Targeted direct mail exceeds paid search advertising ROI

Client: Commerce ?Payment Systems ?
Generate better rate and quality of responses than paid search by using targeted direct mail.?

Commerce Payment Systems, a provider of credit card processing solutions, was prospecting for new accounts mainly through paid search, but its costs were rising sharply, and CEO Michael Mendlowitz began to reexamine the search marketing strategy. While seeking a new agency to revamp its search advertising, Mendlowitz spoke to Joy Gendusa, founder and CEO of PostcardMania, who convinced him to add direct mail to his marketing mix.

“At the beginning, my hesitation was direct mail costs would be prohibitive,” he says. “But we found that if you put together the right piece, the costs can be comparable.”?

STRATEGY: PostcardMania created an 11-by-18-inch tri-fold mailer, and tested two offers: a package of services for startups and a simpler offer of credit processing services. Both targeted newly-incorporated businesses and tested First-Class versus Third-Class postage.?

Commerce Payment Systems segmented the mailing list into several business groups, including recently-listed limited liability corporations. It also segmented by the Standard Industry Codes used by the credit industry to identify businesses in sectors more likely to seek credit payment services.?

The tests revealed that the simpler offer got double the response rate of the bundled offer. The simple offer generated far better ROI than paid search, says Gendusa.?

The companies also found that First-Class postage pulled better response than Third Class. “If other providers mail First Class, their card or offer will get to the merchant one to two weeks before a Third-Class offer,” says Mendlowitz. ?

The call-to-action included both a mirror website and several toll-free numbers, in order to better track results. ?

RESULTS: A six-month test of monthly 12,000-piece mailings generated a slightly better than 1% response rate at a cost of $9,000 to $10,000 per mailing. With each client having a value of $50,000 to the company, the ROI was comparable to search advertising. ?

The campaign, rolled out in October, now mails 85,000 to 110,000 pieces a month. “We’re bringing in 200 to 250 clients a month from direct mail,” says Mendlowitz. “That’s growing, as we’re exploring new lists and new data, and little tweaks to the campaign.”

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