The Future of Direct Mail
&
How to Optimise It
Keith Wiser
Managing Director – 5th Dimension
Part 1
A Critical Review ...
The Future of Direct Marketing
Let me make my
position clear ... I believe in mail
From a recent edition of “Advantage”
•
•
•
•
•
•
•
•
The World of Web 3.0
Meta Tagging
Mi Money (Mobile Wallet)
The Grid (Local Social Network)
USSD (Unstructured Secondary Supplementary Messaging)
The Sacred Space of Social Media
Let Your Fingers Do the WWWalking
NOT A SINGLE WORD ABOUT DIRECT MAIL
From the same issue of “Advantage”
• THE 7TH MASS MEDIUM – THE CELL PHONE
• SA population = 48 million
• 10 million people in SA currently access the internet via cell
phone
• Expected to increase to 17 million by 2013
• SA has 114% SIM card penetration
• 57 million active SIM cards
• 37 million unique cell phone users
• Mobile Adspend projected to be over R2 billion by 2013
A few other interesting facts
• (UK) (2008) Online Advertising overtook TV as the largest
advertising medium (23.5%)
• (2008) Online accounted for 17% of US Adspend ($23,4
billion)
• There are now more cell phones than radios in the world
• Vodacom in SA sends 14 million "Please Call Me" messages
per month
A few more interesting facts
Victoria’s Secret has 2,7 million fans on Facebook
Starbucks collected 7 million fans in 2 weeks\Earth Day Promotion
You must be barking mad ...
Mail in the USA
Down by
9 billion
Down by
28 billion
250
200
150
Series1
100
50
0
2007
1
2
2008
3
Source : USPS – Billions of pieces mailed
4
2009
(Est)
5
Global Mail
You must be TOTALLY barking mad ...
The question has to be asked ...
Does direct mail have a future ?
“I come not to bury Caesar but to praise him”
Mark Anthony – “Julius Caesar” (William Shakespeare)
Let’s not write mail off
•
•
•
•
Europe (2007) – 92 billion pieces
USA (2009) – 170 billion pieces
UK (2009) – Direct mail probably still around 10% of Adspend
SA (2010) – Mail actually grew by +- 4%
Some other interesting facts about mail
The Print Council\Pitney Bowes Survey (2008)
• 85% claimed that they open and read selected pieces of mail
every day
• 55% reported that greater enjoyment from reading regular
mail vs email
• 75% claimed they closely examine their mail for coupons and
special offers
• 40% said they had tried a new product after receiving direct
mail
• 70% stated that they had renewed a business relationship
after receiving direct mail
“For every action there is an equal
and opposite reaction”
Isaac Newton
In summary, mail is declining
BUT it is still an important medium
It has specific roles to play
Mail will continue to be viable when ...
•
•
•
•
•
•
•
•
Your focus is acquisition
You know who you want to talk to
You can personalise your content
You have a lot to say
The value proposition is reasonably high
You need a considered decision
You want to cut through the clutter & noise
You use it in conjunction with other media
Part 2
Optimising Direct Mail
Optimising response ... the essence of direct marketing
Inertia kills response ....
Time is not on your side
BUSINESS TO BUSINESS
CUSTOMER
20 seconds
PROSPECT
15 seconds
BUSINESS TO CONSUMER
15 seconds
10 seconds
Jim Rosenfield (1986)
According to Any Owen (2009) this is now 5,5 seconds
The outer envelope receives between 1,5 & 4,0 seconds
“Scientific Advertising”
Claude Hopkins (1923)
“Ads are not written to entertain.”
“Do nothing to merely interest, amuse or attract.”
“The reason for the non-success in advertising is trying to
sell people what they don’t want.”
“The purpose of the headline (or Johnson Box or whatever)
is to isolate the people you can interest”
“The entire return from an ad depends on
attracting the right sort of readers”
“The More You Tell the More You Sell”
“Long copy does sell, as long as you are
talking to the right person”
“People don’t quit habits without good reasons”
“We do not admire salesmen who talk in loud voices.
People read all they care to read in 8 point type.”
The 3 Core Elements
in Direct Marketing
THE TARGET
AUDIENCE
Who
you talk
to
CREATIVE
COPY
LAYOUT\DESIGN
How
you say
it
What
you say
CONTENT
THE OFFER
THE PROPOSITION
Who you talk to ... segmentation
Life stage
Lifestyle
Psychographic
Transactional
Demographic
Geo Demographic
Sexual Orientation
Betting styles – horse racing
CLUSTER
HIGH
COMPLEXITY
MEDIUM
LOW
MODIFIER
COMPLEXITY COMPLEXITY BETS
Complex
Hedgers
88% - 96%
2% - 8%
1% - 4%
70% - 96%
Big
Spenders
74% - 85%
4% - 12%
10% - 15%
67% - 83%
Prudent
Punters
25% - 31%
10% - 16%
53% - 66%
54% - 63%
Middle
Roaders
16% - 25%
51% - 65%
19% - 28%
72% - 80%
Simple
Winners
4% - 10%
1% - 6%
84% - 95%
3% - 13%
Frequency
The Key
Recent, but not
frequent, high spenders
Less recent, medium
to high spenders
Recent, frequent,
high spenders
Monetary Value
Recency
Segment
Category
Description
Interest
Objectives
AMS
1
LLL
Low Spenders :
Came some time ago, not often & spent little
E
Ignore
2
3
4
MLL
HLL
LML
Came more recently, not often & spent little
Came recently, not often & spent little
Came some time ago, a few times & spent little
E
E
D
Ignore
Ignore
Reactivate & Increase Spend
LC
5
MML
Came more recently, a few times & spent little
D
Increase Spend
LC
6
7
8
9
HML
LHL
MHL
HHL
Came recently, a few times & spent little
Came some time ago, quite a lot & spent little
Came more recently, quite a lot & spent little
Came recently, quite a lot & spent little
D
C
C
C
Increase Spend
Reactivate & Increase Spend
Increase Spend
Increase Spend
LC
LC
LC
LC
Segment
Category
10
Interest
LLM
Description
Medium Spenders :
Came some time ago, not often & spent quite a lot
C
Reactvate & Increase Frequency
MC
11
MLM
Came more recently, not often & spent quite a lot
B
Increase Frequency
MC
12
13
HLM
LMM
Came recently, not often & spent quite a lot
Came some time ago, a few times & spent quite a lot
A
C
Increase Frequency
Reactivate
MC
MC
14
15
16
17
18
Segment
MMM
HMM
LHM
MHM
HHM
Category
B
A
C
B
A
Interest
Retain
Retain
Reactivate & Retain
Retain
Retain
MC
MC
MC
MC
MC
19
LLH
Came more recently, a few times & spent quite a lot
Came recently, a few times & spent quite a lot
Came some time ago, a lot & spent a quite a lot
Came more recently, a lot & spent quite a lot
Came recently, a lot & spent quite a lot
Description
High Spenders :
Came some time ago, not often & spent a lot
B
Reactivate & Increase Frequency
HC
20
21
22
23
24
25
26
27
MLH
HLH
LMH
MMH
HMH
LHH
MHH
HHH
Came more recently, not often & spent a lot
Came recently, not often & spent a lot
Came some time ago, a few times & spent a lot
Came more recently, a few times & spent a lot
Came recently, a few times & spent a lot
Came some time ago, a lot & spent a lot
Came more recently, a lot & spent a lot
Came recently, a lot & spent a lot
A
A
B
A
A
B
A
A
Increase Frequency
Increase Frequency
Reactivate
Increase Frequency
Increase Frequency
Reactivate & Retain at all cost
Retain at all cost
Retain at all cost
HC
HC
HC
HC
HC
HC
HC
HC
Database Overview
Value /Share of Wallet Analysis
SHARE OF WALLET
V
A
L
U
E
High Loyalty
Low Loyalty
No Loyalty
High
Value
HVHL
Retain
HVLL
Increase
value
HVNL
Convert
Medium
Value
MVHL
Up-sell
MVLL
Cross sell
MVNL
Convert
LVHL
Upsell
LVLL
Ignore
LVNL
Ignore
Low
Value
M1
M2
N1
Distribution of potential opportunities
Value Segmentation
We have identified 7 value segments for Edgars according to visit frequency and
spend…
One-off
Occasional Small
Loyal Small
Infrequent
Occasional Large
Loyal Large
VIP
Average Transaction Value
R0 – R250
Average Visits per Account
1
2–3
4–8
9+
48
R251 – R435
One-off:
Accounts: 29%
Turnover: 10%
Spend per account: R512
Infrequent:
Accounts: 28%
Turnover: 15%
Spend per account: R800
R436 – R734
R735 +
Groups: 2
Visits: 1
Basket size: R512
Groups: 3
Visits: 2
Basket size: R330
Occasional Small:
Accounts: 19%
Turnover: 18%
Spend per account:
R1,378
Groups: 5
Visits: 5
Basket size: R253
Groups: 5
Visits: 4
Basket size: R694
Loyal Small:
Accounts: 7%
Turnover: 15%
Spend per account:
R3,141
Groups: 8
Visits: 13
Basket size: R237
Groups: 7
Visits: 8
Basket size: R727
Occasional Large:
Accounts 12%
Turnover: 23%
Spend per account: R2,784
Loyal Large:
Accounts: 4%
Turnover: 16%
Spend per account: R5,581
VIP:
Accounts: 0.4% (9,036)
Turnover: 3%
Spend per account: R11,143
Groups: 9
Visits: 12
Basket size: R961
7+
2-6
1
# of Edgars Groups 08
% of Population
% of Edgars Spend
Average Spend
% attrition
% with active PL card
% of Population
% of Edgars Spend
Average Spend
% attrition
% with active PL card
% of Population
% of Edgars Spend
Average Spend
% attrition
% with active PL card
1-3
R
R
R
0.2%
0.4%
2,469
47.9%
17.0%
26.0%
11.4%
610
57.7%
15.2%
29.1%
5.1%
246
72.8%
13.8%
% of Population
% of Edgars Spend
Average Spend
% attrition
% with active PL card
% of Population
% of Edgars Spend
Average Spend
% attrition
% with active PL card
% of Population
% of Edgars Spend
Average Spend
% attrition
% with active PL card
4 - 10
R
R
R
3.9%
8.1%
2,867
18.4%
17.5%
23.1%
21.6%
1,306
26.2%
16.1%
2.2%
0.9%
594
32.6%
17.0%
% of Population
% of Edgars Spend
Average Spend
% attrition
% with active PL card
% of Population
% of Edgars Spend
Average Spend
% attrition
% with active PL card
% of Population
% of Edgars Spend
Average Spend
% attrition
% with active PL card
10 +
R
R
R
9.6%
41.1%
6,004
4.3%
16.4%
5.6%
11.1%
2,758
7.0%
16.5%
0.3%
0.3%
1,478
14.8%
18.3%
# of Edcon visits 08
Note: The accounts that didn't spend at Edgars have been excluded from these percentages and require a separate strategy. 6.1% of
the total sample had a transaction but not at edgars
What you say
Experiment @ Carnegie Mellon University
Part 1
• Group A
• Group B
• Factual based appeal :
- 3 million starving
- 42% drop in maize crop in
Malawi
- 4 million Angolans forced to flee
their homes
• Emotion based appeal
- 7 year old girl called Rokia
- Orphaned
- Forced to leave her home in
Mali
• Average Donation : $1.14
• Average Donation : $2.38
Experiment @ Carnegie Mellon University
Part 2
• Group A
• Group B
• Emotion based appeal
- 7 year old girl called Rokia
- Orphaned
- Forced to leave her home in
Mali
• Emotion based appeal
- 7 year old girl called Rokia
- Orphaned
- Forced to leave her home in
Mali
• Asked to solve a maths problem
• Think about the word baby
• Average Donation : $1.26
• Average Donation : $2.34
Little used by direct marketers ... research
Female
Count
Education: Child & family/community support
projects
Education: Raising quality of education
Education: Sport development/playing
for children
Education: Support early Childhood
development
Total
14
18
1
33
Protection: Child care forums
Protection: Prevention of child & women
abuse/violence
Protection: Social development projects
Total
8
14
4
26
%
4
30
5.13%
38.46%
18
48
23.08%
61.54%
0.00%
4
5.13%
4
5.13%
1.28%
42.31%
7
45
8.97%
57.69%
8
78
10.26%
100.00%
%
17.02%
29.79%
8.51%
0.00%
55.32%
Female
Count
%
3
3.37%
44
7
54
%
Total
Count
17.95%
23.08%
Female
Count
Health: HIV, prevent mother to child
transmission
Health: Nutrition/Food Fortification
Health: Preventable disease management
Health: TB Prevention
Total
%
Male
Count
49.44%
7.87%
60.67%
Male
Count
6
11
2
2
21
%
12.77%
23.40%
4.26%
4.26%
44.68%
Male
Count
%
4
4.49%
23
8
35
25.84%
8.99%
39.33%
Total
Count
14
25
6
2
47
%
29.79%
53.19%
12.77%
4.26%
100%
Total
Count
%
7
7.87%
67
15
89
75.28%
16.85%
100%
Kids Come First...
Shopping
Shopping
for kids =
Spoiling my kids
• I love my kids and want to give them the best
• My children are brand-conscious
• I shop mostly on credit for my children
• I am an emotional and functional shopper when I shop for my kids
Shopping
for myself
=
Purpose/Focused
• I really only buy when I need things
• I am not worried about the brands I wear, my style is smart-casual
• I shop mostly on cash for myself – price is an important consideration for me
• I am a functional shopper = comfort and fit is important
“I just want my kids to
look good all the time.”
(JHB)
“You go to the shop
especially for you, to
buy you something
today and you end up
buying for my
daughter.” (CT)
“I buy one item of
clothing like if I want a
pair of trousers, then
that is what I am going
to buy and if I need
shirts, I will go and buy
shirts.” (JHB)
“I don’t really go into brands.
They are too expensive. I just
want to buy something, it
doesn’t matter what brand it
is.” (CT)
All About Him...
Shopping
Shopping
=
Image enhancement
(emotional)
• I am an emotional shopper – I have to have the right look
Note: CT group was
more
functional and
• My image and the clothes/brands I wear say a lot about me
value-driven
• I express my identity through style
shoppers (comfort,
size and fit is more
• My appearance needs to impress
important)
• On credit I can afford brands, on cash I pay for forfeited brands
• I love active wear and wear it as casual clothes – “it makes me look good”
“I bought this Apple t-shirt from Edgars that is sort of yellow. I bought that in late 2009 and still
to this day it is still there at Edgars and everyone is wearing it in my street. It is more like a
uniform now.” (JHB)
“I have stopped buying from Edgars since I got that tekkie I was talking about because after I got
that tekkie it was strong and lasting long but now everyone else has it.” (JHB)
How you say it
Creative
Channel
FREE download ...
www.my-way.co.za
A few hints ... copy
•
•
•
•
•
•
•
•
•
•
•
•
Make the most of the envelope
Never forget the Johnson Box
Create a follow on headline
Use personalisation
Ensure convection
Write for standard 8
Benefits not features
YOU not I
Keep sentences short
Make the required action\s crystal clear
Create a sense of urgency
Always include a PS
A few hints ... layout
•
•
•
•
•
•
•
•
•
•
Use serif typefaces
Use wide margins
Don’t be a afraid of white space
Try Drop Caps
Consider sub-heads
Use ticks rather than bullets
Be careful with the use of full stops
Indent paragraphs
Right hand ragged right
Use underlines, bold & italics ... BUT sparingly
Some other stuff
Eye tracking
Eye Tracking
•
•
•
•
•
•
•
ELIPSES are more attracting than SQUARES\OBLONGS
PORTRAIT is more attracting the LANDSCAPE
GROUPS are more attracting than INDIVIDUALS
COLOUR is more attracting than BLACK & WHITE
CLOSE UPS are more attracting than LONG SHOTS
BIG PICTURES are more attracting than SMALL PICTURES
EYE CONTACT is more attracting than NO EYE CONTACT
Other lessons from Prof Siegfried Vogele
• People read the envelope first
• Spend less than 4 seconds
• The back of the envelope receives longer attention than the
front
• Many readers go from the address to the end of the letter to
see who signed it
• 9 out of 10 readers go from there they go the PS. (The PS is in
fact the start of the letter)
• In between they will skip over any highlighted points
• From the PS they will go back to the highlighted sections
Other lessons from Prof Siegfried Vogele
• Difficult to read signatures result in negative body language
• Before any words are read the eyes will be attracted to
illustrations\photographs
• Put a large picture at the top of the letter
• If using more than one picture, put the largest at the top
• Use separate response devices. They are 3 times more
effective
• Preprint the name & address on the response device
My final thought ... be brave
Client : Womans Aid
Organisation
(Malaysia)
Client : Fuji Xerox
(Australia)
Client : Evangelical Church
(Germany)
Client : Society of Hesse for the Blind (Germany)
Client : NSPCC
(UK)
Client : Virgin Holidays (UK)
Client : Tesco (UK)
Client : First Direct (UK)
Thank you for listening