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Direct mail marketing

The term "direct mail marketing" refers to communications sent to potential customers or donors via postal service and other delivery services. In general, direct mail marketing is not about creating markets but locating existing markets. Direct mail is sent to customers based on criteria such as age, income, location, profession, buying pattern, etc. Direct mail marketing includes advertising circulars, catalogs, free-trial CDs, pre-approved credit card applications, and other unsolicited merchandising invitations delivered by mail to homes and businesses. Bulk mailings are a particularly popular method of promotion for businesses operating in financial services, home computer, and travel & tourism industries.

Advertisers often refine direct mail marketing practices into targeted mailing, in which mail is sent out following database analysis to select recipients considered most likely to respond positively. For example, a person who has demonstrated an interest in golf may receive direct mail for golf-related products or perhaps for goods and services that are appropriate for golfers. This use of database analysis is a type of database marketing. The United States Postal Service calls this form of mail "advertising mail" (admail for short).


  1. Reach: The medium potentially can reach every household in the market, or at least every consumer the marketer wishes to target, usually through mail-merge options where multiple advertisers are combined in a single envelope or package.

  1. Tracking: The response rate is easily measured, and can be tracked through coupon redemption and return-card/call-back options.


  1. Low Response Rates: With an average response rate of just over 2%, most of the people you market to will reject or ignore your offer.
  2. Consumer Perception: Most consumers refer to direct mail as "junk mail" – and they have an even lower opinion of the most cost-efficient mail-merge packages that combine pieces from a number of different advertisers in one envelope.

They say it takes money to make money, and this is something all companies understand when it comes to advertising costs. If consumers don't know what you have to offer, you'll waste a lot of time sitting around waiting for the phone to ring. There are many ways to market your product and service offering, each with its own fees, development cycle and other considerations.

Direct mail marketing has stood the test of time to remain one of the most cost-effective advertising techniques today. Like all forms of advertising, direct mail marketing has certain fees involved. Unlike many forms of marketing, direct mail marketing allows you to create highly targeted campaigns that can yield a great rate of return. The key is in understanding and properly applying the economics of direct mail marketing.

There are many ways to spend money on a direct mail marketing campaign. These include your mailing list, copywriting fees, designer fees, printing, mail services and postage. Conversely, there's only one way to make money: Turn your list of prospects into a list of customers. Naturally, the bottom line when it comes to direct-mail marketing is running a campaign that makes more money than it spends.

For new businesses, it can be difficult to estimate the rate of return. Since you don't have previous campaigns to use as a measuring stick, you'll have to rely on estimates when budgeting. So how do you calculate your return on investment? Here's the formula:

(Number of Mailed Pieces x Response Rate x Conversion Rate x Average Sales Price) – Campaign Cost)/Campaign Cost = ROI

Number of Mailed Pieces = How many mailers you're sending out
Response Rate = The percentage of people who respond to the mailers
Conversion Rate = The percentage of people who make a purchase, based on the Response Rate and not the Number of Mailed Pieces
Average Sales Price = How much, on average, each customer spends as a result of the campaign
Campaign Cost = The total spent to develop and deliver your campaign, including your mailing list, special offers, printing, mailing services, postage, design and copywriting
ROI = Return on Investment (your percentage of return)

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