Direct mail in e-commerce: is it a powerful weapon or a waste of paper?
Direct mail in e-commerce works. At least in terms of converting lapsed customers to a new monetary transaction. But also as a way to reactivate MWC’s (Most Wanted Customers) who unsubscribed from opting out of electronic communication.
Therefore I am thrilled to see the German postal behemoth, Deutsche Post, finally acting on the route that has been so obviously needed for the past 6-8 years. That is, to make it easier for brands to leverage direct mail.
Deutsche Post is doing what others should have done long ago. They are (semi)automating the direct mail process. They do that by integrating with selected Email Marketing Service Providers (ESP’s). My understanding is that the direct mail pieces can be personalized.
Exciting news for brands active in the German market – or anywhere else. Obviously mostly relevant for transactional purposes. But, as I said before, direct mail can also be used effectively to reconnect with lost email permissions.
Direct mail in e-commerce – results from the study in Germany
A recent Dialogpost study by the Collaborative Marketing Club in cooperation with Deutsche Post shows how powerful physical mailings for e-commerce can be when it comes to addressing existing customers. The study was conducted with 50 e-commerce companies who had used no or very little direct mail previously. Over 1,2 million direct mail pieces were sent.
With an average conversion (to-purchase) rate of 3.9 percent, print mailings (direct mails) are top of the ranking for online shops. Transactions with basket-values of less than 100 euros show clearly above-average values in the (re)activation of existing customers. Especially in the food and beauty sectors, direct mails were effective at stimulating customers to purchase.
Selected survey results – direct mail driving e-commerce sales
You can get the study here – below are some key results for your perusal.
1) Conversion to purchase ratio highest for smaller purchases
The cost of a direct mail may be as low as €3. For cash-strapped e-commerce shops, this means that there is an opportunity to see an immediate ROMI (Return on Marketing Investment). But – keeping it real – the more realistic calculation should be made based on the forecasted customer lifetime value.
To illustrate what I mean: If the average transaction revenue is €40 with a gross margin of 50% and the cost of direct mail is at € 3 based on sending 10.000 direct mail pieces, the revenue based on 5% CVR is € 25.000 with a gross profit of € 12.500 and direct marketing costs of € 30.000. In other words a direct loss of € 17.500 for this activity alone.
Hence it is important that e-commerce actors look at the customer lifetime value of reactivated customers.
2) For customer reactivation with direct mail, timing is crucial
The graph shows you the CVR (conversion ratio) based on when the last purchase was made. The conclusion seems to be that the longer e-commerce shops wait to reactivate customers, the lower the CVR. Interestingly, this resonates with what we know about email marketing. (Get the State of Email Marketing Report here)
3) Not all product categories perform equally well
The graph shows that food outperforms other categories with beauty coming in second with 4,10% CVR. This presumably ties in well with the higher CVR for lower basked values.
I am not sure whether the study took into account seasonality, which could significantly affect the performance in certain product categories – for example, the sports category or special interest. But a tip for e-commerce shops out there, TEST!
4) Direct mail pieces last longer – responses still received 6 weeks after receipt
This is interesting indeed. Any professional email marketer will know that the email piece is dead 48 hours after pressing the send button. Not so with direct mail in e-commerce. Obviously, the bulk of the responses came in the first 2 weeks after sending. But the direct mail piece kept on delivering responses for at least 6-7 weeks.
Interestingly, after the immediate response, it seems that there are peaks around payday.
Marketing automation in e-commerce coming full circle
At a time when marktech and adtech is merging, marketers have the opportunity to manage all online campaigns from a single dashboard. The missing link has been offline media.