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0:46 – Direct Mail History
1:52 – Create a list for Direct Mail
4:07 – Get the list from SRDS
4:52 – Cost of Direct Mail
5:37 – Create an offer
7:12 – A pile and B pile theory
9:55 – How to improve opening rate of mails
12:06 – Use of sequence in Direct Mail
14:16 – Direct mail for customer reactivation
17:03 – Strategies aside from direct mail
17:27 – Direct mail for lead nurturing
19:31 – Tip of the week
Hello everybody! Welcome to the HVAC Business Growth podcast. I’m your host, Nick Bielawski. We’ve got another great episode lined up for you today.
The topic for today is Direct Mail.
Personally, I’m a big fan of Direct Mail. This is one of the primary tools that I use to build my search marketing company up from scratch. It worked fantastically well and it still continues to work well for me today.
Direct mail is a tool that’s actually used by pro marketers and they’ve been doing this for decades. We’ve seen the internet come along; we’ve seen a lot of different techniques come and go and Direct Mail is one that has stood the test of time.
Back to the 90s, it was actually starting to get a little bit spammy. It almost seemed that everyday we’re receiving a lot of different direct mail promotions from all sorts of companies. But now I think it’s actually back in fashion. A lot of people tend to go off direct mail. But now, everyone’s using the internet.
Who still gets a letter in the mail from anybody anymore? Personally, the amount of the mail that I receive is actually reduced quite a lot. Everything is going online; all the bills that come through are coming in online. So direct mail, I think, is really hitting the spot in terms of generating some interest and generating some conversion.
Let’s go through what’s actually important about direct mail. There are quite a few things. But firstly, the list is very important. The list basically contains who your market is, to whom you’re going to send your direct mail piece to.
So you might be in the residential HVAC market or you might be in the commercial market, you can find a list of people to send your offer just about anywhere. List brokers are a really good place to start. The great thing about list brokers is that you can pretty much inquire about creating any type of list that you can imagine.
If you’re in the residential HVAC market and you’re looking to sell some of your products and services, what would your customer avatar be? They’ll probably be driving a car of a certain level and almost definitely have a credit card and they may live in a particular area. So you can go to a list broker and actually get a list of people who live in a particular area, have a VISA or a Mastercard or both and they drive a particular type of car.
So if a person meets all those requirements, then you can know a couple of things: that they live in a particular geographic zone, they have enough disposable income to be able to afford certain luxuries and they have credit cards. So they have a credit rating. It might not mean that they have a good credit rating but they at least have access to funds. Usually, if someone has a credit card, they’re holding a reasonable and steady job as well.
Those sorts of requirements, bits of information or selects, a term used in the direct marketing industry, really help you narrow down the type of person that’s in your list. And obviously if you get really specific with the type of person that you’re marketing to then the chances of turning that person into a customer or making a conversion is a lot greater.
The SRDS or the Standard Rate and Data Service does a similar thing where you can find a list of people all across the United States that actually have the types of people that you’re looking for. So, if you’re looking for somebody who drives a Ford motor car, earns $40,000 per year and subscribes to Sports Illustrated Magazine, you can actually find a list of people in a particular geographic zone or a state in the United States that meet those particular requirements or selects.
So again it really helps to narrow down the people that you actually have on your list of who you’re mailing to because you don’t want to be mailing to absolutely everybody.
The one slight disadvantage of direct mail is the cost that’s involved. Obviously, email can be sent out very inexpensively. Whereas with direct mail, if you’re adding up all your postage cost and the printing and by the time the whole thing gets put together, you might be able to get something out in the mail for around 90 cents per letter sent out—which I think is fantastic. It’s obviously increased a lot from years gone by. We used to be able to get stuff sent out there for 30 cents. That was an absolute steal, being able to market so cheaply. But it does hit the market now. A letter usually gets into the mail and gets to its intended recipient most of the time.
The other important thing in Direct Mail is the offer. It can’t really be a run of the mill, so-so kind of offer. It can’t have people sitting on the fence about your offer. It has to literally knock people off the fence and make them want to do business with you. Ideally, the offer that you make them is a great one; one that they can’t get anywhere else and time sensitive. So, for them to qualify for your particular offer they have to get off their butt within the next week, 2 weeks, 90 days or whatever it is. Ideally, the time sensitivity to the offer must be close to the current date.
Dan Kennedy is absolutely fanatical about direct mail and he talks about having the right message, going out to the right market using the right medium. So if we put it in the terms of what we’ve already spoken of, the message is the offer that you’re creating, the market is the list and the medium is direct mail. You need to have absolute synergy between all 3 of those things to get your campaign working correctly.
So I want to talk about a few trick of the trade in terms of direct mail. These things are very important and they’re going to have a profound impact on the type of mail that you’re sending out.
A word of caution: the direct mail that I propose and Dan Kennedy and direct marketing legends propose is probably nothing like you’ve ever seen before.
One thing that is pivotal in understanding how direct mail will actually work and what it looks like is an A-pile and B-pile theory.
I think this A pile and B pile theory was first coined by Gary Halbert who is a legendary direct marketer. I think I spoke about him in a direct marketing podcast earlier. The A pile, B pile theory goes like this: basically when people get their mail out of their letterbox, they sort it out over a trash can. They get the mail and before they have a quick sort-through the mail. In their mind, they actually create an A pile and a B pile. The B pile is the junk mail and stuff that just doesn’t look personalized and stuff that is unimportant. The B pile gets put on the side or, at worst, gets thrown into the trash can.
If your mail is actually getting into this B pile and it looks spammy and horrific and nobody wants to open it, then you’re in real trouble because a lot of the time, you’re sending mail out that’s not getting opened. So you have to get your mail into the A pile.
So what’s in people’s A pile? Think about when you sort your mail that comes through, what gets into the A pile?
In my A pile, bills get there from people that I actually know and personal letters that come through. So the whole idea of the direct mail that I do is you need to get, particularly the outside of your mail packages, to look personal. It is self-addressed or hand-addressed envelopes. Use a pen, actual live postage stamps on there and a plain white or plain yellow envelopes. If something like this comes through and it actually looks really personal, people are going to open it because people are normally curious.
If you’re sending your mail out there, your unsolicited direct mail out there and it’s got teasers all over it—free prize inside and all those sorts of things and lots of texts outside—you have to be really careful. That sort of stuff might appeal to some people; they might open it but a lot of the time you’re just not going to get your mail opened. It’s going to get thrown into the bin. You don’t want that at all. You want to at least give yourself a chance to get your offer out there. So if you’re in the A pile, you stand a good chance of getting your letter opened.
So what are some things that actually make the chances higher of getting your letter read?
A few things that we’ll go through now are really important. You need to have some sort of headline or impact point to your mail that goes out. So, a headline is a fantastic thing to put in your mail. So think of the newspapers that you buy from newspaper stands. You would notice that they have 1 sentence or 1 phrase that lures you into picking up the newspaper or the magazine and hopefully make a purchase. Your direct mail has to achieve the same thing.
You either use a headline or a grabber. It is a fantastic tool as well where it almost creates a little bit of a lumpy mail type of effect where when somebody gets a mail they can actually feel from the outside that something’s in the package. You might do some things as simple as putting a coupon on a bulldog clip or something; attached to a few pieces of paper where your mail letter is. People will feel that and they’ll get curious and will actually read that mail that they received from you.
Grabbers, headlines and lumpy mails work fantastic in not only getting your mail opened, particularly if you’re using a grabber, but it actually gets people to read your offer.
They are just some things that I like to implement in particular with my direct mail. I’ve actually found on some of my campaigns that not actually having a headline works really well but I use the grabber as the headline. So I’ll have a grabber which will be something with a bulldog clip attached to it and then I just get straight into the letter from there.
And ideally, in your letter, if you can find out the name of the person that you’re sending it to, then you can personalize the letter. It may be “Dear Bob”, “Dear Gary” or “Dear Mary”. “Dear Friend”, “Dear Household” or “Dear Resident” is obviously not personalized and you’re going to lose a lot of people in that first sentence.
So the other trick to Direct Mail, and you’ll only see the pros when doing this, is the use of sequence. A lot of people, when they try any sort of marketing, they just try the one shot type of technique. They give it a go, they do it once and if it doesn’t work the never do it again. The pros actually know that they should be using a sequence and the power is in using the sequence. The direct marketers actually discovered this decades ago.
Have you ever noticed if you don’t pay your phone bill you’ll get an overdue notice? And then you’ll get a warning letter and then you’ll get a final notice. Each letter that comes through basically builds pressure. They’re putting a deadline on you and it’s building pressure and it’s letting your know that “Hey we’ve sent you all these letters, here’s what the offer is and we think that you should act on this straight away.”
You don’t want to be too aggressive with it because you’ll just annoy people into not taking action at all and they won’t even like you. Space your letters 7 to 14 days apart. I like to do mine probably more like 14 days apart. I think it’s a good thing.
Start with a 3-letter campaign and send out 3 letters, 14 days apart. So what that means is, over 6 weeks, you’re sending 3 letters out to somebody. You have to know at the end of 6 weeks if you’re actually writing good sales letters; whether you’re going to get a response out of people. You have to remember though that with these letters, you need to factor in what you’re prepared to pay for a lead or what you’re prepared to pay for sales. So, with the 3 letters with the cost of 90 cents, you don’t have to be a genius in Math to figure out that it’s $2.70. Most people can afford to spend $2.70 to acquire a customer. It’s really an inexpensive way of doing things. Three letters is a good place to start but you could probably afford to spend a little bit more money.
What are some other uses for Direct Mail? You can actually use Direct Mail for doing customer re-activation campaigns.
There have been some really interesting studies and statistics done on Direct Mail over the decades. It’s interesting to note that only 10% of people that leave your business actually have a grievance or a problem with your business. A lot of people just decide or they don’t actually just decide, I should say, they just end up not doing business with you. Life gets in the way; they have kids or somebody dies in the family or whatever the situation might be they just don’t end up doing business with you. They don’t use you for doing services or whatever it is that they were doing before.
The flipside of that is that you can have a really good success rate with winning people back over. Most typical customer reactivation campaigns can have around 40% success rate. That obviously means that if you’re sending a reactivation letter out to 100 people, 40% of those people or 40 people are actually going to come back.
The other part of the gap is with all that 40% that comes back, that leaves us with 50% of people that aren’t really bothered either way. You can continue to market to those people down the track. They’re past customers of yours. They did business with you and they don’t have a problem with you. So if you can continue to market to them and continue to be front of mind when they have an issue or when they are looking to upgrade a system or buy a new system, they’re going to come to you because in their mind when they think heating and cooling or hydronicating, they think of your business.
Most people will just give up the chase, so to speak. They will do business with somebody who wants them and never market to past customers again. They just let them go and move on to finding the latest and newest customer. I think this is a really big mistake because you could get referrals from past customers. You might have a joint venture partner. They might just keep buying. You might actually be doing business with a person that has multiple rental properties. They might be upgrading their systems on a cycle every year or you might be able to do a service to each of their rental properties. You’ll never know. The trick is obviously just to keep marketing to these people and it’s so inexpensive.
Obviously once you’ve direct mail you can move on to doing things like postcards, emails, phone calls or whatever it is. So don’t be limited to just doing direct mail for customer reactivation.
Anyway we got off the track a little bit there going down customer reactivation but I think you’ll realize that it’s a big part of what you can do with direct mail.
The other thing that direct mail is absolutely fantastic for is lead nurturing. If we use the example earlier where we’re doing a 3-step letter campaign, you can continue to send direct mail out to unconverted leads after those initial 3-letter bursts.
We hop on about this in just about every episode and every video but you’ve got to know how much a person is worth to your business and what you’re going to spend to acquire them.
We said earlier that sending out 3 letters is going to cost you $2.70. If you’re prepared to pay $100 per lead, there are plenty of available funds there to be able to spend on marketing and to be able to spend on further direct mail campaigns, postcards and those sorts of things then go do it.
There are a lot of things that you can do to nurture these leads. I’m sure you know about your business as well as anyone. Some people don’t just click their fingers and buy a $1,000 system. It might take them 6 to 12 months to finally come to the realization that they want to do it. Sometimes, it may take a year by the time they initially investigate getting a heating and cooling system before they actually have the available funds.
So if you can nurture that person throughout the whole buying cycle just by using inexpensive tools such direct mail and when they’re ready to buy, they’re going to lean towards you. If they’re ever going to recommend somebody or make a referral, you’re going to get those referrals because you’ve nurtured them well. Lead nurturing is a fantastic use for direct mail.
Now it’s time for our HVAC Business Growth Tip of the Week. This week’s tip of the week is, again, an action tip.
I want you to map out your marketing process. What happens from when somebody actually makes contact with your company? What are the tactics that you use? Set out the process. You can draw it up on a piece of paper or a whiteboard. Then check where direct mail can come in to it.
Do you have the opportunity to get a list of people in your area? You can maybe get a list of all the property developers in your city if you’re into that more commercial type of market. Figure out where you can actually integrate direct mail into your campaigns.
You can start with a very small test. It may only be 90 cents or a dollar a piece and a bit of your time to sort it out. Go out there and put out maybe 300 letters. That’s enough to get a little bit of response.
If you send out 300 letters to people on the first go, you might get a 1% response rate. Obviously, 1% of 300 would be 3 people that would come through to the business. You might go to step 2 and get 1% again and then step 3 and you get 1% again.
So how much did you spend? You’ve spent $900 and you sent out 900 letters in total. But keep going on the 1% rate conversion because you’ve actually pulled 9 customers from it. You spent $900 and what are 9 customers actually worth to your business if you have an average dollar transaction of $800 or something like that? Nine times $800 is 7,200. So you spent $900 to make a return on investment of just over $7,000. Do the Math. I think that’s absolutely a fantastic return on investment. Anybody would want to do that.
This is just a 1% conversion rate. I’ve had 5% to 7%, on that very first step, that comes back. It’s a fantastic way to generate business and that’s on cold list as well. People have actually put their hand up and said, “Please market to me”.
Direct mail works even better if you’re doing lead generation. If people are actually putting their hand up and asking for information or making a phone call to your business and then you integrate direct mail into the campaign along with phone calls, postcards, emails and catalogs and all that other stuff, it works absolutely fantastic.
So that’s all we’ve got time for today! We’ve had a great episode on direct mail. I hope you’ve enjoyed it. I’m your host Nick Bielawski. Thank you for listening and I’ll see you next time.