How effective is direct marketing?

xha1r

Good afternoon,

With my start-up, my plan was to get 10,000 addresses out of the Golden Pages, get 10,000 copies of a letter and 10,000 envelopes and send them out.

That would cost €5000 - €7000, and I felt that it would get better results as it's more personal. However, I made that decision without knowing enough about direct marketing.

On my website, businesses will be able to login and edit their own information (example). This will cost €500 a year.

So I want to inform 10,000 businesses that this service is available. Would direct marketing be effective? I'm looking for around a 5% response rate, ie them paying me for this service, and I'd be happy getting that within 6 months.

I understand that it's difficult for you to give a accurate opinion when you don't know what I have planned, but I really want to keep it to myself until we launch.

What costs are involved and how do companies look at this sort of thing? Is it less or more effective than what I had originally planned?

Please give as much information as possible, like the other threads I've made and questions asked, you're responses are much appreciated.

Regards,
JB.

growler

it can be extremely effective if done correctly, if you get the right message in front of the right people offering a service or product that they currently have a need for.

Sending 10000 letters to "addresses" isn't going to be very effective, the more personalised the message the higher chance of success. 5% would be wildly optimistic for such a campaign, actually for pretty much any b2b dm campaign.

As a starting point you should look at a few specific sectors and peronalise the message for these. You need to find out the name and job title of the person responsible for the buying decision in your target companies.

You need to have a much clearer strategy than 10000 random businesses: identify a few market segments to test your message on, identify the job titles you need to get your message in front of, look for list brokers or magazines that speak to this audience and see if you can rent a few 1000 names, talk to as many of your target audience as you can in advance to get a very clear idea of what your audience is likely to respond to, give your audience an incentive to respond to you (even if they don't sign up to pay you money you can begin to build a database of prospects.

DM's success is down to the quality of your database, the more you know about yor prospects and customers the better you can commuicate with them, the more likely they are to part with their cash.

paulocon

Have to agree completely with growler here.

An ill-thought out direct mail campaign can be extremely ineffective and can do more harm than good.

It is one thing for you to believe 100% in your idea, it is another thing to convince your target market to part with their money. I find that with anything like this, you need to take a step back and view your product/service from an end-user point of view.

I would be wary of running 10,000 letters straight away. Take a smaller subset and try out on them first. You may need to fine-tune your material several times along the way.

xha1r

Once again, the members of boards come through and give me some great advice.

Thanks guys.

Sonnenblumen

DM is good for mas consumer product sales, but if you are building a database of GP targets, I think you're being very optimistic to expect a return near 5%.

Typical good DM rates are 2-3%. So with hit rates so low it is IMO a pretty good waste of money.

On the other hand if you can have a more direct interaction with prospects eg Trade Fair, Conference (Speaker) etc then your hit rate is likely to be much higher.

We do Trade Shows every year and it pays consistent divis on leads that come true as sales. A sales pipe full of crap is hard to clear, soaks up a lot of time, much better to flush and deal with less crap and more qualified leads.

Black_Couch

Yeah I've got to agree with most replies here. I can't emphasise enough quality over quantity. I know its tempting when you think that there is potential for 10,000 businesses but at the same time you have to concentrate on establishing a client base to work from. Start with smaller clients obviously and build your way up. If you contact 10,000 businesses and get a 'not interested' response, its very difficult to contact them again without being seen to be annoying.

xha1r

How does this sound?

I'm going to contact 1,000 businesses to test the water. Don't know whether I should go straight at the people I think would be most willing to pay for this service, as if it goes badly I might be left in a bad position.

I'll make an effort to contact all of these companies, tell them about the service, and ask if they would like us to send them an information pack. I could therefore say they are in some way interest, contact them in a more personal manner, and they'd be more aware of the service and perhaps be able to make a more informed decision?

What do you think?

EDIT: Also, how do companies respond to emails from unknown senders? Are they like me and delete anything they don't know, or would they take the time to look at it? I was thinking as it would be easier, quicker, and more cost effective to send them an email including the same information as I would tell them over the phone? They could then reply if they wanted an info pack etc. Could this work?

DublinEvents

xha1r wrote:

How does this sound?

I'm going to contact 1,000 businesses to test the water. Don't know whether I should go straight at the people I think would be most willing to pay for this service, as if it goes badly I might be left in a bad position.

I'll make an effort to contact all of these companies, tell them about the service, and ask if they would like us to send them an information pack. I could therefore say they are in some way interest, contact them in a more personal manner, and they'd be more aware of the service and perhaps be able to make a more informed decision?

What do you think?

EDIT: Also, how do companies respond to emails from unknown senders? Are they like me and delete anything they don't know, or would they take the time to look at it? I was thinking as it would be easier, quicker, and more cost effective to send them an email including the same information as I would tell them over the phone? They could then reply if they wanted an info pack etc. Could this work?

Hi xha1r

Have you tried adverstising, like newspaper ads or magazine ads? Maybe it will be a good idea if you can start with that. You can have an ad published in a magazine or paper related to your niche, or target a local newspaper.

About your other question.. if companies respond to emails from unknown senders?

Then my answer would be no. More than 99% companies would want to get services from someone they know or have heard of, or through a reference.

Remember, getting a client and convincing him/her is the most difficult part of the entire process.

leftofcentre

I would be more worried about your business model. Is it some kind of directory site?

Getting people to pay for these things is very difficult.

I would do some test marketing before i splash out on a DM campaign.

mox54

some kind of sales promotion might work for you - introductory sales offer - sign up and get 20% off or 2 for 1 etc etc - the info pack is also a good idea but I don't think you're ready for a big dm splash now, besides for dm to work at it's best you need to make big waves for a little return so start with 10,000 and not 1,000 - sales promo or info pack seems best.

:eek:

Seohelp

Also, how do companies respond to emails from unknown senders? Are they like me and delete anything they don't know, or would they take the time to look at it? I was thinking as it would be easier, quicker, and more cost effective to send them an email including the same information as I would tell them over the phone? They could then reply if they wanted an info pack etc. Could this work?

The majority of them will just delete it. That's the optimistic outcome for sending spam. The worst case scenario is that your business will be blacklisted for sending spam and that will hurt you even more so in the long-run.

If you think that it is any easier or safer doing it with a printed DM campaign you'll be in for a shock. I used to work in a direct marketing agency and the number of businesses that went to the bother of contacting us to find out where the company that sent them a marketing piece was remarkable. Although the company details were sourced from a legitimate list rental supplier that adhered to all of the data protection laws there was still a backlash on a lot of campaigns.

Simply opening the Golden Pages and sourcing company details is going to provide you with a long list of un-targeted contacts (by that I mean you won't be able to find out the name or position of the person that you want to receive the DM piece) that will result in an extremely lost response rate.

Go to Kompass.ie and get a quote for a list that will provide you with a demographic selection of business people that you want to target. This money will be the best you spend as it might result in a decent enough response rate to pay for your campaign.