Maximizing the return on your direct mail marketing investment

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Jennifer Hudson

Despite the proliferation of digital channels, marketers are increasingly turning to a tactile form of communication: direct mail. The State of Direct Mail in 2023 report reveals that marketers have never been more positive about the indisputable impact of direct mail on their bottom line.

The driving force behind this change?

A convincing return on investment (ROI). Direct mail doesn't just maintain its position in the marketing mix; it outperforms other channels. A significant 74% of marketers agree that direct mail offers the best response, conversion rates and ROI of all channels.

But let's take a look at why direct mail ROI is high, and why marketers should invest in this channel that delivers results.

That's what consumers want from marketing teams‍

Every year, we like to survey both sides of the direct mail marketing equation: the marketers who create direct mail campaigns, and those who receive them. Not only do we find praise from marketers for the channel, we also see consumers telling us what they like about direct mail - as well as what makes them act on a marketing message.

Let's take a look at some key consumer statistics that explain why direct mail marketing has a high ROI.

The report shows that 80% of consumers share direct mail with family and friends.

64% of consumers say direct mail inspired them to take action, including exploring websites and reviews, or making a purchase.65% say an offer or promotion caught their attention. Offers are key to getting recipients to open and read direct mail. Personalization continues to be a key element of successful direct mail marketing. 68% of consumers are more likely to engage with a brand message/communication that is personalized to them. Consumers are telling marketers exactly what they want in direct mail marketing.

Marketers' objectives meet consumers' needs

‍Wedon't just ask consumers what makes direct mail marketing successful, we also talk to our own in-house team of direct mail experts in the Lobcast Podcast. Listen in as Julia Lovett, Senior Director of Customer Success, talks about the types of direct mail campaigns that have a higher ROI, are valuable to both marketers and consumers, and the metrics marketers should be looking at to better analyze and understand their ROI.

There are three key indicators for analyzing the return on investment of direct mail: response rates, lead rates and sales rates.

Increased spending on direct marketing

We know that consumers interact with and respond to direct mail. So how do marketers invest in this channel?

In 2023, 58% of marketers said they were allocating a higher proportion of their marketing budget to direct mail than in the previous year. This significant increase reflects the growing confidence in direct mail as a high-performance marketing channel.

A number of factors are fuelling this increase in direct marketing spending.

Growing competition: A key factor is the rising competition for consumer attention in the digital space. Amidst the digital noise, direct mail stands out for its ability to make a tangible, personal connection with consumers.Inflation and rising costs: Inflation and rising costs in other marketing channels are also contributing to this shift. As digital marketing costs continue to rise, direct mail presents a cost-effective alternative with a high ROI. The State of Direct Mail 2023 report also points out that small businesses, in particular, are more likely to increase their direct mail budgets. This raises the question of what this budget includes.

Software platforms

‍Anotherimportant catalyst propelling the shift to direct mail is the adoption of software platforms for campaign execution. According to the State of Direct Mail 2023 report, nearly a third of retail companies (32%) use software or technology platforms to orchestrate their direct mail campaigns.

These platforms are changing the game, enabling marketers to automate their campaigns, personalize their messages at the individual level, and monitor their results with greater precision. The result is increased campaign efficiency and a streamlined process for measuring and managing direct mail spend.

81% of marketers who use a software platform for direct mail campaigns agree that it offers the best response rate of any channel used by their company today. This high level of agreement underlines the effectiveness of integrating technology with traditional marketing methods.

However, the situation changes when we look at marketers who don't use a software platform for their direct mail campaigns. For these respondents, the level of agreement drops to 70%. While this remains a substantial percentage, the difference is notable. This suggests that the use of software platforms in direct mail marketing can improve response rates, making these campaigns even more effective.

In essence, integrating technology into direct mail marketing not only improves campaign efficiency, but also provides marketers with the tools they need to effectively optimize their marketing spend.

Make every effort

‍Asthe marketing landscape evolves, marketers are striving to modernize their direct mail processes. According to the State of Direct Mail 2023 report, several key areas are the focus of marketers' attention for improvement.

First of all, there's a strong emphasis on improving design, copywriting and calls to action in direct mail pieces. Marketers understand that captivating design and persuasive copywriting can significantly increase the response rate of their campaigns. This relates to satisfying consumer desires, as offers are essential to enticing recipients to open and read direct mail.

Secondly, marketers are looking to better integrate their direct mail efforts with their digital campaigns. This integration enables a more coherent marketing strategy that maximizes the strengths of each channel. This relates to the consumer finding that 64% of consumers say direct mail has inspired them to take action, including exploring websites and reviews or making a purchase. Perhaps direct mail is a more cost-effective way of increasing brand awareness to drive website traffic than variable PPC campaigns.

Increasing personalization is also a priority for marketers. A data-driven approach to personalization enables marketers to create highly targeted campaigns with messages tailored to consumers' individual interests. Let's not forget that 68% of consumers are more likely to engage with a brand message/communication that is personalized to them.

In essence, marketers aren't using direct mail as a stand-alone strategy. They're integrating it with their digital efforts, using technology and focusing on personalization to create more effective, modern direct mail campaigns that consumers want to interact with.

Find out what consumers think about direct mail marketing, and get practical advice on how to put these insights to work in your direct mail marketing campaigns by downloading the State of Direct Mail 2023 Consumer Insights Report.

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