Email Marketing vs Direct Mail
Whilst email marketing has its place and benefits, the overall return on investment is considerably lower than most would perceive. The initial cost of an email database needs to be factored in, and compared to the percentage of responders and eventual conversions to becoming a new customer.
The truth is that many email broadcast messages are deleted without being read. The reason being that most of us see an email (from a company we have never heard of) and delete it immediately. Not just because we don’t know who the sender is, but the threat of viruses also makes us wary.
One of the main perception challenges is that many businesses stay in touch with their customers via email, typically through a monthly bulletin or service update, and these messages tend to generate a healthy response rate. Typically 1% – 2%, or even higher. But in contacting a new prospect cold (i.e., for the first time) there is no existing relationship or awareness, so the response rates are typically between one per 1,000 emails and one per 10,000!
Sourcing 10,000 email addresses is not cheap. At least it’s not cheap to source 10,000 email addresses from a reputable b2b data list broker. The reason being that the more reputable business data sources invest manual resource into telephone verifying the email addresses within their file. And that costs. These costs are reflected in the overall price of the data list. So it would not be unreasonable to expect (for example) five responses from 10,000 email addresses.
By contrast, direct mail (i.e., postal mailings) are still generating the same average response of around 1%. So instead of five responders from a mailing of 10,000 emails, a postal mailing of the same volume can typically expect to enjoy 100 responders. Twenty times as many.
Yes there is the added cost associated with printing, packing, posting and the stationery. But does this make it all cost prohibitive? Not necessarily: for postal mailings in excess of 4,000 units a reduced postal rate (Mailsort) can be enjoyed. And by using a mailing house, letters can be machine-printed and machine-packed too.
Over the last few years Responsiva have conducted many email and postal mailing campaigns. Well in excess of 100,000 units for each initiative. The postal mailing route comes out on top every time. The postal route typically costs in the region of 40p per unit (all inclusive), rendering the average cost per enquiry in the region of £35. And yet email marketing (because of the much lower response rates) tended to come in at hundreds of pounds per responder. The truth is that the results and return were not even close.
Whilst this is not to say that email marketing should not be adopted, there is an element of “horses for courses”; any business with a particularly high sale value (say £10,000+) should do well from email marketing. For example; vehicle sales, corporate IT systems or any service which has a proven lifetime value totalling five figures. But if your typical sale value is just a few hundred pounds (or lifetime value around £1,000 per customer) then it is more likely that the postal mailing route will yield a higher return.
Postal mailings may sound ‘expensive’, but an investment cost is all relative to the return. And postal mailings do have a considerably higher return in terms of the percentages. Being frightened off by the costs of postage, or being lured by the “cheap” cost to run an email broadcast, is a false economy. Long gone are the days where every email would be opened, or that recipients would think “yippee, I have got an email: let’s see what it says”. In this day and age, most new emails are ignored and deleted without being read, or are even filtered to the spam box without the recipient even seeing the headline.
Consider postal mailing activity carefully. 500 – 1,000 letters is a good starting point for a trial. The business data list should not be expensive, and all employees should help out with the printing and packing. It won’t take long to complete. Measure the responses; both in terms of volume and quality. And if it yields a reasonable return, evaluate the time and cost savings by ramping up the campaign roll-out to 4,000 units or more. A mailing house can manage the printing and packing at a very good rate, and the postage discounts are considerable.