Even in the digital age, direct mail continues to be one of the most effective marketing tactics for both new customer acquisition and retention.
According to the 2017 DMA Response Rate Report, the household response rate for direct mail was 5.1% (compared to .6% email, .6% paid search, .2% online display, .4% social media). With numbers like that, it’s impossible to say with a straight face that direct mail has no place in your next acquisition campaign.
44% of companies put more effort into acquisition campaigns than they do retention. Why? Because many companies are concerned with increasing their market share, and perceive a wider customer base as a more lucrative customer base. But that assumption just doesn’t hold up when you look at the data.
According to consumer research, increasing your customer retention by just 5% can increase your profits by 25-95%, and repeat online shoppers tend to spend twice as much in the third year of their relationship with a brand as they do in the first 6 months.
In a nutshell: Not only do existing customers cost less, they spend more. Which makes sense. It’s much easier to sell new products to customers who already have a relationship with your company and who trust the quality of your wares. Loyal customers are also more likely to refer new customers to your company.
It’s a mistake to overlook the importance of retention tactics, or to lump them in with acquisition campaigns. Current customers and potential customers (prospects) are completely different audiences, and should therefore receive completely different messaging.
While there’s clearly a strong case to be made for increasing your retention tactics, both acquisition and retention have a role to play in your long-term marketing strategy. Before you put together your next campaign, take a few minutes to brush up on the difference between the two tactics, and how those differences should shape your direct mail piece.
By definition, the audience of an acquisition campaign is most likely not familiar with your company. That means your direct mail piece will have to concisely describe who you are and what you do in addition to making a compelling offer that will motivate recipients to engage.
An acquisition direct mail piece should seek to do the following:
• Get prospects’ attention.Once a direct mail piece is picked up, 82% will receive at least a minute of attention, according to USPS data.
• Introduce yourself. Concisely summarize who you are and what you offer.
• Tell prospects what’s in it for them. A brief list of benefits or differentiators will show prospects what they stand to gain from engaging with your business.
• Call them to action. According to the USPS, 79% of consumers will take immediate action from a mail piece. Make it clear what action you want them to take.
• Convey urgency. If the recipient feels there is a limited time to take advantage of the offer, they will be more likely to act.
A direct mail campaign focused on retention is intended to strengthen the relationship you have with existing customers. This can be done by introducing them to new products, sending them exclusive offers, or suggesting relevant add-ons to products they have purchased in the past – anything that maintains a line of communication and encourages them to engage with you.
You already have a leg up with a retention campaign because your audience is familiar with your company and is therefore more likely to stop and read your mail piece. Direct mail from a company a consumer has purchased from in the past receives a 14% higher response rate than a mailer from an unfamiliar sender.
A retention direct mail campaign that hopes to be effective should:
• Be personal. Over 90% of respondents to a USPS survey reported that personalization—informal use of the customer’s name, location, etc.—made them more likely to open a direct mail piece.
• Make a relevant offer.The largest benefit of an existing customer base is that you have past purchase history information, so use it! Use variable data fields to create customized offers for individual customers.
• Make customers feel special. Including an exclusive offer or special promotion for valued customers will make them feel singled out and more likely to buy in to the offer.
A strong direct mail strategy combines acquisition and retention tactics. Tailor your campaigns to speak to their respective audiences, and your strategy will be even stronger.
For more ideas, check out this infographic from First Data.
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Editor's note: This blog was originally published July of 2017 and has been updated with fresh content.