Why Planning is the Key to Huge Direct Mail Production

Often after my wife and I watch a movie, she picks up her phone to check out the actors and the backstory or concept which compelled someone to bring it to the screen.  She loves understanding nuance about the actors’ careers.  I like knowing what a movie cost to make versus what it earned.  After watching my last movie, the only thing I could think was how exactly this related to something I have been wanting to write about for a while: Production!

It is super important to frame the production of your Direct Mail campaign before you do anything else.  Production is just as important for a postcard campaign as it can be for a movie; disregard it, and you’ll find you’ve wasted money before the first postcard is even mailed.  ‘The Help’ cost an estimated $25 million to make.  Around the world, it earned over $216 million – a 764% Return on Investment!

There are Five Critical Components of Production on your path to success:

1.) Find your Cost Per Thousand (CPM) – The assumption is you’re working with a set (or sets) of 1,000 targets at a time. There is an easy formula you can apply to understand this impact: CPM = L1 (list of 1,000 names) + L2 (what a shop charges per 1,000 pieces to assemble, apply postage and mailing labels) + P1 (printing costs per 1,000 pieces) + P2 (postage per 1,000 pieces).  Think of this like the salaries, catering, trailers, and transportation for your actors.

2.) Find your Break-Even – I’ve talked about this before – it’s where sales generated by your postcard campaign have (basically) paid for, or are equal to, your CPM. The break-even for ‘The Help’ was $25 million.  See where I’m going with this?  Anything you generate above and beyond the break-even is considered positive.

3.) Find your Response Rate – Woven inside the numbers for break-even is the number of people, per 1,000 pieces mailed, who respond and purchase from you. In other words, this is the percentage of responses you’ll need to have in order to hit that break-even mark.  Good news in Direct Mail is that this is typically low (a .5% response could have you hit break-even, so a 1% response could have you doubling your money).  [NOTE: There are calculators online to help you figure out this number.]

4.) Find your Postage Options – Super simple here. There are only three ways to get postage onto something: Indicia, which means a postage permit printed directly onto the piece; Postage Meter, which means using a meter to apply postage; and a plain old Stamp (which some folks prefer because it can make your mailing look more credible and personal). Some folks will tell you that a physical stamp can even increase response.

5.) Consider Third-Class Mail – Not all postage is created equal. First-class postage can add way too much to the Cost Per Thousand and make it harder to see that critical break-even point.  Third-class mail, often when sent to executives, is pre-sorted by mailroom staff and thrown in the trash (same can be said for Indicia and metered mail, too).  It takes longer to route, but third-class mail, when sent to the right target, is very economical.  You can see why it’s super important to consider postage as part of your production process!

Movies and Direct Mail postcard campaigns can seem dissimilar at first.  One is meant to entertain and the other is meant to drive sales.  But the bones of each are more alike than at first glance.  Each strives to make the absolute most of their opportunity in front of the consumer.  And each wants to make sure break-even is left in their wake, on the way to fantastic final numbers!

Give Opportunity Knocks a call today.  We have Success Coaches who are ready for your close up!  We’ll help you understand the ins and outs of CPM, postage rates, and the behind-the-scenes production powering your Direct Mail success.