Improving ROI of Direct Mail Marketing

If your business relies on direct mail (DM) as one of the acquisition vehicles, you are probably in the perpetual cycle of justifying its ROI. DM (postcards, letters, etc.) is not cheap and with all the junk that a typical household receives through the mailbox, it is challenging to expect any better. The piece of paper in hand, however, still gets some attention, if/when the reader can actually “separate the wheat from the chaff.” Nothing we can do about it, right? 

May be, in the times gone by; we now have a plethora of communication vehicles available to connect with our customers. Can we employ a few of these vehicles to influence reader behavior, such that we get an extra second or an extra eyeball on our direct mailers? The answer is yes, it does help!

I recently employed a time-managed campaign strategy to assess the impact of DM ROI, where the mail drops were followed by an email campaign to the customers. The idea was to send a reminder to DM recipients to re-look and/or re-assess their decision about the DM sent earlier. The chart below shows how the daily order volume spiked around the email timings. 

The three spikes (circled in red) represent the 3 batches of DM drops. On a closer look, what is interesting is the fact that the spike is ~3 times the average volume pre-campaign, while a typical DM-ONLY campaign yielded only about twice the lift in order volume. The next bump (circled in green) is when a reminder email was sent about a week after the first email. This got some of the “lazies” to act and respond to the offer. Much better overall ROI, for the time spent in pre-campaign planning. Such analytics based campaign tactics can help gain a little extra mileage out of our marketing dollars, something we can all rally behind.

Customer Centricity and Parallel Marketing Channels

Customer Centricity is enlightening the customer to engage with the brand, no matter what path is chosen. It is, in essence, managing your business with customer at the focal point of your decision-making. What does this entail? Equal focus on enabling multiple marketing channels and implementing internal back-end systems to track customers through these channels.

This implies that all the quantitative and qualitative data from print, web, email and social will need to be integrated such that there is a complete 360-degree view of the customer interaction. 

Big data supposedly is one solution, but is that all? Is it even possible to implement at that grand scale? Are the teams even ready to understand, implement, maintain and utilize the big data scheme to its fullest? 

There needs to be a shift in marketer's mind-set, besides the technology implementation, that aligns with the customer's interaction with their brands.

Let's take an example of the parallel circuit in the diagram above. Electricity travels along the various paths, powered by the battery, lighting the bulb in each path. Our brand needs to replicate the source, powering each of our campaign channels, lighting an interest in customer's mind and closing the loop with customer's connection with the brand (content consumption, purchase, etc.).

Managing a Subscription Business – Do’s and Don’ts

As a proverbial “last mile” service provider, we have the privilege of working directly with the consumer and helping them fulfill their needs through add-on products and services portfolio. Typically, these are offered as a bundle or stand-alone, depending on the strategic provisions and consumer preferences.

For instance, cable companies may bundle their core service (video) with telephony, Internet, security, etc. Recently, a lot of research has been published, particularly as it pertains to Internet-of-Things (IoT), on what other services and products may be eligible for a place in the portfolio, such as, digital health, premium technical support, hardware, premium content, among others. As general managers (GMs), we have to hence consider a variety of factors when creating a portfolio that delivers “net” subscriber growth, and suits the company goals, core product offering and consumer preferences.

Here I want to share a few key findings – do’s and don’ts – about the “consumer preferences” that shape how well we forecast subscriber and revenue, and in turn, the portfolio performance.

• Do promote multiple products at the time of acquisition, as long as they complement the core offering.
• Don’t overload however – too many decisions at the time of initial purchase will usually put off the customer, and you may stand to lose a customer of your core product.

• Do consider pricing when offering multiple products at the time of first sale. Total price that a customer can commit to, requires an in-depth understanding of your target customers and their ability to afford the payment commitments.
• Don’t over-sell the products with higher price points. This may result in a good initial ARPU, but also causes churn sooner than predicted.

• Do take the buyer’s remorse into account, since most churn occurs within the first 30 to 90 days of subscription. The above factors usually contribute to it, besides the product/service quality delivered. After the first 90 days, the pattern sets in and customers are usually comfortable with the product, pricing, etc.
• Don’t over-emphasize the value delivered by your complementary products/services. It is OK for the customer to be a loyal subscriber to your core product – there will be other opportunities to up-sell and cross-sell.

• Do model and plan acquisition and retention targets that are consistent with industry standards and account for the unique motivations of your target market. For example, product “x,” may sell better in urban vs., rural market, or how easy it is for a customer to buy a complementary product through other vendors, etc. Model out the optimum product/price mix, based on customer propensities and limitations.
• Don’t set unrealistic expectations on acquisition and retention metrics. With more products in the portfolio, acquisition targets may need a revision. Similarly, retention is a challenge, if the customers are not happy with the quality or pricing, or are too invested in your portfolio.

I am sure there are more factors that may warrant a consideration and with continuous data analysis (Big Data anyone?), we may be able to further refine our approach to growing the subscription business, while maintaining a healthy product mix, margins and customer satisfaction.