Direct mail: ten FAQs

1. What can I realistically expect a mailshot to do for me? 
2. Is direct mail more effective in business or consumer markets?
3. What comes first - who to send to or what to send?
4. Will a personalised mailing always get a better response?
5. Who do I send my mailshots to?
6. What should I look for in a mailing list?
7. How much does a mailshot cost?
8. What response can I expect?
9. How soon will I know if the mailshot has worked?
10. What must I do to comply with the Data Protection Act?

1. What can I realistically expect a mailshot to do for me?

Both direct mail and advertising are methods of communicating with customers and prospects without meeting them face-to-face.

Advertising, by its very nature, is impersonal and seldom targets an audience with the same precise accuracy as DM. In contrast, a mailshot can be sent to exactly the person you intend and can be addressed to that specific individual by name. You can limit direct mailing to small numbers until you get the 'recipe' right, and can even adjust the message to suit the recipient.

In a way, direct mail can be likened to pinpoint target shooting, whereas advertising is more like a scatter-gun. Unless you can see your target clearly, the advertising scatter-gun may be more useful. Advertising also has the benefit of putting the company name before a wide audience, which can be good for image building. However, precisely targeted DM campaigns are invariably more effective.

When and how often you use direct mail depends upon the nature of your business (for example - seasonality), your marketing strategy (intentions), and the results you obtain from each batch of mailings (effectiveness).

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2. Is direct mail more effective in business or consumer markets?

Well-planned direct mail can be equally effective in both business and consumer markets. But these two markets are quite different, and need different approaches.

In general, the list of prospects in a business market will be shorter than in a consumer market, but the value of each item sold may be greater. This means that you may be justified in spending more time and money personalising business mailshots. The language has to be more formal and the message might best appeal to logic rather than emotion. The recipient of a business mailshot can rarely act without first consulting relevant colleagues - so include benefits and evidence.

In consumer markets the recipient is usually the buyer and can respond immediately. Moreover, the message can be aimed at broader emotional appeal since this plays a strong role in influencing personal buying, though benefits are still very important.

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3. What comes first - who to send to or what to send?

Look at the mailing list first. Start off by spending most of your time and resources in either compiling your own list or carefully sourcing the right list from a list broker. A stunning message delivered to the wrong audience is a complete waste of money. Only when you are happy that a good list is available should you move on to thinking about what to send.

Send to your identified, targeted prospects. And remember to mailshot your existing customers as well - they need to be told about new offers and reminded to make seasonal purchases. You will make more profit selling to your existing customers than spending money looking for more names.

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4. Will a personalised mailing always get a better response?

Personalised mailings will always get a better response than bland 'To whom it may concern' letters. The latter fall into the realms of junk mail, and we all know what happens to that. The more individual you make the message, the more chance you have of building a relationship and making a sale.

Consider digitally-produced options very seriously. These days they are capable of a high level of personalisation.

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5. Who do I send my mailshots to?

Ideally, you want to be mailing people who meet the same criteria as your best customers. So think about the characteristics of these very carefully and see if you can build up a picture of them. Knowing who you are looking for makes it much easier to compile mailing lists and tailor the most effective messages.

In consumer markets, ask yourself if your best customers share the same age group, sex, marital status, income bracket, occupation, geographical location, lifestyle or hobbies. Also consider if your best customers are likely to be of the same mindset, work in the same industry, have the same delivery requirements or all rely on seasonal demand. Always tailor to the needs and expectations of your targets.

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6. What should I look for in a mailing list?

Direct mail is a huge industry with many firms that specialise in running mail campaigns (direct mail agencies), compiling and selling lists (list brokers), designing, printing, mechanically stuffing and dispatching envelopes (mailing or fulfilment houses) and managing databases. A small business will probably do best by just contacting list brokers (sourced via the Direct Marketing Association at www.dma.org.uk ) or looking in Yellow Pages under 'Direct Mail'.

Bought-in lists should always be treated with some care. You need to ask:

1. Is the list for rent or for sale? Most are to rent on a one-use only basis, though follow-up mailings within a certain period are allowed on payment of a reduced fee.
2. Does the cost per thousand include telephone numbers, job titles and individuals' names, and essential extras like printing out the addresses on sticky labels?
3. How was the list compiled? Lists are often gathered from membership lists of magazines (the most common source) or learned societies, 'publicly available sources' (such as the electoral roll) and advertising coupon responses. Lists built from 'box tickers' are far less valuable than those based on real orders to buy.
4. What is the minimum order? Many brokers will try to sell you 5,000 names as a minimum. Do not be bullied into this. It does not take 5,000 names to know whether the list, or your offer, is going to generate a response. A list of 1,000 should be enough.
5. What is the total number available? Some lists may simply be too small to reach the minimum quantity, making them rather expensive per head.

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7. How much does a mailshot cost?

The cost of a mailshot includes:

• Postage or delivery charges (depending on weight).
• Numerical quantity of the mailshot.
• Printing costs of the contents.
• Cost of renting or compiling lists.
• Any administrative costs involved.

Savings are possible if you tackle each of these individual elements of cost.

For example, explore the possibility of self-generated in-house marketing or a discount on postage with the Royal Mail. Limiting the size of the mailshot is an obvious saving. The weight can be reduced by removing all unnecessary contents, or even using thinner paper for your letter and the envelope. Print costs can also be reduced by having optimum print runs or using fewer colours. Try to balance savings against loss of quality - avoid looking cheap.

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8. What response can I expect?

Response varies enormously, though you can usually rely on better returns when you mail your own customer base - those who already know and love you. People normally talk in terms of a national average response rate of about 0.5 per cent, but if you are selling BMWs or major capital goods, a much lower figure will still be quite acceptable.

You must distinguish between responses and conversions. Many prospects may send for a brochure, but how many actually buy? Record all your responses and take steps to improve on your results.

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9. How soon will I know if the mailshot has worked?

The extent of the response will be known within a week or two, often less than that. If the response is poor, you may not immediately know whether it is because you have mailed to the wrong list or whether the offer was poorly communicated or simply fell on stony ground. Contact some of the targets and try to find out why it did not appeal. Without this direct analysis, you will not learn where you went wrong. Where possible it is better to test your campaign in advance on a small sample group before deploying it fully. This will help reduce the risk of poor performance.

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10. What must I do to comply with the Data Protection Act?

All businesses using personal data must comply with the Data Protection Act. To comply with the Act, you must observe the eight data protection principles - enforceable rules for handling information - and ensure that your staff are aware of them. Under the principles you must make sure that any personal information you hold is:

• Fairly and lawfully processed
• Processed for limited purposes
• Adequate, relevant and not excessive
• Accurate and up to date
• Not kept for longer than is necessary
• Processed in line with your rights
• Secure
• Not transferred to other countries without adequate protection

If your business' core activity involves processing personal details, for example you sell mailing lists, you will also have to notify the Information Commissioner that you are a data controller (unless you are exempt). To find out more about your obligations under the Data Protection Act, visit the Information Commissioner's Office website (www.ico.gov.uk).

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