Direct Hit

The pros and cons of using direct mail to build a strong customer base.

Magazine Contributor

April 1, 1997 7 min read

This story appears in the April 1997 issue of Business Start-Ups magazine. Subscribe »

Q: I have a very small home-improvement business and want to do more direct mail to market my products, which include a skylight, a gutter-cover system and ornamental mailboxes. Is it wise for me to try to market more than one of these products at a time using direct mail?

Ron Smith

Charlotte, North Carolina

A: Denny Hatch, a freelance direct-mail copywriter, designer and consultant in Philadelphia, is also the editor of Target Marketing magazine, a publication serving the direct-marketing industry:

I'd be very careful sending direct mail to cold prospects. The reason? Direct mail, also known as direct marketing, is an expensive medium. A TV spot might cost you around $10 per thousand people reached; a solo direct-mail piece will cost you $400 or more per thousand. When you break down the costs of a direct mailing, it all adds up: postage, $200; mailing list, $60; labeling and mailing, $25; printing and paper, $100. The grand total is about 39 cents for each piece mailed.

Another drawback: Even if you send your pieces to homeowners, you have no idea when they are likely to buy your products, if ever. For example, if a couple has just put in a skylight and your 39-cent mailing offers a new skylight, you have just lost that 39 cents. It doesn't take a whole lot of missent mailings to uninterested homeowners before you start going into the red.

Rather than sending solo direct mail (mailing to a select group of addresses in a particular ZIP code) to cold prospects, I would consider saturation mailings, where your message is bundled with those of other advertisers and sent to every address in the ZIP codes you have chosen. Postage broker Advo Inc. in Windsor, Connecticut, which does such saturation mailings, can get you into the mailbox a lot cheaper than with solo mail since you share postage costs with others. The disadvantage? You get to the mailbox along with a lot of other local and national promotions.

Another option is to run small ads in local publications. When someone writes, phones or faxes, you follow up with a phone call to find out the customer's needs, wants and dreams. Then send an elaborate mailing that includes a letter, product descriptions and BODYimonials from satisfied customers. This could be a far more elaborate effort than your little solo mailing or saturation mailing because you can afford to send out jazzier literature to people who have raised their hands.

With every effort--whether it be an ad, a saturation mailing or a solo mailing--keep track of the response. Know where it comes from, whether or not the person purchased, and if you made a sale and subsequent sales. Direct mail is the business of acquiring customers and continually delighting them. Unlike general advertising, you can evaluate and measure the response precisely.

Keep in mind, people will only buy from you for three reasons: price, service and exclusivity. If you have good merchandise and are the cheapest supplier in town, they'll buy. If your service is outstanding (quick, easy returns policy and you're a pleasure to do business with), they'll buy. If you are the only guy in town with your product or service, they'll buy.

For direct marketing to work, you must always scare, promise salvation, and make an offer to your customers. For example:

NEVER AGAIN RISK SERI-OUS INJURY CLEANING OUT CLOGGED GUTTERS!

Enjoy fall and winter as never before with my low-cost, maintenance-free covered gutters! Special offer: FREE hygrometer to measure dryness of houseplant soil when I come give you an estimate! No obligation! Call or fax: John Smith, 555-1234, fax: 555-1245.

Should you market more than one of these products at a time? Only if you have a catalog with a lot of products. Otherwise, follow the rule of the late direct-marketing guru Dick Benson: "You can never sell more than one thing at a time" or the advice of direct marketing consultant Paul Goldberg: "Confuse 'em, ya lose 'em."

Q: I need to know some of the best methods to advertise my electronic tax filing service. Could I get a database of previous electronic filers, or should I speak with major companies in my local area to market my service? If the latter is a viable method, what type of presentation should I make?

Name Withheld

A: Katharine D. Paine is CEO and founder of The Delahaye Group Inc., an international image consulting and reputation measurement firm in Portsmouth, New Hampshire, that helps companies communicate more effectively:

Before you do anything, you need to answer some very basic questions. Both methods mentioned in your question are as viable as a dozen others, but you need a plan and to get some basic information under your belt before moving forward. Stop, look and listen to your potential customers. There are seven questions you must know the answers to before you start any kind of advertising or marketing program.

1. Who's your target audience? Who will buy your service? Given that every taxpayer in America is a potential buyer, you will need to narrow your market considerably. A list of previous electronic filers is a great place to start if you can obtain that information. Such a list will help you identify the size of the market in your particular area. Also, do you know to what extent major companies use electronic filing services? Since the service might primarily be useful for simple tax returns, do you need to explain the benefits to larger companies? Such firms usually rely on outside accounting firms for tax advice. This is a secondary audience you will need to influence, if not sell to directly. Many individuals also use financial planners or accountants, so you will need to influence these professionals as well.

2. What is your audience seeing? Once you've identified and prioritized your target audiences, you then need to understand what they see from their perspective. In other words, look at your competitors and what they are communicating to your potential customers. Even if you're the only one in your area offering this service, there will always be other options people are considering.

3. What's important to your audience? What keeps your target audience up at night? What do they worry about in their personal and professional lives? Look beyond tax preparation to general concerns. For example, you might decide that individual consumers are most concerned with saving money and time. Then, your advertising could focus on those benefits. If you can offer them a solution to what troubles them the most, you'll be their friend for life--and you'll know what feature of your service will be the most attractive to your target audience.

4. Where does your target market get information? To influence potential customers and decide where to focus your marketing efforts, be aware of where your audience goes for information when filling out their tax returns. Do they ask friends? Financial planners? Check out the Internet? Peruse the local paper? Watch your audience carefully, and let them prioritize these sources for you.

5. What do your target customers think about you now? What have they heard about electronic tax preparation services in general? Do they perceive them as fast, cheap, expensive or maybe even risky? Understand thoroughly the pre-existing attitudes and images you're up against. Then gauge the level of awareness of your service, what consumers think about it and the images it provokes.

6. What do you want your potential customers to think? Based on the information you've gathered so far regarding the fears, perceptions and behaviors of your audience, what do you think are the best messages to put out there? What are the key messages you want your audience to associate with you and your service? The ideal messages must be relevant and important to your customers, as well as credible and easily remembered.

7. What are you going to do about it? Take out a sheet of paper and create a chart with six columns. Across the top of the paper, write down questions 2 through 7. Below each question, write your answers--first, for individual customers, then for major companies. Seeing all your answers in one place will help you formulate an advertising strategy that works for your target customers.