Does Direct Mail Work?

Direct mail used to be the flagship strategy for hundreds of B2B and B2C businesses in every conceivable sector, from vacuum cleaners to office stationery, to will writing services and charitable causes. The golden age of direct mail was probably the 80s and 90s; the heyday of the mail order catalogue and before the Internet became an effective business tool.

Many businesses and organisations still use direct mail, but the numbers are dwindling. Depending on your sector, it may still be common practice. For instance, many charities still use postal direct mail, as do some estate agents, travel agents and business consumable supplies.

If you are considering investing in a direct mail campaign, or have used the technique before and been disappointed with the results, it is fair to ask whether direct mail still works? There isn’t a universal yes/no answer we can give to this question, but we can provide a breakdown of costs, as well as average results you can expect in 2017.

How Much Does Direct Mail Cost?

Direct mail is one of the costliest forms of sales strategy. In 2014 businesses in the UK spent over £1.5 billion on direct mail, 14% of all money spent on advertising. Your direct mail costs will depend on the size of your list, printing and production costs for your mail package itself, plus secondary costs for any landing pages, coupons and other offers you are setting up to support the campaign. Some companies also purchase or rent a list of contacts for direct mail, although this is a declining practice.

Envelopes can be purchased for around £25 per thousand, and production costs vary from about £150 per thousand for simple letters, to £300 or more per thousand for brochures or direct mail pieces with inserts.

When postage and staff costs are factored in, you can expect to spend anything from £300-£700 or more per thousand contacts on each direct mail campaign, with more if you choose to purchase data. Data can cost £100 to £500 or more for every 1,000 contacts.

What Results Can You Expect From Direct Mail?

Response rates from direct mail vary widely per sector. In the consumer market, the best results come from charities. This skews average results quite considerably. Some direct mail companies claim a response rate of 1% to 2% for cold lists, and 2% to 4% for warm lists or for existing customers.

This won’t be the case for all businesses. If your direct mail is selling cars, you won’t get a 1% response rate, but even a 0.01% response rate may be enough to give you a good ROI on your campaign. It all depends on the value of your product. Sell one bottle of wine per 1,000 letters and you’ve made a huge loss. Sell one kitchen per 1,000 letters and you will make a good profit.

The Direct Mail Association claims an average ROI of £3.22 for every pound spent on direct mail. This is a good return, but to achieve it you need to ensure you have clean data. The vast majority of direct mail lists include a large number of incorrect addresses and deceased people. An estimated £18 million is wasted each year by UK companies sending direct mail to recipients who are deceased.

On the positive side of the equation, an estimated 92% of direct mail is opened by recipients, with many businesses who engage in direct mail reporting an increase in website traffic and social media engagement. These trends suggest that the most successful direct mail campaigns are those that are backed up by online activity. It is an open question whether the physical direct mail is actually necessary at all, or whether purely online campaigns could deliver the same result.

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