In a digital-facing world, any brand would be smart to think twice before adding print into the mix. And yet, several times a month we get inquiries from wholesale companies or online brands interested in testing mail for the first time. What would compel them to consider print? They reach out because they understand that, if executed correctly, print can add significant dollars to their bottom line, driving customers and prospects to their website or store.
There are many reasons why print still works. To find out why this intrusive, tactile, personalized tactic works, read this infographic that demonstrates its popularity, here.
But personally, my three favorite reasons are:
- It’s extremely proactive and disruptive – more so than email. One could argue that mail gets 100% open rate.
- Tests have proven that with the right calls-to-action, it’s an incredible way to drive interest and sales to both your website and physical store.
- The format allows for brand story-telling and creating an emotional connection, a perfect compliment to your other branding efforts.
Most first-time mailers are interested in producing a catalog, but we advise caution because it’s an expensive endeavor. We often suggest that a mailer or postcard is a better foray into print as proof of concept – more on that later. But sometimes there’s an easier way. By answering three simple questions, you’ll know if your brand can profitably mail a catalog, or if you should consider a smaller format:
- How large is your 12-18 month buyer file?
- What is your average order value?
- What are your margins?
Why these 3 questions?
Buyer file: We ask the first question because a strong base of customers will lift the overall profitability of the mailing. The customers higher response rate and average order value will help subsidize prospects, who typically respond at a lower rate and AOV. We recommend a minimum of 25,000-35,000 customers for an initial catalog test.
Always test mailing to your most valuable and most recent customers, with your best products, your best offer, your best creative and messaging.
AOV and margins: The second and third questions regarding average order and margins go hand-in-hand. If you have generous margins then you can sustain a lower AOV and conversely, a higher AOV can sustain low margins. For example, I recently discussed mailing with a brand who has an AOV of $58 and a margin of 50%. I advised them against mailing a catalog. Why? While their margin is at a retail benchmark of 50%, their AOV is low. And it’s simply not enough when you consider the high cost of shipping and other variable marketing costs (print, postage, paper, list costs, deployment, merge-purge, etc.). The numbers just don’t work.
Let’s put the questions into action with a sample test. A potential client came to us reporting a $90 AOV, an 87% margin and a 185,000 12-month buyer file. In this particular case, they had over 500 SKUs. Do you think a catalog would benefit their brand?
- No, I believe their AOV is too low. Print and mailing costs would never produce a positive ROI.
- With those margins? Heck yeah.
If you answered yes, well done – you are correct. After calculating all costs in the mail, this brand might prospect at a profit in the mail. Had their margins been closer to 50% it would have been manageable but taken much longer to realize a positive ROI.
Do I mail a postcard, a mailer or a catalog?
Many marketers are terrified at the thought of producing a catalog with associated workload and costs. If you’ve never tested mail, you might have a stronger stomach for a postcard or a mailer. And while postage is similar for all three, the creative effort isn’t as daunting. But, keep in mind the following:
- It’s difficult to prospect with a small-format mailer, especially a postcard. They typically get a lower response rate and AOV than a catalog, making it an expensive method for prospecting. Why is this? Because the smaller formats don’t stand out in the mail, don’t allow for brand story-telling and it’s difficult to present a good overview of your merchandise mix. However, understanding the difference allows you to extrapolate and understand if a catalog format might work.
- If using the smaller format, always test mailing to your most valuable and most recent customers, with your best products, your best offer, your best creative and messaging. Why? Your best customers will garner a higher response rate than prospects to almost anything you send them. If you can’t succeed with your best foot forward then mail will probably not work for your brand.
- Creative presentation and messaging between postcards, mailers and catalogs should be unique to their goal.
- For the smaller formats, your goal is to quickly answer the questions, “Who is it from and what’s in it for me?” Offers are vital to the smaller formats. If you aren’t willing to offer a discount then you must create disruptive creative or messaging.
- For a catalog, the role of creative is a bit different. First and foremost, think of a catalog not just as a collection of products on the page but as a collective story that disrupts, delights and most importantly drives customers to DO something. The covers are your most integral pages with the goal of getting the reader inside. Once inside, there is an art to the pagination (how you put things together) how you present your brand, eye-flow, hot spots, merchandise stories and most important, your calls-to-action. It’s an art and one that should not be relegated to a designer or copywriter that do not understand the nuances.
If you have the right mix of existing customers, healthy margins and AOV, then catalogs are a perfect complement to your online efforts. Catalogs can be an incredible piece of advertising, allowing customers to engage in your brand and in many cases, garner a higher life-time value (LTV) than a customer you gained through your online efforts.
Testing in the Mail
Putting together a mail plan is integral to success and allows you to learn many things. Rather than a one size fits all approach, employ a direct response expert that can articulate many tests. This will allow you to learn things like:
- Timing test: When is the best time to mail?
- Frequency test: Does overall response increase if I mail multiple times?
- Offer test: Does an offer help response? What type of offer?
- Reactivation test: Can I reactivate older customers? Should I consider timing, frequency and offers?
- List test: What lists will work best for my prospecting efforts?
- Creative test: What creative appeals most to my customers and prospects? Should I version the messaging?
Ready to mail?
Stop! Before mailing, consider a free ROI assessment that will help you not only better understand the print model but give you an idea of ROI expectations. We take in consideration typical response rates given your industry, include typical costs in the mail and build assumptions accordingly. And yes, it’s free! Just email info@jschmid.com.
Tags: AOV, buyer file, catalog marketing, Lois Brayfield, mail plan, prospecting, ROI