Direct Mail Has Hit a Bottleneck

by admin

Direct Mail Has Hit a Bottleneck

by admin

by admin

Direct mail has been a very effective marketing vehicle. Direct Mail (DM) is a marketing effort that businesses use a mail service to deliver a promotional printed piece to their target audience. Promotional pieces normally include letter mailers, self-mailers, postcards, mailers with brochures, booklet mailers, catalogs and three-dimensional mailers. To set the stage, the definition of direct mail in this chapter includes only letter mailers, self-mailers, postcards, and 3D dimensional mailers. for decades.

Today, multichannel retailers are faced with three challenges when it comes to direct mail: 

First, direct mail is a very mature marketing media; for decades, retailers have already tried and tested many techniques from list selection to offers to formats; it seems to be very hard to come up with any new ways to make direct mail more effective. Response rates of direct mail campaigns have been stagnant or even declining year over year for many retailers. 

Second, the size of direct mail audience has been shrinking. Since mobile became the central to today’s world, not just millennials, most of the population has shifted to mobile and online as well.

Third, more attentions and marketing dollars were allocated to digital channels. Not surprising, marketers took advantage of these new technologies such as display ads, search, social media, and retargeting etc. that allowed them to communicate with their customers and prospects quickly and conveniently.

In response to the market changes, recently, some retailers treat direct mail as an old school media, they decided to spend less time and marketing dollars in direct mail, which might not be a good strategy for two reasons:

Firstly, the importance of direct mail has been widely underestimated. Despite online sales continue to grow year over year, brick and mortar stores are still generating the lion share of revenue for most multichannel retailers. According to US Commerce report, in 2017, Ecommerce represented only 13% of total retail sales after all, physical retail stores accounted for 87% of total retail sales revenue. For some multichannel retailers, online sales contribute less than 10% of the total sales revenue. So, revenue wise, it will take many years for online to finally surpass offline. Also, customers especially those who like to shop offline resonate very well with direct mail. More importantly, direct mail is still profitable for retailers. Therefore, direct mail will remain for many years to come a viable way to advertise products and services to these relevant customers. 

Secondly, while there are many challenges facing direct mail, there are also new techniques and new methodologies available for direct mail as well. For instance, Revenue Insights Corp introduced an approach called Mu’s 541 Rule several years ago, a new framework that aims to improve the effectiveness of direct mail campaigns. Retailers who used Mu’s 541 Rule approach saw significant increases in campaign response rates ranging from 10% to 50%.  

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