I can say from experience over the last 6 months that direct mail is FAR more EFFECTIVE than I thought it would be.
(disclaimer: I do P&C, specifically homeowners mailings, never tried health)
I figured I would get less than 0.5% response, making it not worth doing. Truth is, I get between 1% and 2% response with 80% closing on the response. You can't beat this.
I found out a few things, that took me a while.... for $99.95, I'll sell you my ebook, or you can simply read this post for free....
Myth 1: Postcards work better. Found out this isn't true. (I'll explain in a bit). I personally believed this for quite some time, since even I would glance at a postcard before I through it away. I realized it was a glance and then throw away.
Myth 2: A real stamp improves open rates. Okay, this might be true, but other things have to be in place, the letter has to look professional. Trying it both ways, a meter stamp is pretty effective, and actually improved my response.
Myth 3: Handwriting addresses improves response. It MIGHT improve the number opened, probably doesn't improve response.
Okay, in trying various things, this is what I've found:
- It is important that the mail piece look professional. Make it look more like a bill than a piece of junk mail though. Mine go out in professionally printed window envelopes, with my logo, meter stamped. They look like something I'm proud to send (and I am). Yes, I used to hand stamp the letters, gave up on this after several tests showed it wasn't any more effective.
- Quantity matters, Quality matters more. Think of who you are sending the offer to. Would they have any reason to be interested? I send to homeowners as their homeowners insurance comes due (guessed at based on when they bought their house). I limit this to home purchase transactions in the last 5 years. Responses drop dramatically after this. Given todays market, I also pay to scrub my list against the national change of address list, so I'm not sending to people who may no longer own their house. Do you know who your market is? You need to find a list that matches that market. For instance, direct mail in bulk to everyone in a neighborhood for health insurance is going to be a waste of money, most are covered with group at work, through their spouse, etc. You need to find the right characteristics for the list you use.
- What are you offering? You're response rate will be very low if all you do is say 'Call me for a Quote'. Why would they call you? For my homeowner prospects, I provide them with an actual quote to insure their property, it even lists their square footage, number of bathrooms, discounts quoted, etc. If they like the price, they call. They always like the price
How do you do this with health? Find a solid plan, quote a couple of age brackets, tell them why they need it.
- Make your mailpiece look professional. Don't overdue the envelope, but make sure the inside contents is very professional in presentation. Have a dozen people look at what you are going to send, see what their reaction is. Make sure you use color, decent quality paper, etc. In mine, I have a B&W quote and then a piece of 80lb card stock (1/3 of a sheet) that explains why I'm sending them the quote. Not sophisticated, but very professional.
- My envelope probably looks more like a bill than a piece of junkmail (if bills aren't junkmail). The one thing I do is I print 'Homeowners Insurance Renewal Information' on the envelope. Since most people don't know who their homeowners policy is with, they just assume.... anyway, find something that makes it work.
- Quantity does matter. If you send out 100, you have probably wasted your money. If you send out 1000 one time, you probably have wasted your money. Direct mail is something you have to do consistently, then it becomes part of your business. I can't explain why this is true, but it very much is. I get calls from pieces I mailed out 4 months ago. In fact, I should be writting a policy now instead of this post from one I sent out about 5 months ago.
- Know your costs. If you do your own direct mail (which I recommend), know inside out what it costs to send out each letter. I know what the ink cost on that page is, I know what the data cost is for that letter, I know what portion of my monthly bill for my folding machine I allocate to the letter. All in, with postage, I can mail a letter to a prospect for about $0.43, almost the same as the cost of first class postage. Of course, this is based on mailing a 1000 letters a week, or over 4000 a month.
If anyone is wondering, my letters print at night, and I can fold / stuff / stamp 1000 letters in an hour. Well, okay, the machine I have can do about 1400 an hour, but I have to feed it as it runs out of paper / envelopes, slowing it down. I lease the machine for a little over $100 a month, which is figured into the cost per letter.
Don't be intimidated by direct mail. If it didn't work, people wouldn't do it. If not done right, it won't work. Biggest thing is to have a compelling call to action. Basically, why call? Why call now?
Dan
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