Stamps.com's DM Strategies

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Test and learn.


I write this not to disclose a radical DM innovation we have discovered, but to share our experience bringing a new company, a new brand name and a new technology into today's marketplace, through a careful integration of online and traditional direct-response tactics.


We tested, and you can learn. I want to share the details of our trials and triumphs as we launched our first direct marketing campaign - the campaign that would determine the course of our immediate future, and from which we emerged even more successful than we had imagined.


Stamps.com needed to cut through the bulging dot-com marketplace - to get people to not only notice us, but to consistently buy our products.


Before Stamps.com officially launched in October 1999, we set our customer-acquisition goals high and then prepared to work our tails off to achieve those numbers. We knew that our software marked the first major technological change in the postal industry in more than 80 years, and that it may be difficult to convince the small-office, home-office consumer to try our new postal methods. We launched a three-part direct marketing campaign of direct mail, direct-response e-mail and direct-response television in conjunction with a brand-advertising blitz, in part to infiltrate the market, but most important, to test the results of our different methods.


By Jan. 1, 10 weeks after our launch, we had achieved a base of 87,360 new customers, and we had learned precisely which of our tactics and messages were most effective.


Details. We believe that the most difficult campaign is usually the first campaign, so we started early to iron out all of the wrinkles. Before our fall launch date, we conducted a preliminary direct mail campaign to test offers and formats. Once we found the best combination of creative and free trial offer to yield the most customers, we were ready to move forward.


As launch time approached, we began to heavily market various versions of the free trial offer through DR mail, DR e-mail and DRTV. After some debate, we opted for a bold format on our DM pieces, and we were pleased to find them incredibly successful. With the exceptional response, customers began to flood our Web site, and we immediately sent out a second mailing of more than 3 million pieces.


A direct-response campaign for any Internet-related company would fall short in its effectiveness without some combination of online tactics and traditional methods. The heart of our Internet DM segment was a targeted e-mail mailing, in which we put together a concentrated list of several thousand e-mail addresses and then split it in half. Half of the names received a plain text offer of a one-month free trial and $25 in free postage, while the other half got the same offer enhanced with the colors and graphics of HTML. We found no significant difference in the response rates of the two letters, which will save us resources in the future as we limit the number of HTML e-mails we send out.


My recommendation with DR e-mail: get to the point to why someone should read your letter and consider your offer; keep it short; and be careful that your entire list is an opt-in list. This advice is nothing new, but no less important.


Toll-free number vs. dot-com. Our most surprising results actually stemmed from our direct-response TV spots and their subtle departure from the traditional DM model. We decided to challenge the effectiveness of the traditional toll-free phone number as the call to action to measure performance. We devised an extremely offer-driven, 60-second DRTV spot to target our SOHO audience, promoting a free-trial/free-postage offer similar to the DR e-mail. We were wary of the high cost of a toll-free number as our main sales vehicle, so we put the toll-free number head-to-head with a unique Web site address as an alternative contact.


We aired the spots with both our toll-free number and a unique URL and found our hunch to be correct. The unique URL was not only more cost-efficient, but also more effective in acquiring customers. Using the unique Web site address (not the main stamps.com URL), we knew exactly which customers were coming in from DRTV and their behaviors once on the site. Although the toll-free number is still technically a more accurate tracking method, we were more impressed with the effectiveness and efficiency of the Web site address method. Our DRTV campaigns haven't included a toll-free number since.


By the campaign's end, we had tested, learned and exceeded every one of our goal expectations, all within 10 weeks of our launch date. We discovered that our branding methods were effective in building awareness, while the DM tactics seemed to be what drove customer acquisition. In fact, we had found so much success with our DM efforts that we enlisted the support of direct-response agency DraftWorldwide.


Most important, we found that in direct marketing today's technology products, the rules have changed and will continue to change as the age of information continues to boom. We learned that now, more than ever before, we must test and learn.
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