How outdated direct mail tactics could cost millions
Many marketers are failing to capitalise on their direct marketing spending by using outdated tactics and inadequate approaches to campaign analytics, according to direct marketing and analysis firm SPSS.
The company asserts that the main problem in the marketplace is what it calls the "blanket bombing" direct marketing technique. This approach could cause response rates to drop by 50%, cut profit margins by an average of 29%, and cause direct mail costs to increase by up to 40%, the company warns.
Lower open rates The company's research comes at a time when (according to the Direct Mail Information Service) only 45% of direct mail is actually read by its recipients, and only 42% of consumers report having made a purchase as a result of direct mail during the past year.
By opting for multiple targeted campaigns instead of 'blanket bombing' using a single campaign, and by using intelligent software to identify and segment smaller numbers of likely recipients, one of SPSS's clients - a financial services provider - managed cut costs by 35% while increasing its conversion rate by 40%. Similarly, the leisure holiday operator Centre Parcs reported a reduction in direct mail costs by £1.5 million while revenue increased by £1.65 million.
Relevance is still king According to Neil Hartley, UK country manager for SPSS, "By pursuing the old-fashioned blanket bombing method, many firms are not only wasting their marketing budget, but also run the risk of irritating customers with irrelevant messages."
As a result, SPSS has outlined some of its key guidelines for improving response rates, including:
- Adopt a customer-centric approach, aligning marketing activity with each customer's overall value;
- Replace mass, infrequent mailings with smaller, more targeted campaigns using predictive analytics to determine the offer, timing and channel for each customer;
- Incorporate customer feedback into the marketing process to better refine targeting.
Hartley added: "Not only will such a targeted approach enable marketers to improve the ROI from their direct mail campaigns, but it will also help their companies to be more environmentally responsible by ensuring printed matter is used more efficiently and effectively than before."