing industry makes more than 750 million product shipments, including CDs, books, dietary supplements, cosmetics, apparel and household appliances, through the USPS. If you’re a small business shipping product to clients the change can mean a sharp budget increase from your previous product mailings. While you may not be able to drastically change the size or shape of your packages, there are cost-cutting ‘work sharing’ options available to you through the USPS. These can include drop shipping items at mail distribution centers closest to your destination and making sure you are using bar coding and other automation enhancements.

Another option undergoing testing by the USPS is a reduced rate ‘slim jim’ style booklet. Items falling into the ‘slim jim’ category are folded self-mailers and booklets measuring up to 6.125 inches by 11.5 inches in size. To qualify for the lower rate, slim jims must conform to processing on the delivery bar-code sorter machine. But warns the USPS, don’t shift your entire catalog strategy to this size just yet as regulations and standards for the slim jim may be drastically changed after testing with various paper weights, folding styles, and tabs is completed.

Cost saving partnerships

If you can’t beat ‘em join ‘em, says the adage. Business partnerships are often a highly effective and cost-saving way to increase buying power and lower rates on items or services. “No matter what carrier you use, the rates for postage have risen twenty to thirty percent over the last several years,” says Marie Maio owner of Wildwood Designs, LLC a gift basket and specialty packaging company located in Windham , NH . “Through our NH Made relationship, UPS gives us an incentive to group purchase. Each participating business’s shipping costs are pooled based on the average weekly revenue of the entire organization and a percentage is credited to my account as an incentive.” While that completely remove the sting out of postage rates, Maio says that it is nice to see money coming back into her business.

Say it with style

The USPS processes over 213 billion pieces of mail each year. The opportunity for your direct mail piece to become lost in the daily mail box is high unless your message really stands out. Rather than sending out a broad based postcard, think outside the box and use creative graphic design and content to push your target through the direct mail piece. If your list is clean and recent and you’re still only seeing a .5% return on your campaigns, retool the graphics and content and double check on the offer. Is it engaging? Does it make you want to flip the piece over and read more? Do you want to pick up the phone or drive over to the business to purchase the service or item advertised? If your answer is no, then you’ve got some retooling to do.

The customized greeting card company Send Out Cards has a unique premise that helps them to stand out in their customer’s mail boxes. The international company not only creates unique cards, but also handles the back end processing of custom printing the cards, the addressee database, and the postage for its clients. Combine the ease of use with the high level of satisfaction that recipients have when receiving a greeting card and you’ve got a high open rate and great success.

“Thankfully, the first class postal increase hasn’t been an issue for my business,” says Susan Hobbs, National Senior Manager of Send Out Cards. “Because our clients understand that we don’t have any control over these increases, they’re willing to pay the increase as a natural part of doing business. We’re using standard postcard and standard first class rates so our clients have only been affected by a two cent per piece increase, which is the smallest increase in the new regulations.”

Seek an alternative route

That’s right folks, when in doubt, think like the Greeks and look for a different horse to get into the castle. If postage costs are prohibiting your direct mail efforts, try an alternative delivery option such as your local news paper. This is especially effective if your mailing covers a tight regional demographic. Newspapers can often cull their mailing lists by zip code and are also investigating richer platforms for data diving in the future. For example, the Chicago Tribune offers insertion rates of $.09 per piece for up to 3.3 ounces whereas postal rates for a similarly weighted piece could run upwards of .20 per piece.

Whatever route you choose for your direct marketing strategies, remember that you always have options and that you’ll need to be flexible in your tactics. The new postal regulations are complicated for the lay person to grasp, so be patient and when in doubt seek assistance to create the best possible campaign for your marketing dollars. For assistance in creating a solid marketing communications plan for your small business, talk with Renee Fellows at ClearPoint Marketing Communications at (603) 434-9433 or via email at Rfellows@oneclearpoint.com.

Whatever your small business needs, your Fiducial tax and financial professional can analyze your situation and recommend an appropriate action plan. To locate a Fiducial office nearest you on fiducial.com, see the Zip Code Locator located in the upper right hand corner of the page. Do you have a particular topic that we should be writing about that can help your business? Please send your suggestions to: Howard.Margolis@fiducial.com.

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