Attention Internet Marketers Part 3
Direct Mail Doesn’t Have
To Cost You A Fortune
Dear Business Builder,
TGIF and welcome back to In The ‘Net Trenches. For the last few weeks, we’ve taken a close look at direct mail and why – as an Internet marketer – you should consider adding it to your marketing mix. We’ve also done a quick review of the 2 types of mailing lists … the 3 main classes of postal mail … and the 3 main rate classes based on the size of your mail piece. If you’re a beginner to direct mail, this should give you a good start … if you’re more advanced, it should have been a good refresher.
If you didn’t have a chance to read them, you can check them out here:
Issue 335 – Why You Should Consider Adding Direct Mail to Your Marketing Mix
Issue 340 – What You Need to Know to Add Direct Mail to Your Marketing Mix
My plan was to present creative ways to use direct mail to drive traffic to your website in today’s issue. But I’ve decided to cover that next week.
After last week’s issue, I received a really compelling question from John and before we move on I’d like to answer it …
Overcoming the High Cost of Direct Mail
John is a mailing list broker who often also finds himself in the position of “direct marketing” consultant. Many of his customers are entrepreneurs that are completely new to direct mail, with no customer list and very tight budgets.
John’s question is broken down into 2 parts, so I’ll answer each part as we go.
John writes …
How can one test a new concept, headline, idea or prospect list without spending a small fortune?
When clients come up with a great new idea they are reluctant to test it because testing via direct mail costs so much and results are often dismal.
New creative should really be tested against several lists because results vary tremendously by list. With a response rate of typically 0.3% (or less!) to 0.8% on a cold prospect list, 5,000 names is needed per test list or concept to generate enough responses to be statistically significant.
If the concept is working at all, that 5,000 piece test cell may hopefully pull 15 to 40 responses (at 0.3 to 0.8%) - barely enough to be projectable. And often the 5,000 piece test generates zero, one or two responses which proves nothing except something isn’t working right.
The 5,000 piece test costs at least $0.65 per piece in the mail (including list rental, printing, addressing and postage - but not including any copywriting, photography or graphics). So that simple test will cost (5,000 x $0.65 =) $3,250 plus creative costs. And if you want to try out your new brainchild creative on, say 2 or 3 different lists; the cost goes up to $6,500 or $9,750 plus creative.
How many times can one afford to fail at $3,250 or more per shot?
The problem is that most new concepts/head/copy/list tests (unless written by pro for $15,000) fall totally flat; so the client spends $3,250 or more just to find out that "nothing happened." Their typical reaction is then, "Well we tried direct mail and it doesn’t work."
Today, starting new businesses’ marketing efforts with direct mail is a slippery slope into a big money pit … that is unless you have some big bucks behind you and a lot of experience in a proven direct mail segment.
You would be better off starting on the web and building a small customer and prospect list as well as a product line before attempting to add direct mail to your marketing mix.
Then, by including your customer and prospect lists into your mail plans, you can hedge your bets against your colder test lists. Your customer and prospect lists will be your highest responding lists and ultimately bring up the overall response rate and ROI of your campaigns.
But I also want to warn about getting too caught up in statistics and projections. I’m sure you’ve heard “a journey of a thousand miles starts with a single step.” You don’t have to start your direct mail journey with 5,000 pieces and 2 headline tests, hoping to get a statistically valid response rate that you can project out to a 25,000 piece mailing.
You can start by renting that 5,000 name mailing list for about $750 and breaking it up into manageable and affordable chunks of 500 - 1,000 pieces. Print the letters on your own laser printer, stuff the envelopes yourself. Do whatever it takes to keep the cost as low as possible. Your mail pieces don’t have to look like they were designed by a high-end ad agency and printed on the most expensive stock. I’ve seen “simple, ugly black and white” promotions beat out “elaborate, glossy 4-color” promotions many times.
Back in the early 90s, I owned a mail house. We did a tremendous amount of small mailings. The most successful businesses had three things going for them …
- They created promotions with a clear and concise call to action … snazzy, colorful brochures with no offer didn’t cut it …
- They mailed small quantities consistently until they built a customer file … repetition is key …
- Then they quickly found new products to promote to their customers (as they acquired them) and they did this over and over again thus adding dough to their bank account.
Then and only then did they attempt larger more risky mailings. But, to start they didn’t get caught up in statistics, A/B testing and list size. They just kept mailing. I have a client that started exactly that way … today they are a multi-million dollar company.
I often hear from business owners, “We’ve tried [insert marketing tactic here], and it doesn’t work for us.” And it’s sad to hear the stories of how they spent tons of money with dismal results. But my typical response is that’s “bunk” … no marketing equals no customers. Start small and keep trying on a small scale until you hit on something that works. Establish a monthly marketing budget and spend that money every month. Marketing involves ongoing effort … it’s not a one hit wonder.
Plus, don’t put all your eggs in one marketing basket. Ongoing multi-channeled marketing efforts will ultimately give you the biggest bang for your buck.
Which brings me to the second part of John’s question …
I’ve been looking for ways that new concepts / headlines / creative roughs / and/or a new prospect lists can be checked out for viability for $500 or so. That would let the budding entrepreneur pre-test many ideas to find something that just might work.
While there are all kinds of check lists that tell what the headline should do, how copy should flow, AIDA and other formulas, I haven’t seen any way to really pre-test headlines / ideas against specific targeted lists without spending big bucks.
I wish I had any easy answer to this question, but I don’t. It’s nearly impossible to test lists and creative for $500 in the mail.
But, you can certainly test your creative concepts very cheaply online. Joint ventures are a great place to start if you have little budget. With a joint venture, you would give up a percentage of the revenue you generate to your partner.
And with a little creativity, you may be able to convince a list owner to let you test their e-mail list for a large percentage of revenue and a guarantee that you’ll pay to rent their snail-mail list if the e-mail performs. If a list owner thinks they’ll get a long term list rental customer, they may agree to help you along. It certainly doesn’t hurt to ask.
But, if you are looking to negotiate a special arrangement, be sure to work directly with the list owner. List managers work on commission and will likely be less willing to pursue this type of arrangement.
And with a $500 budget, you could certainly test creative with paid search traffic through Google, Yahoo or MSN making real time changes to your creative as you go.
I’ve found that copy that works online, typically works equally as well in the mail. So by testing your creative concepts online first and finding a winner, you can feel more confident in spending the bigger bucks direct mail commands.
But you’re a smart, experienced bunch … what other advice do you have for John and Total Package readers. What ways have you found to overcome the high cost of direct mail? Have you found creative ways to test lists and copy through the mail on the cheap?
And while you’re at it, let us know whether you’ve used direct mail creatively to drive traffic to your website … you just might find your idea in next weeks issue.
Post your advice and in the trenches stories to the blog and help a fellow marketer out.
Until next week,
Julie McManus
Editor, In the ‘Net Trenches
THE TOTAL PACKAGE™
And Web Media Goddess
P.S. Are you in the ‘net trenches? Do you need help? Send
me an e-mail to AskJulie@MakepeaceTotalPackage.com and
I just might answer your question in an upcoming issue.
P.P.S. Have you checked out The Total Package affiliate program lately? We’ve added tons of new creative to help you earn cash on any new subscriber you refer and we’ve opened our archives up for the pilfering … Click Here to check it out NOW!
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7 Comments »
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Comment by John Klein — February 1, 2008 @ 12:52 pm
Julie: I was presently surprised that my email to you of last week became the subject for today\’s piece on direct mail. Terrific.
Now, one followup question/suggestion: You mentioned testing creative concepts very cheaply on line. It would be very helpful to me (and probably many others) to give us a track to run on. So, for example, say we had 6 totally different headlines or 4 differe offers and wanted to test them out via PPC marketing on Google or other. Could you walk us through an example of just how to do this, when to cut off each test run, how to keep the costs in line.
- John
Comment by Apryl — February 1, 2008 @ 1:13 pm
John and Julie:
I\’m getting ready to do some testing of my own with Google, and planned to test headlines in driving traffic to a landing page.
My idea is to work up three heads, and run each of them with a fixed budget to the same landing page–tracking the click-through rates of each, and use the highest performer in a mail piece later on.
I would think that conversion rate is the best test of the offer on the landing page.
If my best headline gets lots of click-throughs but no conversion, (assuming my heads were honest, and people got what they expected in head/lead on the landing page), then tweak the offer and test the best head again?
Is that a sound plan?
Comment by Eric Grimstead — February 1, 2008 @ 2:03 pm
Great Post Julie!
In response to John\’s question maybe this will help. Here\’s what David Frey did a while back. He was looking at running a full page ad in Millionaire Blueprints magazine.
Step 1: He created 3 versions of a full page ad.
Step 2: Converted those one-page ads into one-page landing pages with specific call to action
Step 3: He set up multiple Google ads to drive traffic to the landing pages
Step 4: Every 3rd visitor was served up a different ad - Google can handle all the \’behind the scenes\’ scripting to handle this version of A/B and in this case /C split testing
Result: At the end of the test (for like $300 bucks) he found one ad out pulled & converted by like a 50-60% lift.
So John in your case you can be testing headlines in the Google ads themselves to see which mini headline and intro copy pulls the highest CTR (click through rate)
Then on your landing pages you can be testing either your full headlines or completely different letter versions.
Good Luck,
Eric Grimstead
Comment by Eric Grimstead — February 1, 2008 @ 2:10 pm
Forgot to add this, which may help John too:
In the case of the full page ad test above, the cost for the full page ad was $30,000
If memory serves me correctly David was able to get hundreds of visitors to each landing page for the small PPC budget of $300
And time wise I think he only ran the test for 4 or 5 days.
Comment by Aaron Stanley — February 1, 2008 @ 5:02 pm
The real key to doing this cheap is to do everything yourself. Your own copy, your own creative, your own list research, your own printing, stuffing, and mailing, etc.
I\’ve been able to do mailings to several hundred with just a couple hundred dollars using cold-compiled lists from InfoUSA.
It\’s a lot of work, but when you\’re low on cash, you have little choice.
For my fiancee, who is an eyebrow artist (www.TheEyebrowArtist.com), I sent a letter to local female residents fitting our demographic profile. My response was 1% on the first mailing, and an additional 1% on the follow-up mailing. It was enough to pay for itself many times over since she got repeat business from it.
I\’m about to test a new letter and new offer that I believe is much stronger, and more personal. But the response will tell the story.
For my business, I\’ve been testing different lead-gen letters to different segments. Best response so far on one mailing: 1.3% on a mailing of 150.
Worst: 0% on a mailing of 300! (You learn something every time. That letter was too \”me\” focused.)
I\’m currently testing two other letters with a more personal approach and a \”grabber\” insert. Again, the response will tell the tale.
It\’s a lot of hard work, and even though I\’ve got envelope-stuffing knots in my shoulders, I\’m having a blast!
Comment by Glen Kohlenberg — February 1, 2008 @ 5:42 pm
Bingo Julie thanks for the tip on using google to test our postcards first.
So we can test 2-3-4 different cards and should come out with a clear winner.
Then test the winner on a 5000 roll out.Then do a 25,000 roll out then up from there.
Good concept could I do the same with newspaper ads?
Comment by Dale Branning — February 2, 2008 @ 1:32 am
Julie:
You suggested renting an e-mail list to test your offer before getting the snail-mail list. You need to clarify this point. While it\’s a cheap way to test, it could put you in the big spam doghouse. If you\’re like 90% of us you despise spam. It can give your business\’ reputation twin black eyes as one you can\’t trust. I\’m leery of any marketing method that is suggestive of spamming.
Comment by ganji.deva prasad — February 2, 2008 @ 5:18 am