Delivering Growth in Direct Mail: A How-To Guide on Going Bigger in 2025

If you are looking to go bigger with your direct mail efforts, you’ve landed in the right place. What does “go bigger” mean to you? It could be increasing volume, improving performance, or maximizing efficiencies and generating cost savings. Direct mail is one of the most proven and cost-effective channels for generating high-value customers, which also has exponentially positive effects across other channels and overall business health when approached strategically.

Yet, direct mail takes work, and the channel poses challenges amidst rising postage and paper costs. But when done right, the payoff is huge. Taking a data-driven strategic approach to direct mail efforts can turn these challenges into big opportunities. The current state of direct mail speaks volumes to the power of this performance channel. According to the Winterberry Group, U.S. marketing spending on direct mail hit $39.4 billion in 2023, representing 17% of organizations’ budgets. That’s compared to spending $38.8 billion in 2022, representing 15% of budgets. Importantly, that growing investment has been money well spent, with 96% of U.S. consumers engaging with direct mail and 64% being inspired to take action, whether that’s by visiting a website, heading to a physical location, or making a purchase.

So with opportunity for growth in mind, let’s explore how to strategize, plan and maximize the direct mail channel to reap its full potential.

A Game Plan for Growth and Performance 

To fully seize the direct mail opportunity, things must be managed closely and deliberately. It is not a set-it-and-forget-it channel. Direct Mail experts can attest it’s a love affair of planning, reporting and analyzing results. But it’s one that involves rolling up your sleeves and taking a scientific approach to analyzing the numbers, testing, learning, and applying insights and partner expertise.

To really set your next campaigns on the right path, here are some key steps to follow on the way to success:

1. Review of Past Campaigns: Begin by analyzing data from previous campaigns to identify trends, strengths, and areas of improvement. This review provides valuable insights, guiding future adjustments and helping to set benchmarks for success. In other words, try to find the elements that are working to replicate and amplify them, while eliminating those that aren’t working to drive efficiency and ROI.
   
   
2.  Goals: Establish clear, realistic objectives that align with both the direct mail campaign and broader business goals. These may include acquiring new customers, targeting specific customer segments, or maximizing revenue while managing costs. Be sure to build out primary, secondary, and tertiary goals to maximize impact across the business.
   
   
3.  Strategy: Develop a strategy that’s specific to your campaign and allows for flexibility on things like budget, timing and other changes. A rolling forecast approach enables real-time adjustments to improve ROI and keep the campaign aligned with business goals.
   
   
4.  Budgets and KPIs: Build a budget that incorporates costs and performance metrics from past campaigns, with a focus on achieving a strong return on ad spend (ROAS). Clearly defined KPIs will help track the campaign’s financial performance and guide optimization efforts.
   
   
5.  Test Panels: Testing is essential to campaign success, and marketers must examine multiple variables including offer, format, creative, and audience. Implement an “always be testing" (ABT) approach to refine your strategy continually. Make sure you have a way of measuring the various elements that allows you to draw real conclusions.
   
   
6. Optimization: Use data-driven predictive modeling based on a KPI to satisfy a business objective. Optimization approaches include mining existing customer files and deeper into other successful list sources, leveraging suppression files, and applying insights from multiple cooperative databases to expand mail reach effectively.
   
   
7.  Timing: Consider seasonal trends, business objectives, and funding cycles, along with logistical factors like USPS postal rates or incentives. Strategic timing can maximize impact and cost-efficiency for each campaign.
   
   
8.  Partners: Select partners who bring best-in-class services and a collaborative mindset. Start by choosing strategy, data, and printing partners that specialize and excel in their respective fields. Then by ensuring these preferred partners can cohesively work well together on your behalf, this will drive improved campaign performance and ROI.

Direct Mail Value Scenarios 

Once you’ve ensured your direct mail program covers each essential step, it’s time to think more strategically about volume. You might be thinking, volume is my number one lever to manage costs. But remember: It’s not necessarily the costs of a campaign that matter. It’s the return! This is where a data-driven approach to direct mail really comes into play. 

When optimizing direct mail programs, there are two typical paths to take: 1) reduce mail volume or 2) maintain (or even increase) mail volume. As of late, the knee-jerk reaction tends to be toward smaller volume. However, a look at the overall costs and returns associated with these two approaches reveals why marketers might want to reconsider this approach.

Let’s explore the cost and return metrics for a hypothetical direct mail campaign at different levels of mail volume with and without optimization.

Scenario A: Starts with 2.0 million volume level without applying optimization and a less than optimal .5% response rate results in being in the red.

Scenario B: Reduces the mail volume level to 1.5 million and factors in a slight increase in cost per piece but utilizes optimization to trim off prospects that are not likely to engage. The result is a much higher response rate, which generates more revenue and in turn, gets you much closer to breaking even, but is still in the red by $105K.

Now, let’s practice what we have been preaching—getting strategic and optimizing toward a larger and smarter volume level. In other words, how do you maintain or increase volume and improve results? The key is to use modeling techniques to select the best audiences and then leverage an optimization model to score records and replace underperforming records with ones more likely to convert. By doing this, you can keep the cost per piece similar, improve response rate, and ultimately convert more customers that drive more sales than if you were to optimize toward a reduced volume.

Scenario C: Bring the mail volume back up to 2.0 million and apply optimization to achieve an improved response rate. This generates more revenue which gets you even closer to breaking even.

Scenario D: Maintains mail volume of 2.0 million and uses optimization to test different formats and/or channels based on score groups. This approach drives higher response rates, more new customers and revenue, which elevates the campaign well into the black at an estimated gross revenue of $383,750.

The key takeaway from this exercise is that mailing less to save money isn’t necessarily always the answer to achieving cost savings and can many times lead to higher CPMs and less campaign efficiency. Instead, growth-minded direct mail marketers, brokers and agents should be aware there is a pathway forward to maintaining and even increasing their mailing volumes. Having a strategic game plan that leverages optimization effectively can enable you to go bigger in direct mail to deliver greater volume, performance and cost savings.

Immediate Takeaways

Hopefully reading this blog has shown you how much additional power there is to be unlocked within your direct mail efforts. If you’re ready to go bigger in 2025—and we hope you are—here are some pre-planning steps you should immediately prioritize:

1. Plan for testing: Set aside a testing budget for 2025 that enables you to test all aspects of your campaigns, from the audience and offer to the creative and frequency. Attrition will sneak up on you when you least expect it, so the only way to stay ahead is to ABT—always be testing.  
2. Build the model: Map your customer journey and develop an RFM (recency, frequency, and monetary) model. Look for the gaps within that journey, and let the data tell you how you fill those gaps.  
3. Loop in your partners: Schedule 2025 planning calls with your data providers. Lay out your goals for the year and challenge your partners to think outside the box when it comes to how they help you achieve them.

For more insight into how to deliver growth in direct mail with case studies included, explore this recent Alliant webinar.