Below are nine steps. If you follow each, you are probably in much better shape from a budget point of view than your other forms of advertising.
1. Know the quantity you will mail. This is the biggest variable factor by far. It is of enormous importance to creative people. They must know over what size base the creative work must be spread. Usually the larger the mailing, the more you can spend for creative development and finished art because the cost is spread over a larger base.
This leads to the question as to how to find out how many pieces you will mail. When mailing to the general public, follow the principle of the direct mail/mail order industry: You want to mail as much as is profitable. For business mail it is usually different. There is usually a small fixed market of firms out there that could be prospects. If you mail to carpet manufacturers, for example, there are only 223 in total!
Follow this rule: If you have very few prospects, mail them all. If you have lots of prospects (lucky you!) figure a quantity that will give meaningful results to your test. In direct mail, every mailing is a test. As a rule of thumb, you need at least 100 responses on the weakest side or panel of a test. What does that mean? Simply pick the one element you think will do the worst. Make sure you’ll mail enough to get 100 responses.
2. Budget your mail package cost in terms of known popular formats. You must have some idea as to the type of mailing you want. For example, an outer envelope, two-page letter, response card, and a two-color, six-panel brochure is a fairly standard item. Obtain an estimate but don’t limit your creative people. Give them latitude to come up with what will work best with the theme and data to be included. It is much easier to plan by adjusting off a known base. Plus, you can give and take. For example, add a color and compensate by a reduction in size.
3. Stay away from “pioneering.” Rather than developing some new mailing concept in terms of format, stick to basics. First, determine that the other elements (product or service, offer or deal, and mailing lists) are correct or within range. Test these elements with a basic package; then, once you know where you are, test themes and formats.
4. Set a test budget as a planned expense. In direct mail, you will always be testing. That means you will experiment with small quantities to make sure that you are right with large quantities. It costs more to do anything in small quantity. So, budget the premium for small quantities as a planned expense. Set aside amounts you can use all year round for testing. It is the testing funds that will really be responsible for your future successes.
5. Anticipate inflation. It makes common sense, but we see many mailers taking today’s costs and assuming they will be good for a whole year. Be realistic.
6. Include peripheral costs. Careful budgeting for mailing is for naught if all the costs are not included. Don’t forget such items as cost of the free premium booklet you are offering by return mail; business reply card postage; cost of fulfillment; cost of test analyses.
7. Budget your time. Since direct mail is measurable and is a business of numbers, why not figure in all the costs? That means including the share of your time, your associates’ time-from meetings to purchasing quotes to printing, and mailing supervision.
These costs will he incremental, since you are already there. As an alternative, figure a flat percentage of sales to cover this type of overhead.
8. Include a contingency. Ten percent is a good average number to allow for Murphy’s Law: What can go wrong will, at the worst possible time. More things can go wrong with direct mail than other forms of print advertising because there are more parts. Magazines and newspapers do the production and distribution for you. In direct mail you are on your own.
9. Make sure you can use responses. This should probably be number one. Can you properly fulfill the orders generated? If not, don’t mail. Save your whole budget unless you can do it correctly.
Follow these guidelines and you will make direct mail even more effective with the type of products best suited to the medium and the right audience. And, more than you can expect from any other form of advertising, you’ll know exactly where you are.