Postal rates will impact direct mail but direct mailers have the opportunity to mail less and make more.
Direct mailers are faced with the challenge of rising postal costs, which I did not mean to trivialize in my last blog. I too owned a mail shop at one time and remember the relentless beatings by customers who would squeeze you for every dime they could.
Assuming the volume of mail is going to go down how can direct mailers increase their margins? For years direct mailers have been selling what I call “ancillary services” including selling mailing list, list cleansing, design, etc.
With new technology there is a whole new set of services and if one thinks of themselves as a “distributor” or “caretaker” of information, the possibilities expand incrementally. SMS service, archiving, EBP to name a few. There is a lot of potential here and many companies willing to partner, if these areas are foreign to you. There is huge potential here being a distributor of information.
A second thought, what if direct mailers changed the model as to how they were paid, based on success? Acceptable response rates today ranges from 3-5%. The limited amount of information available on the results you can get in Transpromo and multi-media applications, suggests that if done properly, results are many times the norm of 3-5%.
What would it be worth to a customer if I could take that response rate from 3-5% to 15 or 20%? At the same time maybe saving the customer money AND increasing their revenue.
So let’s say, as the direct mailer, I approach a customer. They want to send out up to 100,000 pieces of mail for an offer for a $50k sports car. They want to sell 50 cars.
We establish a detailed demographic profile, create a program specifically for their demographics, which could include multi-media, SMS, purls, etc. Through the demographic profiling we found 65k qualified. Because of the profiling, creative work, multi-media marketing the response was 15%.
• If done properly you made money on the lists, creative, adding purls, maybe OMR codes, SMS service, transpromo design (just made that up), but you get the idea.
• The customer saved money by mailing less and received a higher response rate. But even if the cost to the customer was the they did get a higher response.
• If the customer spent the same $$$ (or less on print and mail) you made additional revenue, with most likely lower costs in the ancillary multi-media approach.
Why not change the model and share in the success. Why not say “The 65k pieces will cost you cost X and anything over a 5% response I receive Y. Or if you sell the 50 cars I get Z.”
Sounds over the edge? I know someone who does this. And it works.
It is about who controls the data: become a distributor of information who just happens to also print. There is a lot of money in data and content.
Think outside the box.