WILL THE REAL COST OF DIRECT MAIL PLEASE STAND UP?

Transcription

1 WILL THE REAL COST OF DIRECT MAIL PLEASE STAND UP? - 1 -

2 SUMMARY Direct mail marketing, even during this digital age, remains an extremely popular traditional marketing channel and one your marketing strategy can t afford to be without. But how much is direct mail truly costing you? Review the estimated time and costs involved at each step of the process from creation to analysis, and discover the best way to optimize your direct mail campaign to save time and money. INTRO Let s point out the marketing elephant in the room: in the franchise world, direct mail marketing can be, well, complicated. It s a time-intensive process that often ends up disjointed from region to region, and sometimes begs the question: is this worth it? (The short answer: absolutely but stick with us). Here, direct mail is referring to the marketing tactic of mailing business communication to targeted audiences to acquire or retain customers (e.g., postcards, letters, newsletters, brochures). As a franchise executive, you make decisions every day to increase profits and efficiencies for your company. So to figure out the potential value in direct mail, you must factor in the cost and return involved in each direct marketing effort from start to finish: the process for franchisees to get a mailing out the door, as well as follow-up, analysis, metrics of success, and most importantly, ROI. As you ll see below, direct mail marketing, when building from the ground up, takes a lot of time. Not only do time costs for direct mail start adding up, but they keep your franchisees and managers from focusing on their core business. Yet as stated above, it s not that direct mail marketing isn t worth putting in time and effort. Far from it, actually. When it comes to generating leads and engaging customers, direct mail is one of your best bets: Direct mail has better ROI in both acquisition and retention, above social media engagement, search engine optimization, and search engine marketing, and online advertising. Direct mail generates 10% more customers than (34% direct mail, 24% ). Direct mail drives results, but the siloed way that franchises often approach direct mail can be inefficient. When you re looking at marketing efforts across multiple regions, it becomes clear that it s difficult to create consistent direct marketing messages. Franchisees have a tendency to go rogue with their marketing efforts and create communication that is unclear, off-brand, or just ineffective. Different content, branding, tone, and even materials from each location to the next can all create contradictory final products ultimately leading to a diluted brand. Choice is great when it comes to a lot of things, but when building strong brand recognition and loyalty, consistency is always best. If done correctly and consistently, direct mail could be the workhorse of your marketing strategy, engaging consumers at higher rates than most other marketing channels. Finding a way to optimize your direct mail strategy across your organization will mean efficiency in your marketing, consistency in your brand, and hours of time savings for your franchisees. Below, find an estimation of time costs from creating one direct mail campaign and learn the best and most cost-effective way to streamline your organization s direct mail marketing strategy

3 PROBLEM So what is the true cost of direct mail? From a sticky note idea to a postcard sitting in a target consumer s mailbox here is a step-by-step breakdown of direct mail production. Postcards have benefitted from ever-compressed schedules and a strong digital focus, as people reported that they read postcards in greater numbers, with a 3.9% year-over-year increase. Below is a general guide and time evaluation for one franchise s postcard mailing to 2,000 target consumers*: INTENT 4 HOURS $160 During this initial phase of the direct mail development process, time is spent deciding the purpose behind the mailing and what action the audience should take. The cost? Time from the franchisee or project team s schedule. A project team could be a marketing group, an agency, colleagues or friends ideating, etc. For this estimation, let s say the franchisee manages the project development. The average income of a franchisee across industries is about $85,000. So for estimate purposes, let s say their time costs about $40/hour, and they spend about four hours of work on this initial step. At the beginning stages, it s important to quickly determine the bigger picture for the direct mail piece: what message does it need to convey? What s the best way to do that? Creativity and urgency are crucial in helping a direct mailer stand out. KPIs 2 HOURS $80 Deciding what the key performance indicators of the campaign will be is necessary for determining its success. Before moving into production for the piece, the mechanisms to appropriately track success must be in place. The cost? Time. Let s estimate the franchisee works on this for two hours at the same $40/hour rate. This piece must tie into the overall marketing strategy, so it may require rethinking the marketing mix. Looking back at past marketing plans, the audience, and any marketing goals will help shape this step. What is this communication trying to accomplish? How will it achieve that? If looking for an increase in sales or foot traffic, what metrics will show that the direct mail piece accomplished those goals? Consider using tracking devices such as promo codes, tracking numbers, PURLs (or personalized URLs, which is a call to action with a web address specifically for that individual), or QR codes to more easily see the marketing s impact. 1 Data & Marketing Association,

4 Looking back at past marketing plans, the audience, and any marketing goals will help shape this step. What is this communication trying to accomplish? How will it achieve that? If looking for an increase in sales or foot traffic, what metrics will show that the direct mail piece accomplished those goals? Consider using tracking devices such as promo codes, tracking numbers, PURLs (or personalized URLs, which is a call to action with a web address specifically for that individual), or QR codes to more easily see the marketing s impact. CONTENT 4 HOURS $250 Persuasive content ensures your postcard is read and understood. A clear call to action will inspire your customers to take that next step. The cost? This could include costs of hiring a freelance writer, or time costs of writing original content or repurposing existing content. Let s estimate it takes 3-4 hours for writing (and for freelance writers, about three hours of additional time costs of finding and screening the best fit). Freelance writing rates range anywhere from $ an hour. 3 For this estimate, let s take the median value: $72. Professional writers can create engaging, persuasive content that the targeted market will want to read; if whoever is developing the direct mail piece doesn t have professional writing experience, it s worth hiring extra talent to improve the direct mailer s effectiveness. DESIGN 5 HOURS $270 Working hand-in-hand with content, good design will get a postcard noticed and display the brand as reputable and desirable. The cost? Whether it s a freelance designer, an employee on the team, or a neighbor helping out with the design of the piece, it typically comes at a price. For a freelance designer, rates hover right around $50-70/hour. 4 For this estimate, let s take the median value: $60. About 4-5 hours of freelance work is a safe estimate. Finding an experienced designer is key. A good, eye-catching design is often what separates mail that s opened, and mail that s immediately tossed. EDITING 1 HOUR $40 This step can never be skipped. Double-checking your postcard before it is printed helps catch errors that will turn off potential customers and weaken your brand. The cost? Time; let s estimate one person takes one hour to edit. Checking not just for errors, but for the authentic tone and voice of the brand will help build a strong, recognizable direct mail strategy. 3 The Balance, Thumbtack,

5 LIST-BUIDLING 2 HOURS $120 Once the postcard is ready, gathering your target audience s addresses is the next step. Always take into consideration the size of your mailing and their geographic and demographic attributes. The cost? This could include combing through existing databases or purchasing a list for several hundred dollars. Assembling a list from existing data could take about three hours to refine and complete. After the initial data is pulled, refining it to accurately reflect the key audience sets the mailing up for success. Direct mail can yield an even greater response rates with increased personalization and targeting. Marketing research shows that personalized direct mail triggers a response rate of about 4.4% across the board; significantly higher than that of at 0.12%. 5 REVIEW 1 HOUR $40 PRODUCTION 2-8 DAYS $250-$500 DISTRIBUTION 2-15 DAYS $770-$1,030 Quality control checks on the finished product help catch mistakes from the printing and finishing process. The cost? This is a time cost; let s estimate the franchisee takes one hour to review. Quality control checks make sure the direct mail piece is going to be effective. Catching issues like printing errors or color variations is key to maintaining correct brand standards. While the printing facility staff may conduct their own checks, it s important to make sure especially in the early stages of a relationship with a printing partner that communication and reviews are happening through completion on each project. Any delays due to printing issues or miscommunication can mean lost time, leading to lost revenues. Once your design is finished and your audience finalized, it s time to create the physical postcard by finding the right printing partner and printing the postcard. The cost? Finding the right printer is a time cost let s estimate they take four hours to research and meet with various printing companies. After determining a printing partner, it s safe to estimate costs around $ for 2,000 full-color postcards. This stage includes postage and coordination for mailing. Options for mailing include EDDM (or Every Door Direct Mail ) which is the most cost-effective way to distribute direct mail, but it doesn t allow for refined targeting since it s distributed to each address through an entire postal service route. Standard mail can be as targeted as needed, but has no guaranteed delivery time so it s better for mailings that are not time sensitive. Finally, first-class mail is the most expensive option, but can be highly targeted and local mail is delivered in about 2-3 days. 5 Data & Marketing Association,

6 The cost? Postage costs can vary based on weight, dimension, etc. But postage for 2,000 postcards can range anywhere from $.28 - $.41 each. For estimate purposes, let s say this mailing is sent via standard mail and the vendor charges $.29/piece for postage. Additionally, print vendors have numerous costs for machinery, software, and labor that allows them to sort and prepare mail. Often, they pass on some of the costs to clients. Estimate about $ for data processing fees (including USPS NCOA and CASS validation) as well as $75-95 for miscellaneous fees. Let s take the median of those figures and estimate those fees add an additional $210 to your total cost. In 2017, around 1.3 billion pieces of mail were returned to sender. That s a waste of money that can be prevented with appropriate list cleansing. 6 FOLLOW-UP 4 HOURS $310 ANALYSIS 4 HOURS $160 A direct mail postcard acts as communication between a company and its customers. Once the mailing is sent, factor in time spent answering customer inquiries, re-sending mail that was not delivered, etc. The cost? Time (along with potentially an additional printing and postage cost for undeliverable pieces). Let s estimate the franchisee (at $40/hour) spends four hours on this task, in addition to $150 of re-printing and postage fees. Circling back to your KPIs, what effects have been seen since sending the postcard? Spending time and effort with the results can help refine the direct mail strategy in the future. The cost? Time; let s estimate this step takes four hours of work. Important questions to ask here: Is the promo code being utilized, or is there an uptick in traffic from PURLs? Are buyer behaviors changing from this segment? Has there been any qualitative feedback? TOTAL 28 HOURS days of printing and distribution time $1,436 in development and follow-up costs + $1,020-$1,530 of print production and distribution costs For as simple as direct mail should be for consumers to read, understand, and act upon, it s not a simple process. It takes time based on the example, 28 hours of your franchisees time (in addition to design, printing, and distribution) as well as resources, capital, and commitment. Managing an internal direct mail project can possibly drain important time and resources, lead to large opportunity costs, and take away from your company s top priorities. 6 United States Postal Service,

7 SOLUTION So how do you save time and money while improving your franchise s approach to direct mail marketing? While you can t always reduce the hard costs of direct mail, decreasing the amount of time involved in some steps can lead to significant savings. Here, time costs are making up about 48-58% of the overall project cost. By providing franchisees a more convenient solution for direct mail, you can save them hours of time they can then put back into running their business. The best way to make direct mail easier for your franchisees is to give them a resource where solutions are already in place and can be quickly customized and distributed, without research and back-and-forth on logistics like content, design, printing, or mailing. A print on demand partner that can create a powerful yet simpleto-use branded portal where your franchisees can access approved, customizable direct mail templates can consolidate many of these steps for you. A print-on-demand partner is a smart decision for franchises who want to expedite direct marketing, grow their brand, and maintain universal quality and print standards. Print-on-demand companies specialize in printing customized products in smaller quantities, typically by utilizing digital print technology. There are a few popular names in the print-on-demand industry, but there are hundreds of other players that provide similar services. When choosing a direct mail partner, it s important to think about what you ll need on an ongoing basis: What are their production capabilities? Do they offer the coating, finishing, and binding options that reflect the quality your company is looking for? What are their prices? Are their prices in line with their level of service and their quality of work? How quickly do they guarantee turnaround on projects? Do certain projects or products change that timeline? How robust is their ordering platform? Does it come with real-time reporting, an order approval dashboard, or photo and content libraries? What is the extent of their shipping and mailing options? How efficiently will they distribute your finished product? Are they up-to-date on printing and marketing industry advancements, or do they seem behind on crucial technology and direct marketing trends? Finally, how helpful and reliable is their customer support? Since your franchisees will be most often interacting with support specialists, can they offer troubleshooting and order assistance that will keep your franchisees happy? In addition, some direct mail providers go a step further and focus on brand protection by working with a top-down implementation strategy. They create and maintain products that are approved by key executives for the entire organization. By using one of these providers, you can empower employees and affiliates with the ability to make decisions about their marketing while knowing with certainty that your brand is never compromised

8 Ready to take your next step in finding a print-on-demand provider? At Xpressdocs, we ve built our company around solving the direct mail problems that hinder franchises. Offering all the services expected from a print-on-demand provider, we make consolidated, brand-led direct marketing a reality for hundreds of franchises, and have seen the difference that top down direct mail marketing can make. We ve also believed, from the beginning, that speed to market is crucial in direct marketing (they don t call us Xpressdocs for nothing). That s why we offer same-day shipping and next-day mailing for hundreds of print-ondemand products. With Xpressdocs, in addition to high-quality print products and same-day turnaround, you can receive: Consolidation: From the newest professionally designed templates, and printing and quality checks, to sorting and mailing, everything is done in one place with same day shipping and next-day mailing for orders placed before 4 p.m. CT. Reduced overhead: Xpressdocs cost savings from consolidated operations are passed on to you. Brand protection: Most print-on-demand providers cannot guarantee consistent brand standards because design decisions are made at the individual-level, rather than at the company level. But Xpressdocs centralizes brand assets so that franchisees and franchisors have access to marketing solutions that always reinforce brand standards. Mailing optimization: Xpressdocs partnership with the United States Postal Service (USPS) means your mail will be addressed and delivered for optimal speed and accuracy (and it s why Xpressdocs was previously awarded the USPS Mail Solutions Award). In addition, Xpressdocs is in a select group of only 3% of U.S. mailers that are classified seamless by the USPS. This means we ve reached the highest level of data processing performance. List services: We provide access to a database of millions of qualified households and businesses through data partnerships that our updated continuously so you don t have to waste money on undeliverable mail. To put it simply, with Xpressdocs you can grow your direct mail marketing program without worrying about the logistics. We do the work for you, so you can focus on what matters most your core business. In addition, Xpressdocs digital solutions like Xpress , Xpress Mobile, and more, can be seamlessly integrated with your direct mail marketing strategy to give you a true omnichannel approach. The real cost of direct mail outlined here may be slightly different for you or your franchise, but it s benefits remain the same: proven success in customer acquisition and retention. Are you ready to put away disjointed direct mail marketing and save time and money in the process? Contact us today at sales@xpressdocs.com, or visit us online at