Don’t Try This at the Office
Smart marketers, sales teams and business owners recognize the opportunity to develop a direct mail piece that exclusively promotes a single product — an item with a strong margin and an identifiable target audience.
Usually the item has a high price point and specific benefits for the buyer — as well as a surplus of information that necessitates more space than a catalog page realistically can accommodate.
If identifying the opportunity is that easy, how quickly do you become a victim of either yours or a colleague’s best intentions? If you’re unsure, here are mistakes to avoid when implementing a single-product mailing.
Mistake #1: Don’t Forecast Demand
A targeted solo mail piece should yield double-digit response rates, which means you must plan carefully for the increased demand. A business-to-business (b-to-b) cataloger was trying to reactivate previous customers by using a solo mailer (a direct mail piece featuring a single product). The offer was a free trial on an expensive product.
Unfortunately, the organization failed to forecast the immediate influx of calls after the mailing, and was unable to accommodate customer requests. This example of unintentional sabotage could have been avoided by staggering the mail dates for the direct mail piece.
Mistake #2: Don’t Pay Enough Attention to Costs
A cruel reality of any b-to-b cataloger’s marketing plan is the advertising expense-to-sales ratio. David Ogilvy, who is considered to be the father of modern advertising, once said, “50 percent of my advertising works. I just don’t know which 50 percent.”
The advantage of cataloging and direct mail compared to Ogilvy’s general advertising is the ability to track response and build break-even analysis. With any promotion, solo mailing or catalog, developing the financial break-even is an important decision-making tool.
Recently a senior manager at a catalog company wanted to mail product samples to previous buyers with the hypothesis that if customers tried the new and improved product, they’d place orders immediately. The catalog manager randomly determined a quantity of 50,000. The product samples required special packaging and First Class mail. Upon receipt of the break-even analysis with a very conservative response rate, the investment of $200,000 choked the project to a halt.
The cost of the project overshadowed the return on investment (ROI) calculation. Let’s assume that one order yields $700 gross demand, and further assume a 70 percent gross margin (or $490). Mathematically, $200,000 divided by $490 means 408 orders (or 0.81 percent) to cover the cost of the mailing.
Knowing that 24-month customers historically respond at three to five times this rate, the sticker shock should be tempered with the anticipated ROI. And to be more fiscally responsible, you can calculate the contribution to overhead by revising the formula to incorporate the 12 percent fulfillment expense. (If you don’t know your company’s fulfillment expense-to-net-sales ratio, use an industry benchmark ranging from 11 percent to 15 percent.) Deduct 12 percent fulfillment expense from the 70 percent gross margin, leaving 58 percent.
Now redo the calculation as $700 times 58 percent for $406 in contribution margin. Divide $200,000 by $406, and 493 orders are needed for the program to break even (or 0.986 percent response rate).
Understanding the expense investment is important, and the senior manager should have contrasted this analysis with the cost to acquire a new customer. If reviewing historical response rates for prospects indicates 1 percent is possible, coupled with further indication that a first-time buyer yields a lower average order value, it quickly appears that reactivating customers is a better strategy for the investment.
Mistake #3: Repurpose Copy
Too often conventional wisdom dictates that reusing copy from the catalog, Web site or product flyer is fine, rather than writing copy specific to the solo mailer. But successful single-item mail pieces actually are designed around the copy — which is opposite of how successful catalog pages are created (meaning, catalog copy is written to space allocation based on the page spread layout).
A solo mail piece should get new copy written to highlight the product’s features and reveal its benefits. To accomplish that, use techniques such as headlines, subheads, call-outs, editorial, testimonials and bullet points. Each copy element helps guide a customer through the decision-making process. Existing copy from a catalog or Web site usually doesn’t have enough depth to support all the needs of a solo mail piece.
From the teaser copy on the mailing panel to the call-to-action on the response device, your copy must close the sale. It should be the mechanism to answer customers’ questions and eliminate purchasing barriers.
Mistake #4: Target Everyone
A single-product mailer is most successful when its audience is highly targeted. So use your customer database to identify previous buyers of that item and analyze their purchasing behavior. This will help you to predict future buyers of that product.
Whether you mail to repeat buyers of the product or mine your housefile for prospective buyers of that item, targeting your audience helps ensure a profitable mailer. A customer who previously bought the product may need a replacement, be interested in the new and improved version, or may love the product so much that more are needed. Prospective customers on your database may have similar attributes of the product’s current buyers (e.g., business type, number of employees, location, industry, other product usage, annual sales volume) — relevant characteristics that you determine.
Don’t be tempted to increase circulation outside your targeted customers just to mail greater quantities. Accidental sabotage occurs as you become more inclusive and thus, water down the mail piece’s productivity. That’s how catalogers often draw the mistaken conclusion that an item “just doesn’t sell like it used to.”
Mistake #5: Omit the Obvious
Stating the obvious in the direct mail piece is an important element to close the sale. How could you ever know for sure if the recipient of the mail piece remembers or understands every benefit and component of the product and/or your company? Consider that you probably don’t remember what you had for dinner last night let alone the benefits of a product or company you haven’t seen or heard about for weeks, months, years or ever. That’s why it’s important to restate obvious benefits, such as two-day shipping, an 800-number, no assembly required or a product premium. The more you communicate, the better chance you have of eliminating questions and removing obstacles to purchase. In direct mail, never think the obvious is obtuse.
Single-product mailers can be part of a highly successful (i.e., profit dollars, response rates) marketing strategy for your b-to-b catalog. For best results, choose a product with a strong margin and identify a highly targeted customer group (which translates into small mail quantities). And remember, the mailing must be part of an overall marketing effort.
Gina Valentino is vice president/general manager at J. Schmid & Associates, a catalog consulting firm based in Mission, Kan. You can reach her at (913) 236-8988, or via e-mail at: firstname.lastname@example.org.