For direct mail to succeed as a channel, you need a great mailing list.
When it comes to creating and acquiring mailing lists, your ultimate goal is to have an extensive list of accurate physical addresses. And not just any addresses-- you want the addresses of those most interested in what you have to offer.
So, how can you create or acquire a mailing list that’s not only going to reach customer mailboxes, but deliver results? Will Spero, CEO of Mailers Haven, talked with us about creating mailing lists with the ROI you’re looking for. Here are some of his best tips from 15 years of list-building and thousands of direct mail campaigns.
Many marketers try to do direct mail on their own, even if they don’t have a lot of experience. After all, we’ve all sent out birthday cards to our friends. How hard could it be?
According to Spero, many marketers don’t realize just how much work it takes to build a targeted list or design a compelling mailing. You’re better off partnering with a direct mail provider that you can trust. “Ultimately, you need a list, but you also need a mailing piece that’s well-designed and meets customer needs. A direct mail partner can help you along the way.”
The key is to automate as much of your direct mail and customer acquisition strategy as possible. For instance, you can create triggers based on your CRM. You can even use direct mail to conduct cold outreach with potential buyers while driving sign-ups online.
Often Spero sees people making huge mistakes with their lists, even if they’ve invested a lot in their mailing pieces. These people buy an occupant list when they should use a consumer list, or use a consumer list without advanced targeting methods.
“Sometimes people think they can get away with buying a cheap list, but in my experience, the list itself is important. Usually about 60 percent of the response of the mailing is due to the list, so the list is pretty crucial,” said Spero.
Ultimately, upgrading your list isn’t a substantial investment, especially when compared with designing, printing, and stamping the direct mail piece. “A typical mailing might cost 50 cents to mail, and a list might be a few pennies,” said Spero. “Paying an extra penny on the list is a worthwhile investment.”
If you’re spending a lot of money on the mailing itself, you should see the list as a worthwhile investment.
Be extremely specific in your targeting goals and parameters.
Do you know your customers well enough to buy a list of people just like them? Invest in building a list that is targeted to the extreme.
“People think they know their customers, and they just buy a list without doing a lot of analysis,” said Spero. “They say ‘yeah, give me a list of people about this age and with this income.’ They don’t realize that there’s literally hundreds and hundreds of selects that might be interesting for them.”
It doesn’t matter where you get your list, as long as you’re targeting the right cohort. “If you target the wrong people, the wrong age, the wrong income, and you don’t go into some of the more advanced selects, you’re not going to get the results you want,” said Spero.
Spero and his team use propensities, which are micro-selects, to build hyper-targeted lists that get results. Think: people who like to go to fast, casual Mexican restaurants. For example, if you’re looking to open a new Mexican restaurant, you can use a propensity to send a direct mailing to exactly the right people.
Grow your lists based on data from your existing customers.
A straightforward way to start building a list from the ground up would be to look at your existing customers. You can then build a lookalike list based on the parameters that are most directly tied to sales.
“You can take an existing list and run it through an algorithm to help you identify lookalike audiences—potential recipients who share demographic or behavioral traits with your list,” said Spero. The idea is to identify more audiences who are likely to make a purchase. To run a lookalike report at the national level, you need 10,000 people. A the local level, you’d need 3,000.”
Use advanced statistics to improve the precision of your targeting.
You can also use statistical techniques like regression analysis, which focus less on who each person is, and more on how likely someone is to respond.
“Regression analysis will score your list. It can tell you that a certain group of prospects is three times more likely to respond than a normal prospect,” said Spero.
Ultimately it’s impossible to know how direct mail performs until you send it to your list. Testing should be part of your list building strategy.
“I wish we saw more people running tests,” said Spero. “Instead of just doing one list, you could split that up into three or four lists and test them, so next time when you send mail, you’ll know which one tested the best.”
In the following section, Spero shares answers to FAQ about direct mail pilots.
How much should I spend on my first direct mail campaign? How many mailers should I expect to send out?
A statistical sample is 10,000 mail pieces. If you do not have budget to support that volume, start with a lower quantity. If the ROI is reasonable, you can increase the quantity and try to duplicate the results. My biggest piece of advice is not to ramp up the mailings until you have all the kinks out. Whatever you do, don’t launch with more than your minimum budget. Test a smaller amount, make changes as needed and then slowly increase volume.
What is an ideal conversion rate for lists?
It really depends on what you are selling and what you are trying to accomplish. A 1% rate of return is industry standard, but restaurant mailings offering a BOGO (buy one, get one) offer regularly get between 5% and 10% conversion rates.
But here’s the bigger question to think about: what exactly is a conversion? Do you want your recipients to buy something, visit your location, or fill out a questionnaire? At the end of the day you want to convert at such a level that the mailing was worth it. Remember as well that ROI should be based on lifetime customer value. So if you spend $100 to sell $40 in goods, but the customers you gained will spend another $100 over the next 24 months, that is still a successful mailing.
What are some do's and don'ts of first-time sends?
DO: Test expensively. That means oversized pieces, good stock, possibly live postage stamps. If you can get results on an expensive mailing, but the ROI is not worth it, then you can lower some of the extras and see if the results still come through. But if you test cheaply and it fails, you never know if it was the list/offer or the quality of the mailing that caused the failure.
DO: Use a professional Designer. Unprofessional designs kill a mailing every time.
DON’T: Go cheap on the offer. Make an exciting offer first (you can always pull back later) to see if the results are close. A bad offer will always kill a campaign. I once saw a fast-casual restaurant give $1 off. It just was so unexciting. Even if they only wanted to spend $1, they could have made it a free “side” which has the same cost for them.
Once you have a list, you may feel that you’re in the clear. But direct mail isn’t a perfect science, and there are a few things you should consider after you send out your mailings:
Do you have the resources to automate and design? Pull a developer and designer into a room to discuss a direct mail strategy and to think of the best ways to 1) set up direct mail triggers and 2) create a simple, informative, and compelling offer for the customer to bite on.
Looking for a direct mail automation solution? Get in touch with the Lob team. Our team can walk you through the basics of setting up your lists, making optimizations, running tests, automating redundant processes, and scaling up. Send us your question. Set up a call. Ping us—firstname.lastname@example.org