4 Ways to Increase Your Direct Mail Sales

4 Ways to Increase Your Direct Mail Sales
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Author and Owner of Simpson Direct, Inc.
5 min read
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In his book The Direct Mail Solution, direct marketing expert and entrepreneur Craig Simpson provides easy-to-follow solutions for creating direct mail campaigns that work. In this edited excerpt, the author outlines four different strategies for increasing your customers' lifetime value.

Every new customer you get represents a lot of work and money. But it's well worth it because not only does that customer make a first purchase but he or she is also self-selected to likely make additional purchases.

So once you've made all that effort to find that customer, you want to do everything you can to make the most of this asset. Your aim should be to keep adding new customers to a solid base of existing customers who are continually buying more of what you're selling.

So how do you increase lifetime value (LTV)? It's really quite easy. Once you bring in new customers  the key is to keep offering things that will keep them buying. The more products and services you can sell them, the higher their lifetime value will be.

Here are four things you can do to reach a higher customer lifetime value:

1. Offer a continuity/auto-bill renewal service. In my experience, service businesses with an auto-billing cycle will generate at least an 80 percent renewal rate. And because there's a high renewal rate, it's not necessary to sell as many other products or services to get a higher value from each customer.

For example, let's say 100 people buy your service, and 80 of them renew their subscription for a second round. Out of the 80 second-round renewals, 65 to 70 will usually renew a third time. You can see how easy it is to build a high LTV with an auto-renewal system.

2. Offer a premium service. Supplement your standard service with a premium service that some customers may be willing to spring for now and then. For example, a car wash may regularly offer a standard wash for $15. It can also offer a deluxe treatment that includes full detailing, interior shampoo, and exterior hand wash, buff and wax for $150. If it's marketed right, 7 to 15 percent of customers will take advantage of this option. The premium brings in enough revenue so it isn't necessary to sell as many to build the company's back-end profit base.

3. Offer additional products or services that complement your core business.  If you don't have a continuity program or a premium service package, you can offer additional products or services to build a great lifetime value.

For example, a dry cleaning business might expand to clean draperies, leather coats, furniture and even carpets. Or it might rent out carpet-cleaning equipment and sell related supplies. Use your imagination to come up with ideas for back-end products or services that will appeal to your customers.

4. Put your customers on a customer retention path. We want each customer to follow a customer retention path as their relationship with the company develops. This is often referred to as a "sales funnel." We tell customers what to buy and when by making special offers at specific times after they've purchased something from us.

For example, let's say you have a leather clothing store. A customer walks in and purchases a new leather coat. You offer the leather cleaner and conditioner kit at the time of sale, but the customer declines. You put this type of customer on a retention path and follow up with a series of mailings. This will be a regular reminder of your business, which may keep these people returning to your store and buying.

Here's an example of what such a program might look like:

Week 1: Mail customers a thank-you card for buying, and offer two or three tips on making their new leather coat look great for years to come. Keeping it clean and conditioned would be one key tip.

Week 2: Send them a postcard offering 10 percent off your cleaning and conditioning treatment. Notice that the prior week, you gave them information on how to keep their leather coat looking good. Now you're offering the supplies to make it easy.

Week 3: Mail out a brochure with a short letter telling about matching accessories that would go well with their new coat: purse, backpack, wallet, shoes, belt, etc.

Week 4: Send an invitation-style mailing that invites the customer back into the store for a free cleaning and inspection of their coat. Getting the customer back in the store gives you another opportunity to sell them other products and/or services.

The customer retention path will help keep your customers engaged and coming back for more. It will take some time to test and find the right retention path for your niche, but once you do, it will be very profitable for you.

The efficiency of your back-end campaigns and products/services is the key to increasing the lifetime value of the customers you already have. The more products/services you can offer, the easier it becomes to generate a larger profit with each new customer.

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