Commentary & Analysis
Revving Up Direct Marketing Performance
By WhatTheyThink Staff
Published: November 27, 2006
--- Special Feature Revving Up Direct Marketing Performance By Mike Howard November 27, 2006 -- The power of direct mail to drive business may be one of the more underrated marketing tools available to businesses, but certainly not among companies that have seen how variable data printing can boost response rates. A recent article in The New York Times highlighted the strengths of direct mail, citing direct mail's ability to reach specific customers and its popularity among advertisers because of the ease of measurement. Most people would be surprised to know that the largest share of marketing spending in the United States goes towards direct mail. Marketers are placing a greater emphasis on direct marketing than ever before. Of the $263 billion in U.S. advertising spending in 2004, 19.8 percent went to direct mail, the most of any media. Newspapers were next at 17.7 percent, followed by broadcast TV at 17.5 percent, according to Robert J. Coen's Universal McCann U.S. Volume Report as reported in 100 Leading Advertisers (Advertising Age, June 27, 2005). It's interesting to note that direct mail spending has surpassed broadcast network TV every year since 2001. The Story Behind the Story Many factors drive the upswing in direct mail, led by marketers placing a premium on one-to-one communications. Fragmentation caused by an unprecedented number of media outlets, "do not call" lists that block telemarketers, and the growth of the Internet help increase the value of direct mail because it reaches customers in a highly personalized way. The key for print providers seeking to build direct mail business is in exposing more marketers to the power of variable data printing and how one-to-one communications can work for their business. Many factors drive the upswing in direct mail, led by marketers placing a premium on one-to-one communications. Bart Foreman, President of Group 3 Marketing, credits the technological advances of digital production color presses with taking direct mail to new heights of quality and effectiveness. The Minnesota-based marketing agency focuses on finding the best ways to help clients build lasting relationships and increase revenues. Often, that means direct marketing. "We've always had good information about buying habits, preferences and other consumer data. And we've always had beautiful printing. Now, we can combine the two--customer data and quality color printing--through one efficient process to create highly personalized direct communications materials," said Foreman. "Digital presses give us the perfect marriage of data and technology to develop direct marketing programs that deliver outstanding results." A campaign developed by Group 3 Marketing, the Guests First direct marketing program for Fantastic Sams salons, produces consistently higher response rates and strong returns on investments. After presenting early beta test results, Foreman convinced Fantastic Sams corporate management that individually personalized custom mailers would generate greater returns for salon owners and pay for themselves in short order. The corporate marketers were receptive to the idea, but told Foreman he would also have to convince individual salon owners to buy in. Group 3 Marketing rolled the program out on a limited basis, then expanded it as the numbers grew. How it Works "Like every small business, Fantastic Sams salons want to build relationships with their customers," said Foreman. "That's exactly what this program is designed to do. The basic revenue drivers are attracting new customers, winning back previous guests and retaining current ones. The campaign also targets existing guests with offers for expanded services, such as hair color or retail products." Salon owners are told how the program works and given a menu of options to determine which mailers to use and how many to send. They provide customer data captured at the point of sale, including gender and purchase history. There is a full year mailing calendar based on themes, with one drop every six weeks. The salon owner sets a budget and is in control of costs, spending as little as 45 cents per piece to process data, produce and mail an oversized postcard. The results have been impressive. In one case, we mailed out 1,135 pieces at a cost of about $500 and got a 36 percent response. The ROI was more than $14 for every dollar invested." "It's the owner's money, and the program is tailored to provide the best ROI within that framework," added Foreman. "Typically we see a 15-30 percent response rate, but many offers have had returns even higher. In one case, we mailed out 1,135 pieces at a cost of about $500 and got a 36 percent response. The ROI was more than $14 for every dollar invested." As word of the results have spread, more salon owners have signed up. Today around 10 percent of the company's 1,400 salons are involved with the program and the goal is to bring many more of them on board. Putting it Together Campaigns such as this depend on a streamlined workflow, fast data processing and high-quality production using a digital production color press. "We can process large amounts of variable data, while turnaround time for jobs has been reduced tremendously," said Kelly Laughlin, production manager at Maximum Graphics, the printing partner for the Fantastic Sams program. "This is a clear advantage for the agencies we work with. It means they can create more effective direct marketing products, and grow them into more comprehensive programs." Processing large amounts of variable data and reducing turnaround is a clear advantage for direct marketing agencies. The jobs come in to Maximum Graphics in the form of layout files and data ready for processing and production. The output is full color one-to-one personalized and versioned postcards with variable text and images that stand out from conventional direct mail. Impressively, it takes just three days from data delivery to mail drop. "There are three main aspects to what we do with this program," said Foreman. "We get the data from each salon's POS system and segment and process it. We combine Fantastic Sams corporate guidelines with our design skills and creativity to produce unique mailers. And, with our print partner, we make sure things look good off the press." Print providers can put the power of digital production presses to work in increase print volumes by becoming evangelists for the technology and showing new and existing customers how the data they already have can make marketing programs soar.