The Small Business Case for Direct Mail - Warm Thoughts Communications
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The Small Business Case for Direct Mail

Posted on October 29, 2014

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When developing advertising strategy for our home services clients, I am frequently asked about the ROI across the marketing mix. In our digital world, we can see the ability to drive down the cost of customer acquisition through online tools like pay-per-click and optimization. So can a case be made for the more traditional channels, like direct mail?

To answer this, we have to look at the data first, and then take into consideration what the data can’t tell us.

What the data tells us:

Clearly, on a pure cost basis, pay-per-click is the more effective tool for customer acquisition. In some of our home services campaigns, I’m seeing CPLs (cost per lead) that are as low as nine dollars. Of course I’m also seeing CPLs that are much higher depending on the product we’re promoting, but for the purposes of this discussion we’ll focus on the less expensive one.

Comparatively, our cost per lead for the same product in direct mail is in the $40 range. We use postcards to highly targeted lists in our campaign.

So the obvious question is, why would you spend money on direct mail when you can dedicate those dollars to pay-per-click and get more leads for less money? There really are two answers to that.

The first answer is simply that not everybody uses search engines to find local businesses. I know, shocking but true. So unless you’re getting more business than you can handle from your current search marketing spend (and I’m assuming that your spend is optimized and not underfunded—a big assumption, I know, read more about it here) you’re going to need to look elsewhere to find new customers.

But it’s the second answer that is not quite so obvious.

What the data doesn’t tell us

Sometimes as direct marketers we ignore the impact of brand. When small businesses focus purely on the numbers, it’s easy to dismiss how important brand awareness is.

Site metrics have proven to us that it can take multiple visits to actually get the conversion—hence the success of remarketing. So what role does brand awareness play in general? Can we establish a link between direct mail and pay per click? Here’s what that might look like. A consumer receives a postcard for a product or service they don’t need – at that moment. A few weeks later, when they do happen to need the service, they head to Google to find a provider. Is there some link between an ad they see and the postcard they received a few weeks ago? Difficult to prove, but I’m going to go out on a limb and say yes.

It’s easy enough to compare the list of leads from the SEM campaign against the mailing list to see how many consumers show up on both lists. I’ve done it, and there are lots. That bit of data may or may not prove my point though. It could just be coincidence. But the larger point is in what the brand specialists have always known. We buy from businesses that are familiar. Especially ones that we like. If an ad rings a bell (and maybe not one that we consciously hear) I’d say there’s a pretty good chance that we’re going to click on that one before the other ones.

Of course that strategy opens the door to other forms of brand advertising, such as outdoor, radio, cable, etc. and I’m looking forward to hearing your thoughts about that, and to writing about it in a future post.

But while we’re here in the midst of a very busy customer acquisition season, we need to answer the question, Should you spread your eggs across multiple baskets? The answer is a resounding yes.

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