How to Lower Your Direct Mail Costs

by | Sep 29, 2021

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One of the best actions you can take to measure the success of your marketing campaign is to know your direct mail costs. When you can list how much you spend on creative, printing, postage, and other expenses, you’ll be able to later figure out your cost per piece and your campaign ROI.

In this article, we’re going to look at the typical items that make up overhead in direct mail campaigns. With this background, you’ll be able to make better decisions about how to control, if not reduce your direct mail costs.

Each of these sections gives you valuable insight into solving a common challenge for many direct mail marketers.

What Makes Direct Mail Expensive?

It’s one of those questions that gives even experienced and confident salespeople a pause: “How much does direct mail cost?”

The answer (usually): “It depends”.

Now, that answer may literally be true but it means nothing to you as a marketer. You have a budget to worry about – a potential major pain point. So you need and deserve an explanation of the expenses that go into a direct mail campaign.

A lot of factors and variables that make up your direct mail costs. Each comes with its own advantages that have to be carefully weighed against others when planning your direct mail marketing. Here’s a breakdown of some of them.

Fixed Costs

Do you remember how I said that measuring direct mail costs “depends” on certain factors?

In direct mail production, fixed costs are those standard expenses for services or goods that don’t change regardless of the quantity mailed, client, or for other reasons. And if there’s a follow-up campaign, some of these charges may be much lower if there are few or no changes needed.

Set-Ups

A direct mail job requires preparing the right materials, software, and equipment for the printing and mailing of the piece.

Project Management

These costs include labor, administrative, and ongoing fulfillment tasks associated with the direct mail campaign as well as functions such as invoicing.

Consultation

A direct mail job may require a meeting with design and/or production staff to discuss ideas for the project.

Design/Art and Copywriting

Design really isn’t “free”. For many elements of a direct mail project, agencies or design professionals charge for an initial design, which may include revisions after client feedback. The same applies to copywriters – whether on staff or outsourced – brought onto the project.

Variable Costs

From one campaign to the next, direct mail costs can vary greatly depending usually on the quantity being mailed. And it’s important to note that other factors can affect decisions about how many pieces to mail.

Materials

Put simply, direct mail is ink on paper. The costs of both depends on two major factors:

  • what’s required for the initial scope of the mail campaign
  • what’s available to your vendor(and when)

Pandemic-related shutdowns and restarts around the world have disrupted normal supply chains. The result for printers? Strained access to and increased prices of these consumables. And even when they are available, transportation bottlenecks complicate the picture further.

Printing

The direct mail costs for printing a campaign vary due to a wide variety of options you have available for any and all components, such as:

  • Ink: Black-and-white and/or color
  • Use of variable data elements & technology
  • Coatings, finishings, or embellishments
  • Paper stock type, size, quality
  • Number of pages, inserts, or tip-ons
  • 1-sided or 2-sided printing
  • Quantity
  • Printing process (litho, offset, or inkjet)

Postage

Determining postage costs can be difficult because of the many USPS regulations that give marketers options for their campaigns. In fact, one of the few fixed postage costs can count on is for bulk mailing permits.

Here’s what affects postage pricing:

Data

The list data you use accounts for 40% of the success of your direct mail campaign. So, it’s vital to make sure you have the most complete, up-to-date, and deliverable addresses on your lists. As with print quantity, you’ll need to think in terms of costs per thousand (CPM) for your data.

Besides accuracy, other considerations affecting direct mail costs for lists are:

  • Purchase vs. rental of list data
  • First, second, or third party source
  • Type of list
  • Amount of records
  • Quality and depth of records
  • Number of uses permitted
  • Tracking and analytics of campaigns
  • Integration of data flowing into your CRM system from other ecommerce or automation solutions

What Does a Typical Direct Mail Campaign Cost?

Here’s a simple breakdown of direct mail costs for a 1,000-piece 9”x6” postcard campaign from the mythical Acme Co. Please note: This does not reflect the pricing structure at mailing.com. This is for demonstration purposes only.

Item Cost
Setup fees (Design & Copy) $1,000
Lists  $75
Printing (@$0.50) $500
Postage (@ $0.306 rate) $306
Total $1881/$1.88 per piece

How to Save on Direct Mail Costs

Don’t be held back from investing in direct mail! There are ways to lower your expenses by trading them off against other variable factors in your campaign.

Follow these tips on how to keep costs low while still creating a successful direct mail campaign.

Keep Your Data in Shape

Good data drives direct mail campaign efficiency and effectiveness, so you must get this right! Reduce or end the threat of Undeliverable As Addressed (UAA) mail resulting from old, incomplete, or duplicate records.

USPS’s National Change of Address (NCOA) database catches new movers. All Marketing Mail as well as presort rate First Class Mail must be updated within 95 days of a mailing.

The postal service also has several pre-processing address file tools to supplement commercial list hygiene solutions that are available. And if your address correction/matching software has achieved Coding Accuracy Support System (CASS) Certification, you can qualify for discounted rates.

Focus on Segments

Segmentation deserves a fresh look as a way to both find savings and to develop new opportunities for growth.

Prioritize those customers that should get more of your attention with mail based on the RFM model. Your best customers have bought the most recently, buy most frequently, and spent the most money.

Other segmentations include demographics like age, gender, income level, and more.

Automation Pricing

If your mailing pieces are compatible with USPS’s processing equipment, they qualify for discount pricing. But, they must meet several criteria, such as:

  • Minimum quantities (500 mailings for First Class, 200 for Marketing Mail)
  • CASS certification in the last 180 days
  • An Intelligent Mail barcode (IMb) with the correct delivery point routing code printed on each piece

Test and Keep Testing

Start with a base or control and a response rate for your campaign. Then, consider different variables that may result in lower costs, a higher response rate, or whatever your goal is.

Whether you test one variable two ways (A/B or split test) or several variables in combinations (multi-variate), mail a quantity small enough not to break your budget but large enough to be statistically significant.

Among the variables you can test:

  • Mailer format
  • Price
  • Teaser copy
  • Short vs. long copy
  • Reply/response device

Change Your Mail Class

Mail sent through USPS qualifies for rates based first on the content of the campaign features and requirements. So which one should you mail with? Well, it mostly depends on the content of your mailing, and how you want to balance timeliness vs. costs.

Certain types of mail pieces, like bills, statements, personal correspondence, and handwritten material, must use First Class. But for anything else, you have to look at the costs of your two biggest choices, Marketing Mail and First Class.

  • First Class (for mailings of up to 13 ounces) gets your mailing delivered quickly (2-5 days). It also guarantees free forwarding and returns of your mail
  • Marketing Mail (formerly “Standard”) is handled a little less quickly but at a substantial cost savings

USPS Promotions

Direct mail is a vibrant, evolving channel – and your direct mail can prove it. For over a decade, the USPS has offered 2% promotional discounts for campaigns that use emerging printing and marketing technologies like QR codes, voice assistants, and Informed Delivery.

Four of 2021’s 6 promotions are still running through the end of the year. In 2022, they’ll all return, with some of the incentives bumped up to 3 or 4%.

Identify Opportunities

Just because some cost increases are or seem inevitable doesn’t mean you can’t find ways to get more impact for your money.

Here’s an example: As part of the August 2021 USPS postage changes, the maximum size of presorted First Class postcards was increased to 9 inches by 6 inches. This gives you more room to sell, as well as other benefits of moving up a campaign from the Marketing Mail class.

Work with Mailing.com & Save on Direct Mail

There’s a proverb that states “If you look after the pennies, the dollars will look after themselves.” At mailing.com, we pay attention to even the smallest details. We have over 50 years of experience helping marketers optimize their planning and processes to keep their direct mail costs affordable.

Our mailing services and data management teams can reduce expenses and find savings for your campaign’s setups, pre-press, printing, mailing, and shipment costs. Drop us a line or call us! We’d love to show you how to keep your direct mail costs controlled in your future campaigns.

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