Pros and Cons of Lead Generation Through Direct Mail Advertising

For many small and medium-sized businesses nowadays, lead generation through direct mail advertising is a thing of the past. However, having a direct mail marketing campaign can bring varying benefits to businesses, depending on how they employ it.

When used strategically, direct mail has been shown to be extremely effective and efficient. In fact, when used in conjunction with online marketing, direct mail advertising can increase your website’s traffic by 68%, your response rate by 63%, and boost your return on investment (ROI) by 60%.

There is a good reason behind the popularity of direct mail marketing climbing back up again. Consumers appreciate the personal touch it brings by the businesses they buy from.

Below, we discuss the pros and cons associated with direct mail marketing that will help you decide whether it is a viable option for your business.

Pros and Cons of Direct Mail Advertising

Pros

1. Highly Targeted Towards a Niche Audience

The more targeted your lead generation efforts are, the better your success rate. With direct mail marketing, you can send mail to your target audience that is interested in your product and increase your chances of closing a deal.

Because direct mail is direct, you can highly target it to your existing or prospective customers.

2. Easy Tracking of Response Rate

One of the most prominent pros of direct mail advertising is that it is easy to track, which allows your company to calculate its ROI conveniently.

Businesses usually attach a unique phone number to their mail piece. This unique number is also called a tracking number. Any calls to that line can easily be identified as coming from your direct mail piece.

With so many companies focusing heavily on digital media marketing, there is a lot of clutter on the internet. Thus, customers appreciate the time and effort you put into direct mail which increases their engagement rate with the message you have sent them.

3. Brand Retention

Since direct mail catches the user attention and builds engagement much more effectively than digital marketing, it helps increase your brand retention. As they can touch and feel it, direct mail is over 5 times more likely to be remembered by prospects or customers compared to other types of digital advertising or marketing.

Simply put, a consumer will trust your brand from direct mailing a lot more than they would from digital ads.

4. High Open Rate

Direct mail advertising is a great method of lead generation as you experience a high open rate for the message you send. 82% of direct mail is opened with 47% of it being read or at least skimmed through.

In today’s world, the digital marketing competition is fierce. In contrast, it is not as challenging to grab people’s attention through their mailboxes. This creates room for your business to make an impact on the recipient of your mail because they are much more likely to open and read your direct mail compared to an online email or social media post.

5. Personalization  

Direct mail advertising can be highly personalized which gives you the opportunity to let your promotion speak to the recipient, instill emotion, and build rapport.

Based on several key demographics, such as gender, age, profession, etc., companies can personalize their direct mail advertising to a particular set of buying groups.

When people receive a personalized piece of mail that is directed to them, their curiosity piques. They are sure to be intrigued by the mail and will be excited to see what it has to say.

Therefore, when you send out direct mail that directly addresses the recipient by using their first name or other personal info on the design and text of the card, your customer will be more likely to open it. In contrast to this, a generic email that every other organization sends out would likely be unsuccessful in generating any interest.

Cons

1. High Costs

A typical direct mail includes the following four components:

• The list

• The offer

• The creative

• The delivery

You can rent a mailing list from a third-party vendor or send content to a list of contacts you have gathered. If you rent a list from a traditional agency, you are looking to spend $50-$250 every one thousand names.

Then comes the offer. This is the incentive that you need to create for your customer to make the advertising attractive and worth their time. This offer could cut into your business’s bottom line as you need to create one that lands customers without decreasing profits.

Whatever your offer is, you will need to present it in a visually pleasing and creative way since you want your business to stand out. If you plan to do the design process in-house, you need to quantify the time spent in doing so. If you have a design team to create everything, the hard cost should be added into your expenses.

The final expense, of course, is that of postage. With rising inflation and subsequent postage prices, every business has to crunch their costs.

Taken together, these expenses can certainly add up and sometimes outweigh your ROI.

2. Low Response Rates

In lead generation, one of the most significant roadblocks is low response rates. While people may be opening your direct mail piece, the response rates of those actually reaching out to you for direct mail are typically low. Research is varied with some putting the rate of response below 2% and others suggesting rates around 3.7%.

If you are sending direct mail out to those who are not familiar with your brand, the equivalent of “cold calling” to drum up business, know that for these types of mailers many people simply toss their direct mail without even opening it.

This means that the time and money you spent creating a personalized and targeted postcard or catalog is never even accessed. Focus your direct mail efforts on people who already know you, to have the best shot at a great response rate.

3. Digital World

The world is rapidly moving towards a more digital approach and direct mail advertising can seem outdated by many consumers, especially if your target market is that of young individuals. If your offer is timely, consider digital methods to serve your audience instead of direct mail. However, if your piece is set to engage clients and foster loyalty, direct mail may be the way to go.

At the end of the day, we live in a world surrounded by technology where the importance of physical touch and communication is not as appreciated as it was before. With an appealing direct mail advertising message, you can reach out and leave an everlasting impression on your target audience’s mind. But doing so makes the process of direct mail advertising time intensive and costly compared to digital marketing.