There are three critical elements in all direct response campaigns: data, creative and offer. In direct mail specifically, the key to building a profitable and optimized program is testing each of these elements against new variables on a regular cadence.
Data, i.e. your mailing list, can influence campaign performance by as much as 70%, so it is not surprising the majority of testing efforts are focused on pinpointing the highest performing audience. Your creative may be the most gratifying element to test, but most mail pieces are designed around the often overlooked, yet pivotal, direct mail offer.
When building your direct mail strategy, the offer you choose will have a significant impact on your audience response and overall program performance. As an essential campaign cornerstone, “what’s the offer?” is usually one of the first questions a direct mail strategist will ask. If it is not enticing enough, your mailer will be completely ignored. If it is too subjective, you could risk a consumer postponing the purchase or hindering customer loyalty. The trick is finding the sweet spot – an offer that is so compelling the prospect cannot help but take immediate action.
What is a direct mail offer?
A direct mail offer is the “deal” you are serving your audience. It tells them what you are willing to give them in exchange for a response. Direct mail offers fall into two categories: lead generation and sales generation.
Lead generation offers are common among brands that have a long sales cycle or require additional sales qualification, like B2B. Your lead offer (sometimes referenced to as lead magnet) could be an invitation to take a survey, download an informational asset, watch an online video, or request a consultation. Once the prospect has accepted your offer by exchanging additional contact information, you can engage the next stage in follow-up.
Sales generation offers are focused on getting the prospect to complete a purchase. Product discounts, exclusive savings, free gifts, and complimentary services are examples of this offer category. We have found accompanying a sales offer with an urgent deadline heightens the consumer’s natural fear of missing out – increasing the likelihood of conversion.
The secret to the best direct mail offers
You will find the word “test” repeated throughout this article. As with any marketing campaign, testing is the not-so-secret secret to success in uncovering the right formula for your audience, especially since direct mail offers are so versatile in format. Even if your brand is unable to “offer” anything for various legal reasons, you should not forgo testing offer alternatives.
For example, insurance brands cannot incentivize a purchase. Instead, these types of brands can investigate call to action (CTA) variations to see what achieves the best response. Consider leading with overall savings, information guides, free quotes, or consultation services. If you are not sure where to start, ask “are we trying to generate more calls, or less calls at a higher conversation rate?” This guiding question will lead to what “non-offer/offer” will work best.
If your brand can promote a true incentive offer, it is important to test broadly across several offer categories to find the top performer for your product or service, then pursue those categories further with richer offers. Testing variables can include:
- Percentage discount
- Dollar amount discount
- Free trial or limited subscription
- Informational resource
- Complimentary services
- Gift or “freemium”
- Even no offer at all, such as “buy now” or “don’t wait”
As with any test, consistency is the key to accurate results. Ensure the direct mail creative, informed delivery ad, digital integration ads, and landing pages all have the same message and offer. This will help you to easily identify what offer deviation impacted performance as you read campaign analytics.
How to measure and attribute offer testing performance
When testing direct mail offers, it is critical to pay attention to granular key performance indicators, rather than the popular sales rate and CPA. Ask yourself:
- How does this offer affect retention rate?
- Does the increase in sales out run the lesser revenue of the higher discount?
- What happens to lifetime value of the customer?
- Does an offer perform too well that it outpaces a call center and warehouse capacity?
As a best practice, measuring the effectiveness of an offer should not solely be based on promo code redemptions. With consumers becoming more and more likely to search a brand name rather than going to a vanity URL or toll-free number, it is important to look at all sales that match the mail file during the read period (usually 60-90+ days). Many times, the best offers tend to be the ones that drive more sales but have a lower promo redemption rate, resulting in the best sales rate or higher customer LTV.