Posts filed under Planning

A Guide to Direct Mail in Canada

Canada Post dreamstime_xs_118255640.jpg

Direct Mail strategies that work consistently in the US tend to work in other Western societies. But the implementation process takes a different route. Canada is an example of different implementation processes that experienced direct marketers should consider before undertaking any mailing in this country.

At the time of this writing, high tariffs to produce mail in the US encourages mailers to print and mail in Canada. This is one reason why local direct mail houses and large US firms like RR Donnelley do a significant volume of direct mail in Canada. 

There is a national goods and services tax of 5% and a Provincial Sales tax 7% on production in British Columbia. No Provincial sales tax is charged on postage, but there is a 5% GST tax con postage.

One advantage to mailing in Canada is the exchange rate. At this time, every $US is worth $1.32 Canadian. Spending $100,000 Canadian dollars on mail equals $75,000 US Dollars. 

The first thing to consider is that all compiled names in Canada emanate from Canada Post. The strict privacy laws and their unique access to the Canadian census forms the nexus of available compiled names.

Canada Post offers an internal targeting service that was established about 5 years ago. For a fee, they create customer profiles using client databases to target names using demographics and Prizm 5 analytics. Home ownership, annual income, household composition, type of dwelling and so on are indexed for accurate targeting. There are well over 100 data points for each address for a file totaling 14 million address in the country.

Response lists are small and often not worth testing for some mailers due to inadequate scalability. Compiled names from Canada Post offer the primary list source for Canadian prospect mailings

When working with US or Canadian based printers, they should have a strong working relationship with Canada Post. Some large printers in Canada actually perform their own analytics having direct online access to the Canada Post files.

Another difference between US and Canadian mail are the three categories of available postage in Canada. Here are the three types of Canadian bulk mail.

  1. Neighborhood mail (NM) that distributes mail without a name or address. The price per piece is C$ .092 per piece. Postal code selection is available with clusters of 20 addresses per code in urban areas and up to 2000 addresses in rural areas. Targeting consists of all the same variable as the more expensive mailing categories listed below. But the targeting is done at the postal code level and not per household. the lack of addresses and names means that these files are not purgeable or able to delete no mail names or existing customers.

  2. Postal Code Targeting (PCT) allows the use of addresses but no names. The cost per piece is C$ 0.281 per piece. The advantages over neighborhood mail other than an actual address is the ability to make selections at the household level. The improves targetability and makes the list purgeable by deleting customers from prospect mailings and other house file names such as inquiries that require a different treatment than prospects.

  3.  Personalized Mail (PM) offers the same benefits as standard mail in the US with names and addresses. The cost per piece is C$ 0.3638 per piece. As with PCT, the names are targetable at the household level and purgeable.

There are other interesting aspects beyond the Canadian list selection processes. For example, the postage meters are customizable at no added cost with the sender’s company logo. One additional benefit is that compiled list rentals are included in the postage costs.

As for the creative executions, the formats, offers and language are identical to the US. the only exception are the spellings that follow European English norms such colour instead of color. If mailing in Québec, of course, the creative should be sent either as English with French running parallel or French only.

I hope you found this Canadian mail primer helpful Please let me know if you have questions or need support with your direct mail planning and creative development.

Posted on April 17, 2019 and filed under Planning, Direct Marketing Strategy, Direct Mail.

The Direct Marketer's Core Strategy: The Marketing Allowable

Customer Acquisition Allowable

Use marketing allowables to develop your marketing budget rather than a percentage of sales.

This focuses your budget on your most profitable customers and less on what's left over. Drive your plans using a single evaluation process to create successful marketing programs.

For example, if your customer marketing acquisition is $200 for each new customer. And your business plan calls for 10,000 new customers to make plan. Your total budget for acquisition becomes a matter of simple arithmetic.

$200 per customer X 10,000 new customers = $2,000,000

Your promotion, staffing, fulfillment, product deliveries, returns, phone support and and other related marketing costs for customer acquisition fall within this $2,000,000 budget.

You will also want to develop a customer retention allowable to add to your budget.

Keep it as simple as possible by quantifying your financial goals. Then determine the customer mix you need to achieve those goals.

This simple concept makes a lot of sense to CMOs, CFOs and CEOs. The devil lies in the development and agreement on the allowable details.

The customer lifetime value drives the creation of a reliable allowable. Most companies save the needed information to calculate customer lifetime value.

1. Average sale for all customers

2. Average profit margin per average sale

3. Average number of annual sales

4. Number of years and months the average customer remains active

5. The above information yields the average lifetime value of a new customer

Once you have the lifetime value, then the CFO or someone on his team calculates the allowables. His team will include present cost versus future value to come with the final allowables.

So far, my discussion revolves around the vital role of the allowable in preparing the marketing budget. The allowable plays a critical role in evaluating channel mix, offers, and creative executions. It can ven help divide the budget by marketing strategy such as social media support for traditional campaigns.

Through testing, how does TV or direct mail alone perform without the support of outbound telemarketing? How is social media contributing to acquisition or retention? Are we spending beyond our allowables? What mix performs best based on the allowables.

We must work to find ways to quantify all marketing spends. The first step is to create a reliable evaluation KPI. I know the allowable remains the Key Performance Indicator for all marketing activity.

The 3 Most Successful Direct Mail Formats

Self-mailer, jumbo postcard or window envelope direct mail package? How do you pick one? What package should you use to generate leads or sell your product?

Assuming you have determined your offer and selected your mailing lists, then you must choose your direct mail format.

Do not pick your format based on cost alone. The proper format will pay for itself and improve profitability. The trick is to make your decision based on what works most of the time. Do not try to reinvent the wheel until you have tested your direct mail many times.

Your first package format choice

The Classic Package

The Classic Package

Your first direct mail tests should use the proven envelope direct mail format. It's used most often because it works. The package contains three elements inserted into an outer envelope.

  1. A #10 outer envelope with single window 
  2. A personalized one or two-page letter with the address showing through the window
  3. A personalized response device produced with the letter
  4. A #9 Business Reply envelope for the response device
  5. An 81/2 X 11 flyer as needed to lift response

More often than not, added package elements will improve response rates.

Your second most successful format choice

The Snap Pac

The Snap Pac

The most effective format of all time is the official looking Snap Pac. It contains the same elements as the Classic Package. It usually beats existing direct mail controls using the same content. This rarely happens based on format alone except for the Snap Pac.

My favorite size is the 6 X 9 personalized Snap Pac containing a letter, the reply form, lift note and reply envelope.  

Some heavy mailers such as banks, insurance companies, and large associations use this format. Some companies use the Snap Pac as their super control. This means that they have been unable to beat it with repeated tests after many years.

Your third format choice

The Self Mailer Front Side

The Self Mailer Front Side

The Self Mailer Back Side

The Self Mailer Back Side

Only after you have tested one or both of the above should you go to my last format choice, the self-mailer. This mailer is self-contained using no outer envelope.

It consists of a  folded brochure with an included coupon or response piece. Postcards of all sizes fall into this category. 

Rarely containing letters, these formats work best with existing customers who know your product. Postcards do not create the emotional pull of the letter. Some self-mailers incorporate a personalized letter to create a hybrid package.

Simple postcards work best for couponing and discount offers that need little copy support.

The other options

There are other choices beyond these three formats that meet specific needs.

For example, new perfume introductions may use scratch and sniff to use another sense. A manufacturer of a new flooring material may insert a product sample in a box to flooring retailers. The applications for 3-dimensional formats are endless.

A hybrid Classic Package that contains a solid object the recipients feel through the envelope prompts them to open the package out of curiosity will increase response.

The key point when selecting formats: your first choice is the Classic package first. If that doesn't work, then another less expensive format will not likely make your mailing successful. It's better to concentrate on your offer and list testing rather than cheapen the format. 

 

Posted on August 15, 2016 and filed under Direct Mail, Direct Marketing Strategy, Planning.

Direct Marketing Consultant Reveals Top 3 Response Killers

Photo by Imilian/iStock / Getty Images

Direct marketing (or any marketing effort) suffers from these barriers in client companies. Most of them fall within the realm of common human weaknesses. They may hurt the whole business enterprise and not just the direct marketing program.

1. Worshiping at the idol of the status quo

Clients often fixate on the status quo despite evidence that shows the need for a new direction.

This management flaw remains the biggest response killer for almost all marketing programs. But the idea that "if it ain't broke, don't fix it" serves to restrain growth.

Successful direct marketing programs need a lot of work to remain successful. No matter how successful, direct response rates will drop over time. Direct marketers understand that their job entails ongoing program replacement. 

This means frequent testing designed to beat existing controls. 

Managing effective direct marketing programs over the long term requires controlled risk taking. 

2. Working in the haze of routine

Human nature has a way of lulling managers into a dangerous comfort zone.

Here's what I hear from clients who face clear evidence that they need to upgrade their processes.

- "We've worked with this vendor for over twenty years. We're not going to consider other vendors."

- "Our internal database procedures cost us new sales and opportunities. But we don't want to outsource the work. That move makes us uncomfortable."

- "Taking production outside will cost much less and deliver superior print quality. Outsourcing the work would help our customer image. But we don't want to reallocate internal jobs."

- "We don't think our prospects want to read a letter. All we've ever done is send postcards because they are less expensive than other formats. So we don't want to test other options."

3. Not challenging the company's direct marketing efforts

Clients should never assume that their vendors or staff observe best direct mail practices. Yet many clients rarely challenge the marketing work so long as it is profitable. 

Perform these evaluations at least once every one or two years.

- Audit the database and direct mail deliverability levels.

- Audit all direct mail production to assure quality and competitive pricing.

- Check internal procedures for accurate database input processes.

- Review inbound telephone scripts, inquiry response procedures and  accurate response tracking.

These three response killers do not go away. These are not tactical issues but strategic management issues. If left alone, they will kill long term marketing success.

Experienced consultant may attempt to correct these issues. But it is a waste of talent and energy without CEO support.

Have you found ways to overcome these barriers in your company? If so, how did you do it?

Posted on June 10, 2016 and filed under Planning, Direct Marketing Strategy, Consulting.

The Evaluation Process Differentiates Direct Marketing from Digital Marketing

The evaluation process highlights the primary difference between direct marketing and other strategies such as digital marketing.

Digital marketers as a whole do not evaluate their effectiveness based on financial data as clearly as direct marketers. Note the key digital media evaluators in the graphics below. Digital marketers -- especially content and social media practitioners must evaluate their efforts based on key indicators of results rather than actual sales data.

Let's begin with a sample list of the evaluation indicators used by digital marketers.

 

Notice than none of the evaluators incorporate evidence of incremental sales. These are useful for determining prospect and customer engagement. But no evidence of increasing sales or ROI are clearly evident.

Direct marketing strategists, on the other hand begin and end their planning based on sales data.  

This is not to say that these two approaches to evaluation do not complement each other, but that the approach to solving marketing problems between digital and direct marketers compliment each other.

I should mention that digital marketing is not a marketing strategy in the same sense as direct marketing. Digital marketing is actually a media strategy because it focuses on the digital channel.

In fact, the complete direct marketing strategy always incorporates the digital channel in the planning process. Social media, landing pages, email and web page support all contribute to the effectiveness of direct marketing.

Digital media marketing is no more a marketing strategy than broadcast marketing. That's why the wise marketer should use the direct marketing strategy to drive all marketing campaigns as a way to measure program effectiveness.

Posted on December 1, 2015 and filed under Planning, Database Marketing.