Buyers Meeting Point procurement by Kelly Barner

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A Deep Dive into the Cost Drivers of a Direct Mail Program – Part 2

A Deep Dive into the Cost Drivers of a Direct Mail Program – Part 2

Direct marketing is not a new advertising strategy, but the associated tactics often change with the latest trends and technologies. Direct mail is one tactic under the direct marketing umbrella that has stood the test of time despite the shift to digital in most other areas of the advertising space. This post is the second in a series of two that discusses direct mail as a tactic and the cost drivers that impact the cost of executing one of these programs. You can read part 1 here.

As we described previously, there are four main cost components of a direct mail program: mail lists, creative and design, print and lettershop, and postage. There are different strategies for each of these and managing the costs of some are more complicated than others. Mail lists and postage are the two components that require more than a standard sourcing process in order to identify areas of cost reduction.

Previously, we took an in-depth look at gaining access to mail lists as a cost driver for direct mail campaigns and the strategies that can be executed to manage those costs. This post will take a deep dive into postage as a cost driver and the different postage optimization strategies that can be implemented to reduce costs.

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A Deep Dive into the Cost Drivers of a Direct Mail Program – Part 1

A Deep Dive into the Cost Drivers of a Direct Mail Program – Part 1

While some may believe that direct mail programs have gone out of style similar to print advertising, industry trends indicate quite the opposite. According to the Direct Marketing Association (DMA) Statistical Fact Book, the spend associated with direct mail has been increasing over the past few years from approximately $44.3B in 2012 to $44.8B in 2013, and a decent leap to $46.0B in 2014 – and for good reason. The average response rate for a campaign targeting recurring customers was 3.4 percent for direct mail, compared to 0.12 percent with email. In addition, the average cost per lead for a campaign targeting new customers was $51.40 for direct mail; whereas email was $55.24, meaning that the cost to generate a qualified sales lead or order was about $4 less with direct mail than email.

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