Wednesday, 22 July 2009

Emails vs Direct Mail Marketing

by Nelly Berova

Recently I was asked to put a presentation together on Email Marketing versus Direct Mail marketing, so I spent some time collecting statistical data to use.
We all get a lot of Spam and junk mail which ends up straight in the bin so it’s clear to most that marketing is a numbers game.

But I wanted to find out exactly what are the numbers we should all consider and if we had to choose, which type of marketing strategy is better to adopt.

As I started to dig deeper into this subject I found there is quite a bit of difference over the terminology used to measure the success of each type of campaign, so my research wasn’t going to be a like-for-like comparison.

1) Direct Mail Marketing

Direct Mail marketing talks about ‘response rate’ – this can be open to interpretation, but I take this as the number of enquiries and not necessarily conversions.
On average, the typical ‘response rate’ for Direct Mail marketing seems to be around 1 to 2%. That may seem low, but it all depends on the type of products or services on offer. If you send 1,000 mail shots for example (and lets assume the cost of which is £500) and get 10 enquiries and 3 jobs, it’s down to your average sale value to determine if it’s been worthwhile. If the jobs were valued £500 collectively, the campaign has just broke even. If you have made less, perhaps you have made a loss however you may have gained yourself 3 new clients, who will buy again in the future.

Overall, if done in-house Direct Mail marketing costs a fair amount to send: adding the cost of stamps, envelopes, letterheads, ink and time to stuff letters into the envelopes - and unless the average value per sale for say 0.5% of the recipients is not more than your costs, you will have made a loss.

2) Email marketing

Email marketing on the other hand talks of ‘open rate’ – referring to the number of emails, which have been opened by the email reader. This again is not so straight forward.

Most email marketing tools measure the number of emails by inserting a tiny transparent image as part of the email code, which when opened, records this as an opened message. Moreover, it can record exactly which recipient has opened that newsletter. So, you not only know how many people have opened your email, but exactly who they are too.

And what?

Opened emails do not mean ‘read’ emails. They do also not mean ‘sales conversions’, neither if your recipient has engaged with your email in any way.

Also, if the email reader itself can’t view images or has disabled this function, thus the tracking code will not work anyway, so some statistical information may not have been recorded using this method.

On average, the recorded ‘open rate’ for a good database (and by good, I mean recipients who know you, say existing clients, or who have opted in to receive your emails) is around 20-25% (do note this varies from industry to industry, so it’s not a figure one should take as 100% accurate for their business).

The best way to measure the real results from an email campaign is to focus on the ‘call to action’ in your email – clicks, downloads, registrations, purchases, and so on.

If, for example, you email 1000 recipients and 200 of them are recorded as ‘open’, but say 30 clicked on your link and go to your website from where you get 10 sales, the real result is the traffic you have created to your website and the actual sales that has generated.

So has this campaign been successful?

Email marketing is very cost effective – most email marketing tools (such as charge a modest £30-£40 per month. The time you spend to put this together is significantly less than the time you need to fill envelopes, not forgetting the extra statistical information - although not 100% accurate - gives you a better idea of the success of your campaign.

So if you have to choose, which marketing strategy should you use – Direct mail or Email Marketing?

I would say try both and whichever produces better results for your business, use that. However, if your budget and time are limited, I would choose email marketing anytime.

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