Again Before Trimming Your Direct Mail Budget.
By Teri Evans. MSN Business on Main.
Looking to cut costs amid the recession, Alicia Settle
initially thought it would be a good idea to eliminate her company's
annual direct mailing.
Spending about $20,000 on the personally signed letters, which offered
customers a discount on early orders, seemed indulgent for Per Annum Inc.,
which sells city diaries, albums, and planners in the struggling corporate
gift market. But after swapping snail mail for email last year, Ms. Settle
saw a 25 percent drop in early orders compared with the same period the
"We realized we had made a huge mistake," says Ms. Settle,
president of the New York firm.
The affordability of e-marketing, along with the explosion
of social media and the desire to trim costs in the recession, has
prompted many small companies like Per Annum to slash traditional
direct-mail budgets. U.S. consumers received about 5.2 billion pieces of
direct mail in the third quarter of 2009, a 27 percent decline compared
with 7.1 billion in the same period a year earlier, according to Mintel
Comperemedia, a research firm that tracks direct-mail marketing.
However, some entrepreneurs who were quick to write off
direct mail as too pricey or passé are finding it's not so easy to
Ms. Settle says that at first she blamed the economy for
the drop-off, until she "started hearing from customers that they never got
their 'reminder' in the mail." Ms. Settle quickly sent a postcard mailing
in June, which recouped the 25 percent loss, she says.
Costs are still taken into account. Many entrepreneurs find
that the boiler-plate methods of the past — such as purchasing mailing
lists and sending fliers or coupons to a mass audience — often aren't
cost-effective. Instead, business owners are creating personalized
mailings, which may include special offers or other valuable information,
and sending them to a hand-picked list of current and prospective
The idea is to send something that's more appealing than
"junk" mail and potentially more noticeable than an email message, says
Eric Anderson, a professor of marketing at Northwestern University's
Kellogg School of Management. That allows business owners "to offer a
personal touch the larger firms may not be able to have," he says.
To save money, Peter Taffae, founder of ExecutivePerils, a
Los Angeles wholesale insurance broker, stopped his small firm's humorous
postcard mailings last year. The colorful marketing pieces showcase the
insurance broker's offerings through satirical movie themes, such as "Full
Metal Policy," a parody of "Full Metal Jacket" and "Singin' in the
Renewal," from the classic film "Singin' in the Rain." About 2,000 current
and potential clients received the postcards, which cost the company
$4,000 to send out every four to six weeks.
"We would visit some clients and notice they were hanging
the postcards on the wall, collecting them," says Mr. Taffae, who says he
secured $270,000 from a new client who chose to do business with the firm
in late 2008 after receiving the postcards.
"After two or three months [of no postcards], we got a lot
of emails and phone calls asking us, 'Did you take me off your list?' I
figured if even 1 percent complained, then a much larger percentage were
thinking about it," says Mr. Taffae, who restarted the postcard mailings
William Kapas, president of J.C. Kapas Real Estate Co. in
Rochelle Park, New Jersey, says he has secured clients as a result of his
high-gloss, four-color monthly mailings that list who has bought or sold
restaurant properties through the firm.
"Our clients look forward to knowing, and it's a little bit
of gossip, too," says Mr. Kapas, who exclusively uses traditional mail to
reach clients. "I think it's easier to delete the electronic junk mail
without taking a second look."
Mr. Kapas spends about $1 a piece for the monthly mailings,
sent to about 2,200 current and prospective customers.
Prof. Anderson says other business owners are trying to
figure out how to integrate Web marketing — such as email campaigns,
banner ads and social-networking sites — with direct mail. "The
introduction of new media has forced [business owners] to go back and
revisit the whole playbook on what's the best way to communicate with
customers," Mr. Anderson says.
Ms. Settle, for instance, plans to use e-marketing to
complement the hand-signed direct-mail piece, not replace it.
Meanwhile, Mr. Taffae is starting to take his satirical
marketing approach to YouTube; he's created a parody of F Troop, the 1960s
sitcom, to promote his firm online.
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