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