Direct Mail: Is It Worth It?

Marketing 101  

Marketing your business is required to generate revenue.  Unfortunately though, how you spend your marketing dollars is not as simple as you might think.  First, you have to decide for your own business how you want to be known in your marketplace.  Despite it sounding like an “old school,” archaic way to spend your marketing budget, direct mail is still a valid and potentially successful tool.

“The 2012 Channel Preference Study for Both the Mobile and Non-Mobile Consumer from Epsilon shows that 62 percent of Americans enjoy checking their physical mailbox, with 73 percent of U.S. consumers saying they prefer direct mail for brand communications because they can read the information at their convenience. A whopping four-fifths (79 percent) of potential customers will act on direct mail immediately according to Direct Marketing Association (DMA) research. And while Millennials may always seem to be on their phone or social media, they also report an affinity for direct mail. ExactTarget’s 2012 Channel Preference Study found more than half (57 percent) of young people have made a purchase as a result of a direct mail offer.”

(Source: https://www.insurancejournal.com/magazines/mag-features/2015/03/09/359395.htm)  Studies have shown that direct mail need not be overlooked when it comes to marketing your business!

Decide on a budget

One of the major benefits of using social media and digital marketing today is the low cost.  Direct mail can undoubtedly be quite expensive, but it really depends on the type of direct mail campaigns you use.  Here are some things to consider when building your direct mail marketing budget:

  • What type of piece are you sending?  (A flyer, brochure, letter, postcard, etc.)

  • Paper/ink choice - the higher the weight or stock, the higher the cost.  Do you want to print in color or black and white?  Are you printing double-sided?

  • Design/copy - who is designing and writing your direct mail materials?  What does it say about your brand?  Does it accurately represent your business?

  • How many items are you sending, and how often?

  • Postage - consider how much each item costs to send and decide how many items will fit your budget.

Once you have an idea of the budget you can set aside for direct mail, you will better understand how to factor in these considerations.

Target your audience

If your direct mail is too generalized, it may end up in the trash as junk mail.  Targeting your audience and sending appropriate mail to the right people is a better way to use your marketing budget.  Some factors to consider:

  • Age - are you targeting young people who are getting close to driving age?

  • Demographic/Gender 

  • Geographic - lower rates for different zip codes

  • Economic - making insurance more affordable

The more you can tailor your direct mail to the appropriate reader, the better.  You have only one chance to catch their eye.  If the postcard does not seem to speak to the customer in a specific way, it could end up as trash very quickly.


Stay consistent

A common mistake some agents make is to give up on direct mail before it becomes profitable.  However, staying consistent will allow you to see a bigger picture of your direct mail campaign, so you can have a much clearer picture of how effective it really was.  For instance, maybe direct mail is not very effective in your area during the summer months or during holiday times.  But the only way to truly know that is to run your campaign over a period of time and track your numbers.  

Knowing your “lead-to-quote” ratio or “contact rate” and seeing how that feeds into your closing rate will help you determine how profitable direct mail can be for you.  You should average about .5% on your lead-to-quote ratio for direct mail.  You will find that some months you could show a 1-2% contact rate, but over time your average should be right around .5% for direct mail to be worth your time.  When tracking your numbers, you might even find that your closing rate for direct mail could be much higher than other marketing sources.

To recap, studies have shown that people still like receiving physical, direct mail.  To take advantage of that for your agency, make sure to be smart about how you spend your marketing budget, target the right people, and stay consistent and track your numbers over time.

For more information on insurance sales, check out our podcasts at Insurance Agents Think Tank.

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