You’ve got (effective) mail, says NZ Post study

Direct mail doesn’t tend to get the same level of attention that other ‘sexier’ channels like online or TV get. But according to the ASA ad spend figures for 2012, it’s on the rise, with addressed mail up 16 percent to $58 million. So why the increase? And is it effective? NZ Post and Key Research attempted to find out.

Royal Mail in the UK often conducts studies through www.marketreach.co.uk to show the strengths of direct mail. But it’s thought to be the first time something similar has been attempted in New Zealand. Two methodologies were used in the study, with six advertisers recruited for in-depth face to face interviews and case studies and 53 advertisers enlisted to fill in an online survey. And if you’re a fan of the medium, the results make for pretty good reading, with 72 percent of the addressed mail campaigns examined rated as successful or very successful when considering both the effectiveness and efficiency. 

Respondents rated direct highly for generating sales, customer retention, customer acquisition and building brand equity (overall, direct mail was second behind online across the four categories and it was number one in brand equity, with 58 percent stating it had a significant impact).

There is a chasm between the perception and performance of addressed vs. unaddressed mail, however, with the latter still being tarred with the junk email brush and generally not being seen very positively by respondents. But with advances in personalisation and printing technology, combined with the lack of clutter in mailboxes these days, addressed mail seems to be undergoing something of a renaissance.

Gathering return on investment data for the study proved difficult and participants that were interviewed explained the difficulty of attributing sales to a specific media channel where integrated media channels were used. Even so, the median revenue return on investment of campaigns that use direct mail was $4 in sales for every $1 spent on the campaign. But there were a few campaigns that returned in excess of $100 in sales for every $1 spent and this pushed the average return on investment figure to $46 for every $1 spent (this is based on a small sample of 10 campaigns).

As well as the letterbox options, there was also extensive use of email in marketing campaigns amongst the respondents and some of the six case studies presented ways in which direct mail is used with email to improve campaign success (for example, using direct mail for high value customers or those of a specially targeted segment). Email was seen favourably relative to other media, particularly with generating direct sales and retaining existing customers. And it’s also seen as efficient, with three case study participants using email in campaigns and describing its key advantages as low cost and speed.

Overall, 87 percent respondents used email in their marketing campaigns over the past two years, while 58 percent used direct mail – addressed, and 28 percent used TV.

Part of the goal of this study was to show how direct mail improved the effectiveness of other campaigns. And of those that undertook an integrated direct mail – addressed campaign, 71 percent believed the success of the campaign was improved by using direct mail – addressed

New Zealand Post is going through a major transformation at present, and there is a focus on creating new revenue streams to make up for declining mail volumes. Ben Goodale wrote a piece about NZ Post’s need to make direct more attractive to marketers. And while this research is predominantly about showing the role of the medium, it also offers some insights into where to focus its energies (for example, growing revenues by promoting the use of direct mail alongside email or providing useful methodologies and examples of measuring campaign success and ROI). 

Direct pros:

  • Ability to personalise communications;
  • Able to use creative concepts;
  • Offers richer and more meaningful messages;
  • Functionality (for example, booklets and folders);
  • Can contain detailed content which is particularly useful for purchasing decisions that require high involvement; 
  • Establishing credibility;
  • Making effective use of databases;
  • A good point of reference for follow up, such as telesales;
  • Enables a highly targeted campaign;
  • Measurable results of campaign                                                                                                                                                                   

​Direct cons:            

  • The cost (especially vs online only), speed to market and knowing if your mail was in the bin or actually read.
  • Competing with large volumes of addressed direct mail from other organisations. 
  • Perception of being intrusive
  • Risk of loss due to weather
  • Could be treated as junk mail.   
  • Data being incorrect.                                                                                                                                        
  • Hard to measure success.                                                                                                                                
  • High production costs associated with creating material that captures attention and customer will use. Customers often overwhelmed by communication.
  • Increasing cost of postage, very time consuming to compile the data in a suitable format, complications of cleaning data and supplying an SOA to achieve a discounted rate.                                                                                     
  • Expensive to buy the consumer information, print and post for an eight percent redemption.  ​          
  • Addresses not being accepted and the return of undeliverable mail.                          

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