Direct Marketing in an economic downturn

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I just responded to this question posed on LinkedIn, and thought it would be a good first post here:

“Can anybody point me to reliable statistics on overall industry trends in direct mail volume and response rates?
Even before the downturn, I’d been hearing from clients that direct mail response rates are dropping. This is a very broad generalization and I’m sure actual results vary by industry, audience, use of data, etc. But anybody can point me to some reliable numbers, I’d really appreciate it.
Also, I’ve also noticed fewer offers in my inbox and friends of mine report they often come home and find nothing in their mailboxes. Again, are there any reliable statistics on falling mail volumes or even volume per household / company.”

My response:

DM News, August 13 2008: “According to the USPS, total mail volume was down 5.5% in Q3 of 2008 (ending June 30)… The USPS said that the decrease in volume is the result of a slow down in the economy, ‘particularly the financial and real estate sectors, which are heavy users of the mail.'”

Who’s Mailing What will tell us what the industry is doing and where it may be going, or what the industry is testing or striving towards. Response rates and cost effectiveness by company, product, industry and target are not available in any central database; at least, I’ve never seen anything like that. There are some benchmarks, but nothing comprehensive that has truly helped me with DM planning decisions for a specific product or company. It’s micro and macro studies of history at a particular company, and in an industry (if that data is available), that will help form a direction for future DM efforts. Any other data is gravy. Analytics will become of huge importance, as will being able to quickly test various versions of DM messages and pieces to arrive at the most cost-effective creative (for example, multivariate testing instead of AB splits).

With new technologies, and even tighter customer targets being forced upon businesses by the economy, effective DM will no doubt experience an increase in both results and the size of the marketing pie. The trouble is that more and more effort will be needed to determine the right paths and messages to use. Businesses that cut DM budgets and resort (or regress) to using a shotgun approach to marketing will no doubt suffer, and will not understand why things are working — or more importantly — not working. Now is the time to put even more resources towards DM, whether it is mail, email or mobile (or even such guerilla marketing tactics as targeted and tracked door hangers), even if the overall marketing budget shrinks.

General advertising will decrease further as I see it, and become less effective. The science, combined with the art, of direct marketing will become of much greater importance, along with data and analytics bedfellows.

Direct mail has been falling in volume for the past few years, but the most cost effective mail will continue and thrive. As expressed by John Greco in a letter to DMA members this month, businesses need to fine-tune their relationships with their customers even further. Branding, often thought of as a separate entity, will need to become almost as scientific as DM. A logo, company name and slogan will have to sell, not just be a “warm fuzzy” that looks nice to a board of directors. Everyone in the company will need to be a marketer to a degree. Everything a company does must have the customer in mind, and not just count the customer as an “accounting unit.” Keeping that customer — and keeping that customer happy — become paramount.

Finally, consumers will become even more selective. It’s our job as DMers to identify who will respond, and devise the most effective offers that will get the phones ringing, customers licking envelopes and “order submit” buttons being pressed.

Jonathan Blaine

I've always called myself a "Marketing Guy." If I had a brand and logo, perhaps that would be my slogan. Measuring ROI is huge. Just because you're now using "new media" does not mean marketing fundamentals should be discarded. Customers' desires do not change. I'm a "right-brained creative analytical" guy (if you can fathom such a thing) who looks at a project several different ways. My first instinct is usually the correct one. I'm a "doer," and often a "diplomatic fixer;" someone who gets things done and still gets a thrill out of customers actually buying something because of something I mailed to them, or an ad I placed. Most of my success has come from strategy, writing, how ideas are presented to the potential customer and the actual thoughts that somehow originate within the ether between my ears. As a fan of DM guru Denny Hatch, I believe that the brand should never outweigh the message, and that art should never win over copy. The mix has to be “just right.” And continually tested. I have solid ryttan, err, written and verbal communication skills, and a reputation for consistently producing cost-effective quality work.

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