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Direct Mail Marketing For Small Businesses

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How To Turn Your Common Sense Into
Profit On The Cheap

A “Freebie” From 

MailingSupplies.com

 MailingSupplies.Biz

  May  2006
                                                                                                             Download MS WORD VERSION

 Preface

 OK, let’s put things in perspective.  You’re looking at this and saying, “do I really want to sit down and read all these pages”?   “Let me just get to the good stuff”.  Fact is, that it’s all good stuff, what you miss reading here or there may not make the difference for you but we have a little motto that we banter about daily in house.  It’s simply, “knowledge is power”.   While knowledge is not money, few can argue that without knowledge, you’ll never get any money.  Without the power that knowledge brings you won’t know how to make money.  Hence the next ten or fifteen minutes it takes to get through this is something you and your business both need to be successful.  Read it once and pitch it, but remember what you learn. 

The author is an individual who spent 25 years in the post office retiring as a postmaster.  After accepting an “early out” that allowed him to retire he promptly started MailingSupplies.Biz from scratch in late 1992.

As the business grew a second division was opened in late 1995 to offer mailing services, data processing and fulfillment, which he sold off in early 2005.  In sum total he now has 37 years in the business from both sides of the fence.  He has done business with Fortune 500 companies as well as marketing companies of all sizes, even people working out of their houses as he once did.  While his background alone gives him a degree of credibility his pride centers mainly on the fact that the business grew rapidly and has been profitable since day one using direct mail advertising, and later the web.  On the pages that follow he explains it all, focusing on how the little guys can crank up their sales and turn a profit.  No, it’s not a get rich scheme of any sort, just the practical “inside” information you are looking for.   

Advertising by mail hasn’t gone the way of the horse and buggy despite the advent of the internet as many thought it would.  Look at the mail you receive daily and then look at who sent it, profitable businesses.  Our own records show that we generate as much business through direct mail advertising as we do through the web.  Imagine doubling your business. 

It’s all about the components, the individual costs of printing, design, mail preparation, list cost, and postage where direct mail advertising is concerned.  Learn what each is, their related costs and how to put it all together to be successful.

Sit back, relax and read.  Afford yourself the knowledge offered.  It just may change your business forever.

  1   THEORY 

It’s All About The Curves!

If you want to grow your business, think in terms of a plan.  Marketing types call this an “advertising campaign”.  Little guys don’t have advertising campaigns, just plans.  The worst plan is to advertise just once, “sending out a mailing”.  Save your money, your going to need it.  If a business doesn’t grow it will just stagnate and eventually die.  Then you can utter the words “I tried that once, it didn’t work”, as you explain to your co-workers at McDonalds why the business you once had failed.

 Your plan doesn’t have to be weekly or monthly but quarterly isn’t a bad idea.  Twice a year is better than not at all. But before we get into that subject lets talk about something called a “bell curve” and how it relates to direct mail advertising (DMA). 

 Our bell curve line begins the day we drop the mail at the post office.  Usually 3 to 10 days out you get your first call (depends on the distance the piece has to travel in the P.O.).  If you track the number of inquiries (not just sales) over the ensuing days you will eventually reach a peak day – the top of your bell.  At this point, you’ve gotten about half of the responses your going to get.  Notice however that once we go down the backside of the bell, our line extends out a much greater distance.  This means simply that you will continue to get an equal number of calls but it will be over a longer period of time.

                              

 
How long? The shelf life of a piece of mail depends first and foremost on the type of piece.  A simple postcard may go directly into the recipient’s trash, a shelf life of 1- seconds.  If it’s a piece that has captured their attention because of design or the offer you presented it generally is good for about a week – when they have time to look at it.  Newsletters typically have a week or better – sometimes up to a month, while catalogs usually are good for a month with calls for a year (we’ve had them as much as three years later). 

That said, now I’ll address frequency of advertising.  Many times I’m told “yeah, we sent out a mailing last year and got a few calls, it wasn’t worth it”.  If I were to graph the actual business that was done in sales since the mailing that was done and pulled out the preexisting customers he had, guess what?  I would see another bell curve but with a slightly different out-bound curve.  His overall business, his “base” of business, his sales will have increased.

Ok!  Here is the paragraph you’ve been waiting for.  Had he done one, two or more mailings in the ensuing year, each time he mailed he would be starting from a higher base, retained business.  In other words as long as he wasn’t going broke paying for all the advertising his business would have been up 20% or better.  A mailing is just a mailing, continued advertising, even in slow times builds a successful business. 

 2.       THE LESS YOU SPEND THE GREATER YOUR PROFITS WILL BE!

Shop your printing! 

Yes, saving money is just common sense, can’t argue that.  So to keep your attention let me say this.  Here is how to advertise inexpensively, hah!  I’ll even use a politically incorrect word – cheaply!  That is the single most important, underlying theme throughout this document. 

You may have all the common sense in the world but don’t forget the words “Knowledge is Power”.  Without the knowledge, small businesses have to defer to those who have it, marketing companies.  Would it be less expensive to hire a lawyer or just pay a parking ticket?  You’re a small business for crying out loud, you have no business hiring an ad agency or a marketing company.  What you need to do is simply gain knowledge as quickly and inexpensively as possible – this blurb or a nine-dollar paperback can give it to you, just read it. 

Earlier you learned that your business base will increase with each mailing – your business will grow.  When you did your first mailing did you get let the local corner franchise guy to design and print your piece.  How much did it cost per piece?  You probably got charged for some design time and because of “small quantity” piece run got charged more per piece than you would have had you printed 10,000 or 20,000.  You may have spent so much on design and printing that you found you couldn’t afford the postage to mail them all. 

The printing industry for small to medium size printers has literally collapsed in the past decade.  Bigger fish are undercutting pricing on print jobs they normally would not have bothered with in the old days.  The price of paper stock, ink, labor and machinery simply caused many to fail, they couldn’t compete with prices offered by larger printers.  The good news is that they’re still some around and surprisingly willing to make highly competitive bids.  Additionally, many are privately owned and don’t have to pay 7% or more of their profits to corporate as do most of the small franchise print shops.   Shop your mail piece!!!   

I’m sticking with printing before moving on cause there are a few more things to think about.  There will be a section on piece design later but lets talk about color vs. black and white mail pieces.  In the industry they talk about 1 over 1, 1 over 4, 4 over 4, etc.   They are referring to one side of the piece and the number of colors and then the other side of the piece and the number of colors.  What you need to know is that the more color used, the more expensive the piece will be.  Do you really need a photograph (4 color+) on high glossy expensive paper stock or would a simple cartoon character printed in black on colored paper stock conveyed the same image or message?    

There are still many printers out there using their old “paid for” equipment that can’t do four colors, but they can do two.  Almost all of them have quality paper stock they purchased for another job that fell through that otherwise will just be sitting there gathering dust.  Which is more important?  Sending out a fancy expensive mailing of which you can only afford to print and mail 4,000 pieces or mailing 6,000 pieces of an acceptable piece that conveys the image or message you are trying to convey?  My money says you’ll get more customers by mailing the 6,000.  Save the money for the fancy pieces for the day you’re rolling in dough. 

Printers by the way always have what are called “overs”.  These are extra pieces that they may or may not charge you for.  Get them and put a stamp on them, mailing them individually to somebody who calls you out of the blue to inquire about your product or services.  

 
3.       
MAILING PIECE DESIGN

 Nobody Buys Ugly!

 Back in the first chapter I talked about the “shelf live” of various kinds of mail.  Now let’s take a minute to explore the human mind.  Studies of babies have been done that flashed picture of decidedly “pretty” mommies and pictures of plain and even ugly mommies in front of them.  Mind you we are talking babies now – they haven’t been taught a thing at this point in their young lives, no good or bad habits.  Researchers concluded that there was a decidedly more positive reaction when pretty mommies were displayed.  Now I don’t claim to be a shrink but somehow it suggests the desire for pretty is ingrained at birth.  Who knows, maybe where we all originally came from was pretty and we want to see more, who knows.  But I digress…. Sorry!

One can conclude then that each of us knows what the word pretty means even though tastes differ.  I like pizza, but not with anchovies.  Beauty it is said is in the eyes of the beholder, now you have to remember that the beholder is going to looking at your mailing piece, he be-hol-din’ it in his hand while hovering over a garbage can.  What can you do to make him hesitate, read or put in his “I’ll look at it later” pile?  You have to capture his attention.  On the street you could yell loudly “hey you!” and get everybody to look at you.  Not so with a piece of mail.

Imitation is the most sincere form of flattery.  Each day you receive countless pieces of advertising.  Some come from huge companies that have spent a lot of bucks in piece design to get and hold your attention.  Thus if you’re clueless as to what your mailing piece should look like all you have to do is save the best designs you see and eventually fold all or parts of them into your piece design.

Regardless of the piece of mail you’re sending, the front and back of the pieces will be seen by the recipient.  Those two surfaces are your best chance to avoid having your piece thrown immediately in the trash.  In that space you have to provide enough information to say “keep me, keep me”.  The word “Sale” is always big.  “Special Offer” is another.  Something pleasing!

Color helps, certain colors more than others.  Look at the sales papers from the local supermarket.  Seems like a lot of red, doesn’t it (hint).   The colors do however have to be appropriate to whatever product or services you are trying to sell.  Ever tried to eat mash potatoes under black light?

Not all of us are blessed with that “artsy” thing happening in our brains.  As a business owner the success or failure of your business is going to depend on your use of your instincts and your belief in them.  What you need to do is combine what you think will work with some sample pieces and if necessary, sit down with a box of crayons to outline what you want.  Then sit down with your printers design person (if you don’t do it yourself) and give them a little latitude to build on your design.  If you don’t like the result (trust your instincts) have the offending part removed or changed prior to printing. 

You will know when you have reached the final part in the design process, you may even utter the words “that looks cool”.

There are a lot of other tricks used to get a recipients attention.  I won’t get into them because most spell m-o-n-e-y.  Among them are pieces that look like: they are from the government, hand addressed (by machine), have a stamp on them, have a personalized post-it note attached to the front, and so on, and so on.  Today I received an actual personalized quote that identified the car I actually drive from an insurance agent for a national company.   I would hate to guess how much it would cost a small business whose advertising was not subsidized by a major company to produce such pieces by the thousands.

4.        TO WHOM IT MAY CONCERN

Your mailing list can make or break you.

 You can generate the best looking glossy piece imaginable in full color that cost you a fortune but it is a complete waste of time unless you get it into the right hands.  On our web sites we list four different basic types of lists; business, consumer, walk sequence and new movers.  Each has a specific value and purpose.  If the buyers of your products or services are businesses you click on D&B to see what is known as selects.  If you advertise to certain residents, click on the Equifax section to see the selects available there.  If you plan to deliver a piece to everybody in an area you might also want to click on the ADVO list section.  Pay particular attention to the various ways you can choose a list based on what are called “selects”.  As an example, click on D & B, which is for business lists and note that you can select a business list based on number of employees, sales, etc. 

“Selects,” add to the base price of a list.  Each select has its own additional cost, some can be as little as $3.00 per thousand to the base price while others can add as much as $15.00 per thousand. What is known as “geography” is free as are SIC Codes.   Geography is typically a zip code(s), a carrier route within the zip, radius, city, county, state, etc., anything that defines an accepted geographical area.   Between the river and 49th street doesn’t get it.  When you consider the total cost of a mailing, the additional price of $3, $5, $7 per thousand to target the right people or companies is trivial.  If geography is all you need, no problem.  But for our business to send one piece to every resident would be a huge waste of money.  Thus “selects” are necessary in business-to-business marketing unless your selling something or providing services that all businesses can use. 

Target marketing is nothing more than sending a piece of mail to the person or business most likely to purchase from you.  It allows you to save print costs and postage.  On a normal day I walk potential list purchasers through the process of narrowing down their list by getting them to focus on their current customers.  Who are they?  Is age a factor? Wealth?  Type of business? Location?  Type of residence?  Etc.  Etc.  The person I’m speaking with tends to understand the need only after I have provided them with what we call a “list count”.  This is a freebie list of how many businesses or residents are in the geographic area they have chosen plus any selects they have identified.  Most determine quickly that their budgets can’t support mailing to that many people or businesses and we either choose more selects, or reduce the geographic area and run the count again.  Eventually we are not only targeted, but also within the budget. 

What I just provided information wise is quite obviously not the most scientific thing available.  Where the intended target is based on the likes or dislikes and/or habits of a certain type of person, you need to spend big bucks and should stop reading, but I’ll give you an example.  Several years ago we had a lettershop/data processing/fulfillment operation.  A customer who advertised for people interested in flying in simulated aerial dog fights was trying to figure out who, after pilots and ex-military types might be interested in participating or just riding shotgun (for non-pilots).  He had in fact been mailing to those same people for years and the need to find “new” potential customers.  What?  He asked himself, would be a common denominator between his known customers and potential customers.  Well, he spent a big buck having his existing customers  “life styles” examined to determine what other types of people might be interested that he could target market.  After their obvious mutual interest in airplanes, the results came back that provided the usual things like average income, value of residence etc., but they also found the highest common denominator after those was motorcycle ownership.  He then advertised to similarly situated people and got a result he was well pleased with.  Not as good as his original target of pilots but good enough to achieve a very positive return on his investment.

The average small business can’t afford this type of study.  A list derived from serious “lifestyle” information is costly, they are known as specialty lists.  Most start at $80 per thousand with minimum fees of $500 plus. 

Where business lists are concerned, businesses that sell things to other businesses have a different path to target.  Every business in the country falls into a category of other similar businesses identified by what is called a SIC code.  This is a 4 to 8 digit number (which the government is trying to replace with another system called NAICS but is having as much luck as they did in imposing the metric system).  The first four numbers being somewhat general, like “Agriculture” and the remaining four digits identifying what type of farm, like “pig farmer”.   Business lists also allow delineations in addition to geography such this as number of employees, sales, etc. etc. 

The cost of any type of list is but a component of what your total marketing expense will be.  Others costs are piece design, printing, mail preparation and postage.   If you knew your budget for your next mailing and had estimates of each of the component costs, you could add all the component costs together and convert it to cost per piece.  Then divide this back into your budgeted amount and you would have a ball park idea about how many pieces you could afford to send out and how big a list you should buy.  Get quotes! 

It is estimated that last year, 17% of the population in this country changed residences.  If you are using an old list, it is safe to expect that 17% won’t reach the intended recipient it you mailed out the pieces at the “Standard” rate as the post office calls it.  “Standard” is what us old timers call junk mail.  Officially it went from “3rd Class Bulk Mail” to “Bulk Business Mail” before being called Standard.  If a name is on such a piece and the intended recipient no longer lives there it is assigned to waste by the post office.  You have wasted 17% of your pieces and the costs associated with each (design, print, preparation, postage, list) piece and by extension 17% of your budget.  How do you avoid this?  Include “Or current resident” beneath the name on the mailing piece.  Another way is to have your existing in-house list preprocessed to have the forwarding addresses provided.  Worth the money?  Figure that half the people moved out of your geographically targeted area so you’d be spending good money to find the other half.  Is it worth it to you? 

Companies that assemble mailing lists are known as compilers.  There are probably no more than 7 or 8 true compilers of lists.   Most, if not all, will not sell direct to an end user.  Companies that typically sell mailing lists are known as “brokers” or “resellers”.  Typically they have negotiated contractual prices with compilers.  They then “mark up” the price and serve it up to the mailing public.  Thus it is wise to get three quotes from various brokers – the info they sell has a very good chance of having come from the exact same compiler.  The only difference is the price. I recently dropped in on a convention of serious mailing equipment/software providers in Orlando.  Among the booths was a company representing themselves as list company that sold only to brokers such as we are.  Their advertised pricing was much higher than what we charge and the lists come from the same sources.  It pays to shop.

5.        WHAT POSSIBLE GOOD IS A CARRIER ROUTE MAP?

“Well, I tried to get the information from the post office but…”

 A large number of the people we serve are newcomers to direct mail advertising.  They could be a pizza parlor, a dry cleaner, a real estate office or even a dog walking service.  All have three things in common, they want to be successful, they want to save money by targeting their potential customers and they know which part of town (city) they want to advertise in.  This local knowledge (is power) can serve their interests only if they know how to connect the dots.  If your business is similarly situated, this could very well be the most important part of this document so stay with me!

       

 

Each zip code delivered by the post office employs people to deliver within that territory, duh!

They are called carriers.  Each serves between 300-600 businesses and residents.  Each has a route number.  The dots you need to connect to mail to a certain part of town find out exactly which carrier routes serve which areas.  This will allow you to order a smaller, more focused list with 100% probability of getting your mail piece to the intended area.  You save money in postage, list, printing and preparation while getting the highest return on your investment.  Gee, you’re target marketing already!

The information of which carrier route serves which area is available at the post office but your chance of getting it without a hassle or wasted trips to the post office is minimal.  Conversely, a carrier route map can be ordered and emailed to you within hours in most cases through us for $39.95.  The choice is yours, but please, when you call to order one don’t whine about what the post office said or did when you tried to get the information from them.  We told you so.

Once you have a map the next step is to identify those routes in your targeted area and get a count of how many deliveries are involved.  This allows you to compute the number of deliveries (pieces) well ahead of time to estimate the cost of printing, the list and what the postage will be.  Again, the actual count is available through the post office but….again, good luck.  We can give you the count free (see sample below) in most cases within 15 minutes of your inquiry – just tell us the zip(s) and give us an email address.  See the sample count below.

Sample count

Geography

Carrier Route

Total

City Addresses

Simplified Address

MFDU

SFDU

Business

Contact Name

77320

HUNTSVILLE, TX

8338

8338

0

1602

6736

0

5792

    C001

852

852

0

310

542

0

476

    C005

600

600

0

215

385

0

412

    C010

665

665

0

409

256

0

359

    C011

356

356

0

54

302

0

243

    R001

505

505

0

9

496

0

368

    R003

574

574

0

20

554

0

410

    R006

657

657

0

106

551

0

450

    R010

501

501

0

4

497

0

393

    R011

600

600

0

25

575

0

470

    R012

509

509

0

2

507

0

394

    R013

487

487

0

19

468

0

385

    R015

564

564

0

43

521

0

453

    R016

581

581

0

42

539

0

428

    R019

418

418

0

146

272

0

254

    R020

152

152

0

152

0

0

55

    R022

317

317

0

46

271

0

242

77340

HUNTSVILLE, TX

10551

10551

0

4669

5882

0

5447

    C002

420

420

0

86

334

0

290

    C006

1356

1356

0

1323

33

0

341

    C007

552

552

0

413

139

0

135

    C008

187

187

0

122

65

0

87

    C009

712

712

0

285

427

0

389

    C012

330

330

0

153

177

0

190

    C013

1050

1050

0

834

216

0

235

    C014

787

787

0

457

330

0

287

    C016

568

568

0

568

0

0

79

    R002

490

490

0

0

490

0

382

    R004

516

516

0

12

504

0

387

    R005

618

618

0

253

365

0

360

    R007

704

704

0

0

704

0

625

    R008

589

589

0

57

532

0

366

    R009

554

554

0

79

475

0

421

    R014

553

553

0

27

526

0

422

    R018

21

21

0

0

21

0

14

    R021

544

544

0

0

544

0

437

Total

18889

18889

0

6271

12618

0

11239

In general terms, the wealthier a neighborhood is, the more mail per capita they receive.  The measurement system used by the post office in determining the length of carrier routes (number of deliveries) is greatly affected by wealth.  The PPD (pieces per delivery) in a wealthy area may be 8 or nine while a poor area may have a PPD of 1.  Advertisers know that it’s all about “spendable income”.  If they were to target customers who couldn’t afford to buy a product or service they would just waste money.

If your business happens to be a marketing company, try walking into a potential customer with a laptop containing a carrier route map, a count of deliveries by route and a schedule of printing costs.  You will be able to estimate your potential customers advertising expense and get a check in your hands before your walk out of the building.

6.      IT’S A “PER PIECE” THING!

“A Penny Saved Is A Penny Earned”

We have talked about the individual components of direct mail marketing.  The final steps are to save on postage and mailing preparation.  A permit from the post office costs $320 these days ($160 application + $160 annual fee).  If your marketing plan is to simply mail  3,000 pieces just to “see if it works” you really shouldn’t bother with a permit.  You’re already in the hole by 10.6 cents per piece ($320 divided by 3,000) before postage.  Your options are limited to putting a first class stamp on your pieces or contacting a letter shop (aka mailing service, mail house, etc).  Many printers now provide the service or know someone who does.   They can save you 10 – 20 cents per piece on postage but will of course charge you to prepare and mail the piece.   Make certain that you have this figured out before you have the piece printed.  The mailing service or printer will allow you to use their permit indicia (in-dee-sha) which takes the place of the stamp but there will most likely be additional charges if they have to apply it after the piece is printed.

If all they have to do is address, tray and take it to the post office they will typically charge upwards of $20 per thousand.  Most have minimum fees and in most cases such a small mailing would be below their minimum.  Some will do it charging you the postage they save vs. first class – but they are few and far between.  Many printers also act as quasi-marketing companies, offering everything from design, to list, to printing and mailing.  If you already know your component costs you can avoid being overcharged and know if you’re getting a good deal.   Look for the cost per piece number – what is it going to cost to get it into your potential customers hands.  Make certain it is clear to your mailer ahead of time that you required a “postally” certified/stamped copy of the 3602 Form they get back from the post office.  Overcharging for postage actually paid has on occasion proved to be a problem.

Conversely, regular mailers who have a true plan often look for ways to cut their marketing expenses and choose to take all or part of the entire process in-house.  Is it a viable option?

Yes, but you have to do the math.  Can your fancy new laser print and address pieces that are acceptable?  Would the “light version” of the mailing software you bought pay for itself in postage savings and preparation time?  Already you can save list cost so that’s a “no brainer”.    Need to fold or stuff envelopes?  An underutilized employee may fill the bill and kids tend to love to help “mommy or daddy” do work stuff! 

Whatever method you choose to pursue your plan, it all breaks down to one common denominator – how much does it cost you per piece to advertise.  It may seem silly to think about pennies but let’s look at that 3,000 pieces, but mailed each month.  That’s 36,000 pieces a year.  Even a savings of a penny each piece is $360 a year.

Imagine saving 10 cents each!  While many people wouldn’t think of stooping over to pick up a penny, if you had 360,000 pennies sitting in your change dish at home you’d have a mess and $3,600!  That is the nature of this business – as a business owner we all think in terms of dollars where profit and loss are concerned.  But direct mail marketing is all about the pennies because it’s completely repetitious!

7.      SUMMARY

This was written to help answer questions regarding something you as a small business owner or start-up needed to know.  Having read it I sincerely hope you’ll understand a little more about direct mail marketing and how it works internally.  Marketing professionals would laugh at its contents because it is so basic.  But you’re not a marketing professional; you’re just somebody with a dream and a limited budget, just as I once was. 

Your business will climb many hills and visit as many valleys enroute to your ultimate goal of success.  Sadly, one of the items you will consider expendable when times get rough is the money spent are marketing.   Truth is, there is no good time to stop or cut back on marketing.  Your business is evolving all the time and the more the world hears about your offerings or services the greater chance there is of them calling you to do business. 

Tape a penny to your wall alongside your first dollar.  One represents profit, the other, how to get more. 

copyright MMS INC 5/1/2006    - 

                            
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