Have you noticed a major change in the direct mail offers that stuff your mailbox? Are you receiving fewer offers for products and services the sender hopes you can’t live without? The change consists of two factors: more expensive goodies and better target marketing. That means more of the material is directed especially to you, and the mailer wants you to spend a lot more money than you have before. You can use this new information to do your own direct marketing program, but you need to know the new parameters. Here’s the scoop.

MAIL LISTS
Begin by visiting your public library and ask to see the Standard Rate and Data Source (SRDS) book “Direct Marketing List Source”. (Yes, you can order the book on the Internet, but it costs over $500 for a subscription.) Carefully read the first few pages to exactly determine the category of your prospect. Write down the owner of the list as well as the publication, etc.

Contact a list broker such as Mark Desch at the Alan Drey Company in California (mdesch@adcdirect.com 1-805-987-3466) or one of the other list brokers who advertise in the SRDS book and tell them what you have done. Do NOT contact the owner of the list directly as you will have no guarantee of accuracy or appropriateness. A list broker will guarantee somewhere around 95-98% accuracy, and the few dollars you pay them for this guarantee is worth it.

Expect to pay from $60-$150 per 1000 names for one-time consumer lists and around $100 per 1000 for businesses. Unlimited 12 month use is usually 2-2 ½ times the one time cost. Typical minimum order is 5000 names. Don’t try to use a list more than once as the owner seeds them with decoy names of people who get paid for turning in cheaters. You will be billed at the full price for a year’s use if you get caught, and you can be sued for a lot more if you don’t pay.

PRODUCTS
The absolute best direct mail products these days are publications (including books), catalogs, and magazines focusing on home improvement, sports (especially golf) and wine. Anything to do with motorcycles is always hot as are seminars and workshops. Anything in the specialty line directed specifically at users of that specialty is always great. For example, pond statuary ads directed towards people that subscribe to Ponds of America. (I made up this name.)

COSTS
If you decide to go it alone, you have a problem. You will need to make a profit of over $50 on each and every order. Here’s the math. Suppose you send 10,000 mailers at a post office average of $0.23 each for standard presort. Now assume your advertising material costs $0.37 for a ready-to-mail piece including labor. (Note: These costs are based on a real life ad campaign.). This means the average cost per mailing to you is $0.60. Your total cost for 10,000 mailers is $6,000.

Here’s the bad news. The average purchase-response rate is 1-1 ½ % for a single mailing. (Yes, one to one and one-half percent.) The percentage can range from 2% to as high as 5% on specialty items directed at a target market, but the average return for non-specific lists is lower. A one percent purchase return on 10,000 mailers is 100 returns. This means each return must generate $60 above and beyond your cost of the product or service you are delivering! Even if your product brings in a return of 4% your mailing must generate a profit of at least $15 to break even.

ALTERNATE METHODS
Consider joining with others targeting the same market and publish a catalog together. If you join with three others your typical reduced cost would be one somewhere around $2000 for the mailing, and at 4% you only need to generate $5 profit per order. Note that multiple mailings of the offer often can increase response to 5% or more. You will have to experiment on your own here. Use your money wisely.

HELP
Catalog publishers abound. They, as well as postcard printers, etc., can not only print your material, but many can mail it at a lower rate. Be sure to get accurate quotes from at least three vendors.

(NOTE TO EDITORS: PLEASE INCLUDE THE FOLLOWING.)
Paul Tulenko is a Small Business Success Consultant based in New Mexico. Additional tips and suggestions are available at www.tulenko.com or call (toll-free) 1-866-TULENKO.