Rule #1: Test everything.
Rule #2: See rule #1.
The biggest advantage direct mail has over other forms of advertising is the ability to measure its performance. No other method of advertising can have its results immediately quantified.
According to an NADA press release, in 1999, auto dealers spent 5.7 billion dollars on advertising, with 51% going to newspapers, 16% going to TV, 14% going to radio, 12% going to other advertising (yellow pages, billboards, and the Internet), and 7% going to direct mail. Aside from the budget spent on direct mail, American auto dealers spent 5.3 billion dollars on advertising that they can’t directly test to see if it works.
"Any investment should be guided by results."
Any investment should be guided by results, so lets look at direct marketing. If you mail 5,000 pieces of mail, and 50 of those mailers make their way back into your showroom, you can accurately calculate the response rate of your mailer as 1%. This calculation is even easier if you assign a deadline to respond to the mailer. The statistics on the mailer are easily figured.
Why is this such an advantage? Because this allows for effective testing and measuring, which is the only way of improving your results in the future, and thereby increasing your profit.
The only way of improving what you do is to find out what you are currently doing right, and more importantly, what you are doing wrong. And, the only way to discover this is to TEST, TEST, TEST!
"Something can be learned from every mailing!"
Something can be learned from every mailing, and without analyzing every campaign, you can be making costly mistakes by repeating bad mailers, or making even more costly mistakes by giving up direct mail altogether. Those who do not know history are doomed to repeat it!
"Every variable of the mailing affects the overall results."
So, where do we start? The primary activity should be tracking- keeping records of every criteria on every mailer. Remember- every variable of the mailing affects the overall results. Once we have a solid database of information about our sales efforts with direct mail, we can start measuring results, and testing variables one at a time.
Keep in mind that success in this field is typically 40% dependent on the list, 40% on the offer, and 20% on everything else (creative, layout, paper stock, etc.).
For basic testing, you can break any direct mailing down to three main categories: list, verbiage, and form.
"For basic testing, look at list, verbiage, and form."
The list is the group of people that you will be mailing to. This category is nothing but variables- Are you selecting by income? Vehicle registration? Age? Marital status? Zip code? Previous buying habits? Presence of children? Age of present vehicle? Individual credit score? Purchase date of present vehicle? Loyalty to brand?
The verbiage is the wording and theme used in the mail piece. This is the offer that you are making. Among the variables you should concern yourself with in this category- Are you personalizing the letter? Making a bold enough offer? Creating a sense of urgency? Giving the customer more than one way to respond? Using an RSVP? Offering a free gift? A cash giveaway?
The form is the physical mail piece that arrives in a customer’s home. Examine all of the variables that can occur just within the form- Is it an envelope form? With a window? A zip tab? A self-mailer? With what colors and designs? Any graphics or illustrations on the outside? Are you using a stamp or an indicia? Printing the address or using labels? There are thousands of variables that can occur within the form itself.
Other than these three categories, there are other variables that greatly affect the mailing- day of the promotion, time of the month of promotion, weather, dramatic news events, or poor economic factors, for example. But, only by altering the mail piece one variable at a time can you determine what works the best for your dealership.
Start with the big factors- the obvious offer, the main criteria of the mailing list, and so on, and work down to the little ones. Your customer probably doesn’t care if you used blue or black ink.
"A good direct mail firm should make measuring much easier."
Simply because of the time and effort involved in all this testing and measuring, it may be wise to bring in a reputable direct marketing firm to handle this for you. They will have already tested form and verbiage for effectiveness with your brand of dealership, and in your region of the country.
They can present you with already proven campaigns, and then work with you on fine-tuning the details.
A good direct mail firm should also make measuring the effectiveness of your events much easier.
We invested heavily to create the software and resources to effectively look at the promotional data, and completely analyze the results for you.
"Declining results is a problem that can be reversed!"
A thorough analysis of your promotion should go well beyond a summary of the event. The particular zip codes that elicited response, the use of a particular giveaway or free gift, the form and verbiage should all be examined for effectiveness.
A history of these events should also be examined, to discover trends in your market. This is also useful in helping to eliminate market saturation.
The ability to identify market areas that are the most responsive is also critical. Imagine the value of identifying the market areas that you should invest in, and the ones to avoid.
You could eliminate wasted time, effort, and ad dollars in low response markets, and focus on markets that respond. And, by continuously improving the mailing lists in this way, you should see better response rates.
Declining promotional results is a problem that most direct mail users suffer through, but can be avoided (and even reversed!) with the proper testing and measuring.
Rule #2: See rule #1.
The biggest advantage direct mail has over other forms of advertising is the ability to measure its performance. No other method of advertising can have its results immediately quantified.
According to an NADA press release, in 1999, auto dealers spent 5.7 billion dollars on advertising, with 51% going to newspapers, 16% going to TV, 14% going to radio, 12% going to other advertising (yellow pages, billboards, and the Internet), and 7% going to direct mail. Aside from the budget spent on direct mail, American auto dealers spent 5.3 billion dollars on advertising that they can’t directly test to see if it works.
"Any investment should be guided by results."
Any investment should be guided by results, so lets look at direct marketing. If you mail 5,000 pieces of mail, and 50 of those mailers make their way back into your showroom, you can accurately calculate the response rate of your mailer as 1%. This calculation is even easier if you assign a deadline to respond to the mailer. The statistics on the mailer are easily figured.
Why is this such an advantage? Because this allows for effective testing and measuring, which is the only way of improving your results in the future, and thereby increasing your profit.
The only way of improving what you do is to find out what you are currently doing right, and more importantly, what you are doing wrong. And, the only way to discover this is to TEST, TEST, TEST!
"Something can be learned from every mailing!"
Something can be learned from every mailing, and without analyzing every campaign, you can be making costly mistakes by repeating bad mailers, or making even more costly mistakes by giving up direct mail altogether. Those who do not know history are doomed to repeat it!
"Every variable of the mailing affects the overall results."
So, where do we start? The primary activity should be tracking- keeping records of every criteria on every mailer. Remember- every variable of the mailing affects the overall results. Once we have a solid database of information about our sales efforts with direct mail, we can start measuring results, and testing variables one at a time.
Keep in mind that success in this field is typically 40% dependent on the list, 40% on the offer, and 20% on everything else (creative, layout, paper stock, etc.).
For basic testing, you can break any direct mailing down to three main categories: list, verbiage, and form.
"For basic testing, look at list, verbiage, and form."
The list is the group of people that you will be mailing to. This category is nothing but variables- Are you selecting by income? Vehicle registration? Age? Marital status? Zip code? Previous buying habits? Presence of children? Age of present vehicle? Individual credit score? Purchase date of present vehicle? Loyalty to brand?
The verbiage is the wording and theme used in the mail piece. This is the offer that you are making. Among the variables you should concern yourself with in this category- Are you personalizing the letter? Making a bold enough offer? Creating a sense of urgency? Giving the customer more than one way to respond? Using an RSVP? Offering a free gift? A cash giveaway?
The form is the physical mail piece that arrives in a customer’s home. Examine all of the variables that can occur just within the form- Is it an envelope form? With a window? A zip tab? A self-mailer? With what colors and designs? Any graphics or illustrations on the outside? Are you using a stamp or an indicia? Printing the address or using labels? There are thousands of variables that can occur within the form itself.
Other than these three categories, there are other variables that greatly affect the mailing- day of the promotion, time of the month of promotion, weather, dramatic news events, or poor economic factors, for example. But, only by altering the mail piece one variable at a time can you determine what works the best for your dealership.
Start with the big factors- the obvious offer, the main criteria of the mailing list, and so on, and work down to the little ones. Your customer probably doesn’t care if you used blue or black ink.
"A good direct mail firm should make measuring much easier."
Simply because of the time and effort involved in all this testing and measuring, it may be wise to bring in a reputable direct marketing firm to handle this for you. They will have already tested form and verbiage for effectiveness with your brand of dealership, and in your region of the country.
They can present you with already proven campaigns, and then work with you on fine-tuning the details.
A good direct mail firm should also make measuring the effectiveness of your events much easier.
We invested heavily to create the software and resources to effectively look at the promotional data, and completely analyze the results for you.
"Declining results is a problem that can be reversed!"
A thorough analysis of your promotion should go well beyond a summary of the event. The particular zip codes that elicited response, the use of a particular giveaway or free gift, the form and verbiage should all be examined for effectiveness.
A history of these events should also be examined, to discover trends in your market. This is also useful in helping to eliminate market saturation.
The ability to identify market areas that are the most responsive is also critical. Imagine the value of identifying the market areas that you should invest in, and the ones to avoid.
You could eliminate wasted time, effort, and ad dollars in low response markets, and focus on markets that respond. And, by continuously improving the mailing lists in this way, you should see better response rates.
Declining promotional results is a problem that most direct mail users suffer through, but can be avoided (and even reversed!) with the proper testing and measuring.