Is direct mail useless at helping direct mail businesses generate leads?

That's the question I was asked last week by a reader of Alan Sharpe's B2B Direct Mail Tactics newsletter. Here is her unusual challenge, and my response.

“My biggest challenge in generating leads from direct mail is to convince our marketing people that direct mail should be used. This is a completely ironic situation given that we are a DIRECT MAIL HOUSE. Yes, that's right. I've been told that ‘direct mail is not good for our business.'

“Apparently, direct mail was tried once long ago and had a bad response rate. Our other lead generation methods include sales outreach activities (prospecting, networking, etc.) and community involvement - charities, boards, councils, etc. Our word of mouth reputation is excellent - we've been in business for 18 years, our turnaround time is excellent, our customer service people are top notch, our team really knows their stuff .. .. However, it seems to me that a larger outreach should be done as well .. . am I barking up the wrong tree here?”

Myth #1: Direct mail doesn't work for us

The only way to convince management to use direct mail over the long term to generate sales leads is to prove that direct mail either outperforms other methods or increases the effectiveness of other methods. You can only do this through testing and measuring results.

After all, the telephone, not the letter, is the number one tactic to generate leads according to the Direct Marketing Association's 2005 Response Rate Report.

Your firm sounds like it is content to do business in your city only. That's why they rely on “networking, community involvement - charities, boards, councils, etc.” These methods of meeting prospective clients are not sustainable nationally or even regionally. They are too expensive.

Unless your management wants to grow the business outside of your city, or grow the business in an aggressive way in your city, you may have a hard time convincing them to try DM. This is especially true if your city is small, since your prospect pool is so limited.

Myth #2: We tried it once and it didn't work

You say, “Apparently, direct mail was tried once long ago and had a bad response rate.” Business-to-business lead generation using direct mail is a program, not a campaign. It consists of a plan, a year-long series of mailings, and a way of testing methods and measuring results. I would suggest that if you have not tried direct mail consistently for at least a couple of years, testing different packages against each other, testing DM against your other lead generation methods, and measuring your results to see which method is most cost-effective, you have abandoned direct mail prematurely.

Myth #3: Direct mail delivers poor response rates

You say, “Apparently, direct mail was tried once long ago and had a bad response rate.” Direct mail response rates are misleading if you read them incorrectly. Your response rate only tells you part of what you need to know. It tells you the percentage of people on your list who responded and nothing more.

Your response rate doesn't tell you how much you had to spend to generate one lead. Or how much you had to spend to make one sale. Your direct mail response rate does not tell you if the sales people who followed up on the leads closed any sales. Or if you broke even. Or if you made a profit.

So don't be fooled by a low response rate. Unless you measure these other things (cost per lead, cost per sale, break even, return on investment) and compare your results with your face-to-face prospecting, community involvement and other methods, you will always be relying on feelings and not facts. One of the things that I like about B2B direct mail lead generation is that it is empirical. The numbers never lie. You can bank on it.

Recommendations

1. Show your boss a compelling business case for testing direct mail lead generation at your firm. Calculate cost per lead, cost per sale, break even and ROI. Show your boss the numbers

2. Start with a list of prospects that have been unresponsive to your other methods, or people that you cannot reach cost-effectively any other way

3. Think niche. Target a narrow group of prospects and go after their business with a year-long campaign, reaching them more times and in more ways than your salespeople ever could in a year

I wish you every success!