Much of direct mail is counterintuitive. Over the years you have probably wanted to cut direct mail costs. For example, by eliminating a lift note. On the surface, this might make sense.
Common ways to cut the cost of a mailing package are:
- Shorter letter
- No value-added piece
- Smaller response device
- No business return envelope (BRE)
Even though it’s tempting, you should really think through the idea of cost cutting.
Why? Because it can be very counterproductive. Each of the above cuts will almost always depress your response, not justifying the cost reduction.
Here is an example of what I mean:
Your cost per lead is the money you must spend to acquire one lead.
Let’s say you mail to 50,000 prospects at a cost of $0.75 each ($37,500 total) and get a response rate of 1.0% (500 leads). Then your total cost per lead is $75 ($37,500 divided by 500 is $75)
Now let’s say you cut a value-added insert. The inserts cost $0.06 each, but taking it away decreases your response rate from 1.0% to 0.7%. Here is what happens:
- Your cost of mailing is now $34,500
- Your response rate decreases to 0.7%
- So the number of leads decreases to 350
- Your cost per lead has increased to $80.25
So you see that by cutting an insert that costs you $.06 each, you increase your cost per lead by $5.25 Even though it may appear that your total costs have decreased, your actual cost per lead has increased by over 6%!
If you would like some more tips on how to have a successful and profitable campaign please contact me at (310) 212-5727 or at inquire@cdmginc.com.