The only reason for adopting a direct approach is to make more profit. The response to direct mail is often quoted as between 1 and 2 per cent, although even my puny efforts have helped to generate 17 per cent to DIY outlets. A return of 1/2 per cent can be perfectly profitable if the unit cost is highly priced. The response rates are therefore basic to the whole operation. One of the major attractions of direct mail is that your costs are easily calculated. You can get quotes from printers, designers, list owners and packers. Postage costs are known. The only variable is the response rate: but you can test a representative sample and predict the eventual profitability. Everything can be varied and tested: your offer, the goods, the audience and the price. You are in control, dealing direct with your prospect.
A comparison can be made with selling through distributors with their margins and promoting direct. Whichever method is adopted, and it may well be a part combination of both, aim for a long-term strategy. No one expects you to make a profit from your first mailing as you are initially looking for customers you can sell something else to. Your first response costs will be high as you are looking for customers with the right needs. Successive mailings that have been honed to converts will be considerably more responsive. This is where the profit lies.
The mail order industry is dominated by the catalogue companies, GUS, Freemans, Littlewoods, etc. Around 90 per cent of the market is cornered by these lavish producers of home catalogues and something over 80 per cent of the sales are on credit.
As the cost of colour printing has reduced and computerisation has made life simpler, the mail order catalogue market has become much more specialised. I have before me catalogues covering kites, cooking accessories, quality paper, educational software and shoes. There are now many opportunities to exploit specialist areas and develop profitable businesses. If every customer's order is broken down into a multitude of data – age, sex, size, colour, fashion, use, etc – you can buy in or make an item that you can mail out specifically to that niche of the market. Wastage is cut to a minimum and you develop a very close and profitable relationship.
Let's look at where many small firms start off – selling 'off the page' from small space ads placed in special interest magazines or the more general Exchange & Mart. The national newspapers have their own truncated version in their 'Postal Bargains' slot. They all present the chance to reach millions of readers at a moderate cost. But whether they pull or not is up to you. To summarise the drawbacks first:
1. Black-and-while newsprint gives limited scope for creative ability.
2. The space allowed in many of the slots is not sufficient for products that require a lengthy explanation.
3. Space is often booked well in advance, particularly near Christmas.
4. Quite rightly, you have to abide by the codes of practice that cover mail order advertising, but practices seem to differ between papers.
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Note: This article was sent to us by: Carrie Hopkins at 07172010
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