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“We Tried Direct Mail and it Didn’t Work!”

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When any of my clients tell me they’ve tried direct mail and it didn’t work
for them, I always ask, “What exactly was that campaign?”

The kind of response I usually get? “We mailed to our top twenty-five
prospects, and none of them bought anything! Damn, they were our best
prospects too.”

I then take a left turn in the conversation and ask, “How many in-person
sales calls does it take you to make a sale to a new customer?” The answers
vary but usually the number of sales calls ranges from two to five personal
visits. Given that figure, here’s what always amazes me. Why would an
otherwise intelligent person expect that a sale will result faster or sooner
from sending their prospect a sheet of paper in the mail?

A Look at the Sales Process:

In Person vs. Direct Mail

Face it. Like it or not, the easiest and most persuasive way to sell a
product or service to a customer is face to face. You can get immediate
feedback. You can shift gears and change your pitch. You can apply pressure
or back off according to their immediate response. And when you see a closing
signal, you can secure the sale right then and there with a smile and a
handshake–and, of course, a goodwill deposit.

In direct mail, you have to convince someone not only that:

  1. You have what they want.
  2. They should buy it.
  3. They should buy it from you.
  4. You are a reputable company.
  5. You will send the customer what he orders in a timely fashion.

But you have to do all this in a way that will entice them right off the bat
and avoid losing their interest at any point in the sales process. Then you
have to convince them to put money in an envelope and wave to it as they drop
it in the mailbox. Ugh! Very tough. Very tough, indeed. But very possible!

The Direct Mail Advantage

In person, you can see five or six people in a day. In direct mail, you can
reach thousands every day… even hundreds of thousands. Mmmmmm. Hundreds of
thousands in one day? There’s the advantage of using direct mail. Just ask
the Publishers’ Clearing House!

Direct mail is a game of numbers. Test small numbers. When you hit on a
winner, mail large numbers of your successful packages. If you initiate a
direct mail campaign with this knowledge from the get-go, you can create a
realistic campaign where the odds definitely work in your favor. Direct
mailers do it all the time, some with incredible profits. You can too.

If you send out 25 letters and call it a direct mail campaign, we have
different definitions. A one-time mailing of 25 pieces isn’t a direct mail
campaign. What shall we call it? A mailing to 25 people? Sure, it’s a
mailing, but not a campaign.

A direct mail campaign needs to have more mail sent at one time, or mail
sent with greater frequency if it’s to a smaller list. If you need one sale
(or one qualified inquiry) from every 100 pieces you send, you’re aiming for
a 1% response. The person who buys may be the 99th person in your list of
100.

Recognizing A Winner

What does a successful campaign look like? Let’s take an look. A client of
mine spent $1,000 for a short direct-response campaign selling boxes of
taffy. He mailed to 2,000 mail-order candy buyers at a final cost of 50c for
each mailpiece ($1,000 total) which included everything, even postage. He
received a little under a 2% response: 38 people ordered at $45 + $4 shipping
or $49, totaling $1,862. He shipped the candy at an all-inclusive cost of $12
a box or $456, so he made $406 in profit.

“Whew,” he said. “That was a lot of work, and I only made four hundred and
fifty-six dollars.” And he left the direct mail business, saying it didn’t
work for him.

When he told me about his efforts in direct mail, I only had one question:”How long was the list of mail order buyers?” It was from a big direct mail
merchant, he replied, and the list was a couple of million records.

I was excited! You see, once you have a winning package in direct mail, if
you just keep mailing it (seasonal offers excepted), it should just keep on
bringing in the same response. On page 101 of my book, How to Market a
Product for Under $500, you can see from the Probability Chart of Results of
Test Mailings that his chances are better than 95% that his mailing would
draw a response between 1.37% and 2.63% if we sent additional mailings.

The Game Plan

Here’s how I worked out the plan. I told the client I’d be his partner and
we’d test the list further. We’d buy 20,000 names and mail to them. We’d mail
the exact same package and, figuring the same response rate, we’d make
$4,060. With this large of a mailing, the Probability Chart narrows its
prediction on further mailings with greater accuracy: the response rate (95%
accuracy) would be between 1.72% and 2.28% if we mailed to the rest of the
list. If our response fell within these figures, then we’d mail to 200,000
names, and clear $40,600 profit. Then we’d mail to all two million names, and
clear $406,000. We’re following that very plan right now. With the economies
of scale in buying candy and printing, we’ll do even better next year.

Some Final Words

That’s how you make money and how you make direct mail work for you. Test
small but reasonable quantities, 100 to 200 at the minimum. Then 500. Then
1,000 and 2,000. When you find a product, offer, and a creative direct
response package that works, figure out what it will earn if you increase
your mailing size to run the entire list. Then go to dinner and celebrate!

This is an excerpt from Jeffrey Dobkin’s new book, How to Market a Product
for Under $500!
To place an order, or to speak with Dobkin, call
610/642-1000
.

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