Direct mail can be a highly effective and engaging way to reach new and existing customers. However, like any marketing effort, managing costs and creating a proper budget for direct mail campaigns is crucial for success, ensuring a positive return-on-investment (ROI). In this blog, we will explore the budgeting and cost management strategies necessary to make direct mail a sustainable and cost-effective part of your marketing strategy.
- Why Direct Mail Marketing Still Matters
- Understanding Direct Mail Costs
- Direct Mail Budgeting
- Cost-Effective Strategies for Direct Mail Marketing
- Send Direct Mail with DMS
Why Direct Mail Marketing Still Matters
Before diving into cost management, it's important to emphasise why direct mail is worth budgeting for in the first place. The channel is increasingly seen as a 'Super Touchpoint' in the customer journey, bridging the gap between physical engagement and digital action. Tangible and personalised, direct mail has an emotional appeal that often surpasses digital marketing in driving action. For example, where email open rates can be challenging, the average warm direct mail campaign achieves a robust response rate of 7.9%, which is significantly higher than most digital channels. Furthermore, other research has shown that 71% of consumers completely trust the customer mail they receive, highlighting its role in building brand trust.
The true value of direct mail is also measured in its commercial actions. Latest results from JICMAIL reveal that 6% of mail prompted a purchase in Q1 2024, underscoring its seamless effectiveness in driving both offline and online sales. Direct mail therefore gives brands an opportunity to make an impact in a less crowded space compared to the saturated inboxes or social media feeds of modern consumers. However, this advantage comes with costs, so understanding how to effectively manage these costs can make the difference between a profitable campaign and a financial loss. Investing in this channel means securing genuine consumer attention; with the average piece of direct mail generating 134 seconds of attention from household members over a 28-day period, it offers unrivalled retention for your message. This engagement is why marketers are increasingly integrating direct mail to complement their digital strategy, creating a cohesive and impactful customer journey.
Understanding Direct Mail Costs
The first step to managing your direct mail marketing budget is understanding the different components that contribute to the overall cost. Unlike digital campaigns, where costs might be more variable and depend largely on impressions and clicks, direct mail has fixed, tangible costs that must be accounted for in your budget. This transparency allows for more accurate forecasting of your Cost Per Acquisition (CPA) and ROI.
Design & Creative
Whether you're creating a postcard, brochure, or catalogue, a strong design is essential to capturing attention. Costs here can vary depending on whether you have an in-house design team or outsource the work to an agency. You may also need to pay for copywriting, photography, or graphic design services. Consideration must also be given to the physical specifications, such as choosing the right paper weight or finishes for your campaign, as these impact both the feel and the final mailing weight. For larger, intricate campaigns, our digital printing services ensure high-quality output while managing your colour and production costs efficiently.
Printing
Printing costs depend on the size, paper quality, colour scheme, and print finishes like embossing or varnishes. Smaller print runs typically have higher per-piece costs, so if your campaign is on a larger scale, it may be more cost-effective to print in bulk. For certain applications like subscription boxes or seasonal promotions, you might even consider one-piece mailers to simplify the production process and reduce enclosure costs.
Mailing Lists
If you're using direct mail to target prospects, purchasing a mailing list is a key cost. Depending on the quality and specificity of the list, prices can range from £0.03 to £0.50 per contact. A highly targeted list is usually more expensive, but it may result in higher response rates, making it more cost-effective in the long run.
If you have your own customer list, then investing the time and money into cleaning up your list is worthwhile. Removing duplicates, fixing spelling mistakes or removing people who have moved addresses or are no longer subscribed is essential. We strongly recommend leveraging professional data hygiene best practices to avoid the significant waste associated with 'goneaways' or inaccurate addresses. This initial investment in data capture and processing ultimately lowers your campaign cost per response and protects your brand reputation.
Postage
This is often the largest cost in a direct mail campaign. Postage rates vary based on the size, weight, and format of your mail piece. Royal Mail offers discounted rates for bulk mail, which can help reduce costs, but these rates still need to be factored into your overall budget. Leveraging specialist postal discounts through a mailing house like DMS is a critical step in effective cost management.
Fulfilment
Fulfilment costs include sorting, addressing, and preparing your mail for delivery. Many direct mail houses offer comprehensive fulfilment services which will be an additional cost, which often varies based on the complexity of your campaign, the volume of mail, and any special handling instructions. For campaigns involving multiple inserts, choosing the right method for envelope enclosing can be crucial for speed and accuracy. Complex mailers, such as those with non-standard sizes or requiring product attaching, will naturally incur higher fulfilment costs but often deliver higher engagement due to their innovative design. We specialise in managing this complexity efficiently.
Tracking & Reporting
To accurately assess the ROI of your campaign, it’s important to track response rates and conversions. You may need to invest in software or services that provide detailed analytics on your mailings, such as call tracking or unique URLs. This data is crucial for refining future campaigns, justifying the spend and for setting future budgets. Incorporating tracking elements like bespoke QR codes allows you to measure the direct online impact of your offline spend, providing clear evidence of mail's role in the purchase funnel.
Budgeting Strategies for Direct Mail
Here are some ways to ensure cost-effectiveness in your direct mail marketing efforts.
Smarter Targeting
Narrowing down your target audience can significantly reduce your mailing list and printing costs. Sending personalised mailers to a smaller, more relevant audience is often more cost-effective than blasting a generic message to a large group, improving your ROI. Targeting existing customers with highly personalised mailshots, for instance, yields the highest return. We work with clients to leverage advanced audience segmentation to maximise the effectiveness of every piece of mail sent.
Use Postcard Mailers
Postcards are typically cheaper to print and mail compared to letters or catalogues, as they don’t require envelopes and less ink. If your message can be effectively conveyed on a postcard, or through other creative, cost-effective options like naked mailing, this is a great way to cut costs.
Opt for Bulk Mailing
Taking advantage of bulk mail discounts can save you significant money on postage. Work with a direct mail house that specialises in bulk postage to navigate the requirements and ensure you're getting the best rates. Large print runs also allow you to take advantage of economies of scale, significantly reducing your per-piece printing cost, which is crucial for managing the overall budget.
Test First
Run small test campaigns before committing to a full-scale rollout. This allows you to see which designs, messaging, and lists perform best, helping you avoid costly mistakes on a larger scale. For instance, implementing A/B testing techniques on a small segment can provide invaluable insights into your audience's preferences before a major expenditure.
Leverage Variable Data Printing (VDP)
VDP allows you to personalise mail pieces with specific names, offers, or images, making each recipient feel special without creating completely unique designs. This can boost response rates and ROI, making the additional cost worthwhile. This level of customised printing is essential for modern marketing and is easily managed through professional direct mail production processes.
Send Direct Mail with DMS
DMS is a direct mailing house that has extensive experience in printing, posting and fulfilling direct mail campaigns for top organisations and brands, across multiple industries. We use top-of-the-range equipment and technology to provide our clients with high quality results with cost-effective prices and can support you with your entire campaign or at certain points. Whether it's data processing, bulk postage or printing, we are here for you.
For more information and to speak to one of our knowledgeable team, get in touch by clicking here.