Direct Mail, Evolved
Illustration by Adam K. Olson
Despite all the digital hullaballoo in marketing today, the direct mail business is expected to grow 1.4% annually for the next five years to $13.8 billion, according to IBISWorld's “Direct Mail Advertising in the U.S.” October 2012 research report. This is good news for the channel, which contracted an average of 1.6 % per year over the past five years, driven by recession-era budget cuts. But it's only a modest comeback.
“Direct mail is only growing at about half the rate of overall ad budgets and less than the rate of inflation,” says Kevin Culbert, lead analyst at IBISWorld. “But incentives provided by [the] USPS are giving direct mailers a reason to do business with them. The continued merging of digital and physical advertising is going to be one of the reasons for growth. In the next five years we'll see more aligning of digital and direct mail together with things like QR codes.”
The U.S. Postal Service (USPS) has been offering new programs to compete with cheaper digital channels and to reach consumers in an increasingly digital world. For example, it has run promotions in which mailers received lower rates for sending direct mail that includes 2D barcodes with a call-to-action. “Right now is a pivotal point for direct mail; it can do things it never did before. It can elicit an impulse buy,” says Gary Reblin, VP of new products and innovation at the USPS. “Direct mail was never viewed as [an] impulse tool at any point in history, but now it can [be one]. We're trying to evolve the mail to have its place in a more digital and mobile society.”
Reblin also sees augmented reality technologies adding to the marketing benefits of direct mail; for example, enabling marketers to create 3D experiences within catalogs.
On the backend, new technologies and 24/7 print houses make it easier and more expedient to execute mailings, so marketers can use the channel almost like email. Consequently, marketers can make changes to campaigns in progress based on the results of tests and use data to target on a more personal level.
In fact, personalization is still very much at the core of effective direct mail marketing. “Marketers today are gathering as much data as possible on customers, taking that information to [compose] relevant communications, and using direct mail as the vehicle,” says Don Jarred, VP of production services at marketing services provider Epsilon.
Given the changing environment in which direct mail operates, marketers must think differently to stay relevant and engage today's oft-distracted, multichannel customers.
The following are 10 tips for marketers to do just that.
1. Deliver your message into the right hands
Personalization in digital channels has upped the ante and now consumers expect messaging to be relevant across channels, including direct mail. Marketers often have scores of data about customers and prospects and should use this information to avoid batch-and-blast messages.
Credit card company Discover, for example, targets its list based on a number of different customer attributes and then tags each piece of mail that it sends with a personalized invitation number. Then when a customer goes online or calls the contact center, the online application or the customer service representative is able to process the request based on the specific offer sent to that particular customer.
“Direct mail is a great way for us to target consumers,” says Laks Vasudevan, director of acquisition at Discover. “It's our most targeted platform, and we use it as an opportunity to understand the consumer more.”
2. Make it personal
Savvy marketers combine transactional and profile data to make sure customers get a message that is right for them. Marketers also use predictive analytics to craft and send communications that they anticipate will do well with a particular individual. “Analytics tools are essential to creating smart databases that can self-mine and identify…the responses [marketers] are looking for,” says Grant Miller, global VP of operations and product management at Pitney Bowes.
“Data is the champion,” adds Epsilon's Jarred, “but being able to take that information and make it relevant in a one-to-one communication and using direct mail as the vehicle is extremely important in how we communicate to prospects and customers today.”
One way to use data to create one-to-one communications is to merge key customer data points with variable graphics for print-on-demand mail pieces. “It can be built to speak to a particular customer that you want to have an individual relationship with,” Jarred says.
The USPS's Reblin emphasizes that personalization is vital to the effectiveness of direct mail. “Direct mail still gives the consumer the idea to check out a product, unlike when they do a Google search and have to come up with the idea themselves,” he says. “But it has to be targeted to get the customer's attention.”
3. Remember those special days
Triggers like birthdays are especially effective for connecting with customers on a personal level. DSW sends personalized birthday postcards to all of its loyalty program customers (there are 20 million rewards members in the United States). The shoe retailer offers customers $5 or $10 off on a purchase during the month of their birthday, based on past purchase behaviors.
“Birthdays are very personal to all of us, and we like to have the personal touch by sending something in the mail,” says Kelly Cook, SVP of marketing at DSW. “A customer may love getting an email from us for fashion tips or to let them know about a triple points offer, but their birthday is different.”
The company has tested sending birthday coupons, via email, but these didn't perform as well as the direct mail piece. “Direct mail provides beauty,” Cook says. “It's much more elegant to get something in the mail that you open up. It can be more emotional.”
DSW also uses mail to alert loyalty members about promotions like triple points for purchases. “Mail is special because it gives you a customer's undivided attention,” Cook says. “Digital can be busy and harder to get through the clutter.”
4. Integrate direct mail with other marketing channels
At Discover, direct mail is also part of an overall messaging program that includes TV, radio, billboards, contact centers, and online. In January when the credit card company introduced the “Discover it” card, a rewards card with no annual fee, the company used a multichannel approach to get the word out. Consumers were introduced to messaging through TV ads and billboards, but direct mail served as the catalyst to drive sign-ups either via Discover's call center or an online application.
“Direct mail is a critical part of a communication plan,” Vasudevan says. “But we believe that it's important that we use multiple channels to close the loop.”
Integration also allows brands to send a consistent message across channels so that no matter how the customer interacts with a brand, it's seen as one holistic organization. For DSW this means not thinking about the company as a store, a website, or a mobile site, but as one entity that sells shoes. “Our strategy is to be one brand to the customer,” Cook says.
5. Plan holistically
When using direct mail as part of an overall multichannel effort, it's essential to consider how each channel will impact the others. “Direct mail is no longer just a mail piece,” the USPS's Reblin says. “If you want it to be more effective by integrating it with other channels, then you need to think about the whole experience.”
For example, adding QR codes to a direct mail piece is a great way to catch a customer's eye, but if it leads to a website that's not optimized for mobile, then it could turn customers off instead of spark a sale. Or, when using direct mail to encourage customers to go online and register for an event, the PURL (personalized URL) should lead directly to the sign-up page, not the brand's homepage.
“Think about the site and the end reaction,” Reblin adds. “You want to think the whole experience through for the customer before you execute it.”
6. Use 2D codes wisely
Adding a 2D barcode such as a QR code can bring a static piece of marketing to life. During the 2012 political campaign season, politicians used direct mail pieces with QR codes to deepen the conversation with citizens. After scanning the codes, the recipient could watch a video of the candidate speaking on a specific issue, for instance.
“Mail is a great jumping-off point,” Reblin says. “It can encourage people to go deeper to find out more.”
But don't add a 2D barcode just to be new and flashy. It's important for marketers to think about which customers are more likely to respond to these triggers. DSW, for example, has learned that while men are likely to respond to direct mail pieces with QR codes, women often ignore them. For this reason, the company only sends QR codes to men.
“Our male customers have shown us through data that they don't like having to rip something off of a mailer and put it in their wallets, but they do use QR codes,”
Cook says. “So we include QR codes on mailers for men. Women are more inclined to put something in their purse and less likely to use QR codes.”
7. Push the envelope
Mailers are rethinking how to use the envelope as a marketing tool. Discover, for example, uses images of its cards on its direct mail envelopes. Its mailings go out when the brand is already running ads on TV, radio, and billboards, so the customer may be more likely to open it to see what offer Discover has tailored for them.
“We show our card because we'd like the prospect to see that it's a great product,” Vasudevan explains. “The idea is to show off the product and encourage them to open it.”
Citibank has also experimented with its envelopes by creating simulations of the blue-grey windows that might be seen on a statement mailing to make the piece look more important. “Marketers should experiment with the envelope to get a customer to open it and not dispose of the mailing,” says Pitney Bowes' Miller.
Using full color on envelopes has gotten easier to print thanks to new wrapping technologies, which build envelopes quickly and efficiently out of one roll of paper around the mailers—without driving up costs.
8. Think customer-first
As with all marketing, direct mail should be inspired by the customer. “Gone are the days of blanketing the universe with one offer,” Epsilon's Jarred says. “We've become much more analytical and send creative that is backed by a real understanding of the customer.”
Demonstrating that understanding means that marketers must get back to basics: make sure their lists are current, their mailings are targeted, and their promotional offers are meaningful so their message will resonate with the recipient.
“It is important to go back to the core and think about your customer,” Discover's Vasudevan explains. “What we offer has to be innovative and significantly relevant to customers, and it has to be presented to them in a targeted way. Direct mail is a great channel that works in combination with everything.”
DSW enables customers to choose how they receive marketing and loyalty communications. “There is a set of customers who prefer to get a message in their mailbox,” Cook says. “It makes them feel warm and special and excited.”
9. Increase production with new technologies
New innovations in ink jet technology make it easier and more cost effective for marketers to produce high-quality mailings and get them out quickly. With these innovations in direct mail production, the channel has more in common with email than it has in the past. Although, in general, direct mailers still plan ahead for campaigns, it's easier than ever to test campaigns in progress and change them during the execution based on how recipients are responding.
For example, marketers can change a call-to-action on the second postcard in a series if the first version doesn't perform well. “The direct mail timeline has been extremely collapsed,” Jarred says.
Improvements in database integration can also help speed the mailing cycle without risking the personalized experience. “In the past you would print out a whole bunch of pieces and have them in warehouse ready to distribute, and then add envelopes,” says Pitney Bowes' Miller. “New analytics tools allow you to sub-segment and fine tune your market, coming out of the blocks without requiring a lot of extra effort to identify your target market when you get into physical production,” he adds.
10. Marry mail and mobility
Consumers are used to getting direct mail pieces with coupons or toll-free numbers on them. Mobile offers ways to simplify both. Inspired by Google Wallet, this month the USPS is launching a new promotion to encourage mailers to send direct mail pieces with coupons that can be uploaded to a mobile phone.
“[Then] you don't have to take the coupon to the store with you. You can add the coupons to your phone and use them when you're at that store,” Reblin says. “We're trying to make direct mail more convenient and fit better into people's daily routines.”
The USPS is also encouraging marketers to add QR codes that feature click-to-call triggers. Recipients can scan the QR code and the phone number will automatically pop up on their phone. All they have to do is click to reach the company's contact center. “This is a great way to solicit an inbound telemarketing response,” says Epsilon's Jarred. “By allowing consumers to capture information more quickly, direct mail is staying nimble.”