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Finding the Right Mail Formula

November 1, 2000

Some have already been forecasting the demise of direct mail, saying that e-mail marketing will cannibalize direct mail revenues. Yes, e-mail as a marketing medium has been growing at explosive rates. Its value is expected to reach $7.3 billion by the year 2005 — a jump of more than 4,000 percent from 1999 — says Jupiter Communications Inc.

But shrewd marketers know that forecasts of one advertising medium gobbling up another one are often more hype than truth. Look at what happened when television came on the scene. Everyone predicted radio would be eliminated. Obviously, radio has changed, but it still thrives. Radio’s prime time evolved into drive time.

Direct mail certainly has changed and will continue to change as Web marketing technologies — including e-mail — evolve. Direct marketers who know how to weigh the pros and cons of both media and strike a delicate balance between the two will win the battle for new customers and their loyalty.

Though e-mail offers unique benefits not matched by direct mail — speed of turnaround, for example, and interactivity and customization options — it also carries a unique set of cautions.

It is no secret that customers view their e-mail inbox as a much more personal space than their postal mailbox — and thus feel more violated by unsolicited e-mail.

Customers can change their minds about products, become quickly jaded with new features, forget what they registered for or simply indict whole categories of Internet businesses because of one bad experience. Then the opposite of viral marketing begins as messages of dissatisfaction spread with equal vigor.

And online-based marketing — like the Internet itself — is such a rapidly morphing force that you must constantly be on your toes to test and innovate.

Using permission-based e-mail data for prospecting is hotter than hot right now. But what’s going to happen tomorrow? Consumers who got 40 commercial e-mails last year can expect 1,600 by 2005, according to Jupiter.

Companies trying to get their e-mail message through to new customers and even existing ones will have to compete with more e-mail clutter than they do now.

When applied to customers and prospects who have prior knowledge of your company, the cost of customer retention per sale via e-mail is $2; via direct mail it is $18, according to statistics from FloNetwork. In this case, e-mail marketing makes a tremendous amount of sense.

Yes, it seems cheaper to send e-mail than to send a four-color direct mail piece; however, when it comes to new customer acquisition, that ratio is reversed, with the cost of getting a new customer at $286 via e-mail and $71 via direct mail, according to FloNetwork.

With traditional direct mail, you also have better and more data for your marketing universe. An estimated 75 million-plus people are online in the United States, and that number is expected to grow substantially. But no single data source provides more than a small fraction of permission-based e-mail addresses. By using only e-mail data for prospecting efforts, you could be excluding many qualified people who fit your natural market.

When integrating your e-mail and direct mail campaigns, think about your users and the experience you want them to have.

The experience of receiving something by e-mail is very different from receiving it via direct mail. With e-mail, you can’t pick up, touch it or see the depth of the color. You can’t put an e-mail piece on your coffee table or easily throw it into your briefcase and read later. The average time someone spends with an e-mail is different from the average time someone spends with a direct mail piece.

On the back end, one challenge in comparing e-mail results to direct mail is the host of variables. With e-mail, there’s more to measure — unique visitors, page views, how long they were on your site. You easily can get caught up with those measurements instead of comparing conversion rates and cost per order as you would with traditional direct mail.

In the end, integrating e-mail and direct mail into your new customer and retention marketing efforts needs to be a methodical and thoughtful process. If you integrate both and give your customers a choice about how they want to be contacted, they will take the lead and tell you directly how to sell them.

Pat Atchley, AccuData America

• Pat Atchley is national data sales manager of premiere accounts at AccuData America, Cape Coral, FL.


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