The success of any direct mail campaign is determined by three elements: the data (or mailing list), the offer, and the creative. Said simply, you should consider what you’re sending, who you’re sending it to, and why recipients should pay attention.
The 40-40-20 rule is a guideline often used to explain the importance of each of these elements to the success of any direct mail campaign. Forty percent of your campaign’s success comes from the list; 40% from your offer; and 20% from creative.
With a bit of thought, this breakdown intuitively makes sense. If you’re presenting a great deal to the right person, you can get away with slightly subpar presentation, but if your offer doesn’t align with the recipients’ needs or desires, you won’t see a response—regardless of how creative the presentation.
Below we expand on the basic principles of the 40-40-20 rule to help you grow your business and improve your marketing ROI (Return On Investment) with direct mail. By the end, you’ll know how to define your audience, create an appealing offer and design, and ultimately, how to create a successful direct mail campaign.
Plan and Strategize
The first step to realizing a significant ROI with your direct mail campaign is to set up clear, measurable marketing goals, and a plan to reach them. This phase of the design is crucial to the development of all three parts of your 40-40-20 campaign, and begins by considering your business needs.
Clearly Articulate Business Goals
Before any other step, take stock of your business goals, as they’ll inform your ideal customer model creation, which filters down into all other aspects of your campaign.
For example, if you sell a variety of insurance products, but want to increase the number of high-value home accounts, that will affect your ideal customer’s income requirements. If you want to sell lower-priced policies at a higher volume, your customer and list size may look different.
As your high-level goals start to take place, take them and translate them into specific, measurable numbers. For example, you could shoot for 300 new customers, or $10,000 of revenue—a response rate of 5%. Setting goals in a numerical form makes it possible to measure success accurately so you can evaluate and improve performance.
If you have historical data to pull from, it can also be useful to set improvement goals over previous campaigns. If you’ve seen a response rate of 3% in the past, for example, it might make sense to shoot for an improvement of 15%, up to 3.45%. Examining previous campaigns and finding potential areas for improvement will make the creation process easier, as you’ll have a place from which to start and modify.
Create a Model
Once your business goals are set, it’s time to create a customer model that defines your ideal prospect in the most clear and specific terms possible. This model is the base that will empower you to define a targeted mailing list, craft targeted offers, and even personalize creative, so don’t cut corners in this step.
The first part of your model is demographics. Dive into data such as age, sex, income, geographic location, and any other hard factual information you have available or can think of. Current customer databases are a great place to search for patterns.
Direct mail can succeed with very small lists, so no level of granularity is too much.
After addressing demographic data, look at psychographic data. This includes motivations, behaviors, and values—anything that influences your customer’s thoughts or actions. Often this type of data is acquired by hiring market research firms, running focus groups, or through surveys, but use whatever information you have available. Even pausing to consider how your customers think and act can help you provide a more appealing offer and design.
Repeat this process with each type of customer that you’ll target in your campaign. If your customers are identical except for one characteristic, such as age group, it’s still worth breaking them out into separate categories to consider and identify their needs individually. Direct mail can succeed with very small lists, so no level of granularity is too much. You can always revert to including all recipients in the same campaign if you can’t think of a meaningful way to tailor the creative or offer for each group.
Create a Targeted Mailing List
When planning a direct mail campaign, nothing is more important than choosing the right mailing list. This is data—the first 40% of your campaign—in action.
The best, and most important list for any business is the in-house list of previous customers. If someone has previously purchased from you, they will likely purchase again, so it’s a good idea to mail to them regularly. Make sure to keep these lists fresh and updated, as it doesn’t make economic sense to keep mailing someone who bought from you five years ago and hasn’t responded to any campaigns since then.
After previous customers, your second-best list is made of anyone who has shown interest in your product, but hasn’t made a purchase yet. These can be people who signed up or registered to get product information or anyone who has asked for a quote or estimate. These prospects will purchase at higher rates than the general population, which will boost your campaign performance.
If you’ve exhausted your database of previous customers and interested prospects, your third option is to find a list of people who have purchased items related to what you sell. For example, if you’re selling business desks, there might be a list of people who have purchased business chairs or other office equipment. It doesn’t matter what the other product is, as long as it’s typically purchased by the type of person you sell to.
Finally, your last option is to use a list of cold prospects. These prospects haven’t demonstrated any positive purchasing behavior or intent, but modern targeting makes it possible to mail consumers who are very similar to your current customers. In fact, there’s so much information available today that you can essentially draw a direct line from your ideal customer model to the data on your list. If you need high-income clients, just purchase a list of consumers with incomes over $250,000; if your product sells to women more regularly, include gender data; if your best clients own cars, use that as a data point.
Segment Your List
Once you have a list of names and addresses, it’s time to segment them based on your customer models. Depending on the size of your list and the data you have available, you can even break each customer model into several sub-segments.
For example, your customer model might not include geographic details, but you could still use location to create sub-segments in your list. Then, you could use those sub-segments to personalize each piece of mail to show location-specific photos. As we’ll discuss in-depth later, more personalization leads to better performance, so it’s a good idea to make customer segments as detailed as possible.
Companies with house and customer lists can further segment names into groups using a segmentation technique called RFM analysis—a model that estimates the value of previous customers based on the recency, frequency, and monetary value of previous purchases—but this isn’t necessary for small, or non-commercial companies.
Define an Offer
Once you have your model and targeted mailing list lined up, it’s time to decide what to offer recipients. This phase of your campaign represents the second 40% of your campaign success.
Remember that it’s crucial not to attempt this step until after you’ve defined your ideal customer. Even if you’ve worked in an industry for years and feel that you know your customers, it’s easy to overlook one or more crucial details if an ideal profile isn’t fresh in your mind and written down for reference.
While it may seem obvious, it’s also worth mentioning that you must keep your business goals in mind while creating your offer. If you want to sell more homeowner policies, for example, the offer has to attract customers to that product.
Above all, make sure your offer is highly specific, and worth acting on right now.
Consider the two following offers:
Get your teeth cleaned at our local dentist shop.
15% off your first visit.
Get your teeth cleaned at our local dentist shop.
We use modern water jet cleaning methods so nothing sharp ever touches your mouth during cleanings.
15% off your first visit.
Which is more likely to gain your attention and business? The first is generic, with an offer similar to others the recipient likely sees hundreds of times per week. The second offer addresses a common pain point for dentist patients—they don’t like being poked and prodded with uncomfortable instruments—with technology that isn’t widely available and makes the business stand out. Be specific, and offer relevant details when possible, while remaining concise.
If you have more than one ideal customer model, remember to create a separate offer for each if appropriate. The offer above may work for a wide portion of the population, but other segments may present opportunities for further specificity.
Families with small children, for example, may find a “Child’s First Cleaning” offer appealing, but that clearly wouldn’t work for all potential customers. Create as many offers as necessary to meet each customer’s needs.
It’s also helpful to introduce scarcity by making offers exclusive or limited-time. If an offer is only good for a short period, the customer is more incentivized to take action quickly instead of tucking your mail in a drawer to be forgotten. Once a prospect has become a customer, the biggest hurdle has been overcome. It’s much easier to make an existing patron a repeat customer than to acquire a new one, so it’s crucial to encourage immediate action.
Remember What’s Worked in the Past
As a closing remark on strategy, remember to review what has worked in the past. If a campaign was previously successful but was stopped for any reason, there’s a high probability that it will work again.
All direct mail campaigns suffer from saturation and deal fatigue that make even the best see reduced performance over time. A break of a few months may be all you need to refresh the results. Even if it’s been years since a campaign was run, it’s worth trying again or using as inspiration.
Create the Campaign
When you’re ready with clear goals, a targeted mailing list, and a strong offer, it’s time to address the last 20% of a successful direct mail campaign—the design.
Similar to your offer, great design is powered by personalization. Modern printing technologies empower marketers to apply detailed customizations at scale like never before; anything can be swapped in and out of creative to appeal to individual customers in roll-out quantities.
When used with a targeted list and offer, personalization can improve response and return dramatically. In fact, using three or more data points for customization can improve response rates by over 100%.
Data can be used to customize images, offers, colors, and more to create maximum impact. Look at each design and ask: “What can I customize to make this more attractive to each customer?” If you’re not sure, ask your printing partner. An experienced shop can help you with every step of the campaign to improve and maximize returns.
Track Your Results
As you’re creating the design for your mailer, make sure to include a tracking method to help you follow and analyze your campaign’s results and KPIs (Key Performance Indicators). These will help you understand how your campaign is performing, determine ROI, track improvements, and ultimately spend marketing dollars more effectively.
Here are the four most common methods to help track and analyze the performance of your direct mail campaign:
Custom URLs or QR codes
If your goal is to send customers to a website or landing page, custom URLs and QR codes are a great option. URLs have two tracking options. The first is to use a customized ending to an existing URL, like www.yoursite.com/direct-mail-landing-page. Then just track the number of visits that page receives to measure response. Alternatively, you could set up a Personalized URL (PURL) that is customized for each individual recipient. A PURL would look something like www.yoursite.com/johndoe and is set up using a special service provider to create them at scale.
QR codes are another option for website visitors. These are small scannable codes that are included in a design. Recipients can scan the codes with their smartphone to be taken to a website. A PURL can also be integrated into the QR code to allow the recipient to be taken to the personal landing page. This is perfect for driving mobile traffic and can be a convenient option for any campaign. Make sure your website is mobile friendly. It’s also worth testing QR codes against text-based URLs to see which performs better.
If you are using a coupon, including a coupon code on each piece of mail lets you track performance by measuring how many times each code is redeemed. Just make sure to have the back-end tracking set up, whether on your website, via customer services reps over the phone, or in-store with employees.
You can use a phone number tracking service to measure phone calls from a particular campaign. Each campaign will be assigned a custom number to be tracked by the service provider. Then, you can measure which campaigns result in the most calls and best performance.
Test and Improve
Even after the campaign is launched and results are coming in, your job as a marketer isn’t done. If you’ve set measurable goals and a mechanism to track progress, now is the time to evaluate performance and identify areas for improvement.
Keep an eye on how close you’re getting to your goal, but also how you get there. Perhaps you met your revenue goal due to larger-than-expected purchases, for example, but the response rate was lower than expected. Identifying a way to increase response rates, in this case, might help you boost overall revenue in following campaigns while setting new, higher benchmarks.
"There will always be a way to make each campaign better."
Whatever your campaign results, there’s always room for growth. The key to making improvements long-lasting and predictable is taking a systematic approach to change. This means targeting only one metric, changing a single corresponding feature of your mail with improvements in mind and tracking the change.
Selecting only one KPI (Key Performance Indicator) at a time helps you identify changes that move the needle, rather than making multiple modifications at once and wondering which one had an impact.
Once you see growth in one area, keep the successful changes in mind, apply them to future campaigns, and select another area to improve. There will always be a way to make each campaign better.
Don’t stop at one or even a few mailings with your direct mail campaign; keep following up. According to the Certified Direct Mail Professional guide from the USPS (U.S. Postal Service), many marketers will suppress a recipient if they don’t respond to five mailings or touches, but this is a mistake.
Many prospects who have received five or more mailings are on the cusp of purchasing, so you’re missing out on potential revenue by excluding them from future sends. Stay consistent with your efforts to see maximum returns.
Additionally, brand awareness and recall are key to your success as a business, and continued mailings help these increase and stay elevated. For that reason, it’s even recommended to include current customers in some mailings—they need to be reminded of the value and services you provide.
With consistent, thoughtful action, direct mail can bring a reliable stream of revenue to your company for both long- and short-term goals. Just make sure to create a clear strategy, keep the 40-40-20 rule in mind, and continually test and improve each campaign.
If you want help implementing these steps for maximum success, contact us. We offer a full range of printing and consulting options for every campaign, and can help you reach your direct mail goals while improving ROI.