Tuesday, September 29, 2009

Direct Response Vehicle

Direct Marketing Tip of the Day.

Direct Response Rule #1: Always provide a response vehicle.
But it isn’t always as straightforward as it seems.

Q: I saw a membership appeal from another organization recently. They used a #9 BRE. We always use a return envelope, but ask our donors to supply postage. Are we missing the boat? Does a BRE improve response rates significantly?

A: My answer is definitively “Maybe.”

First the obvious: Many neophyte marketers miss the boat by NOT including a response envelope, even if seeking a donation or hard copy response. Not including a reply envelope doesn’t save money; it costs money. Fewer people respond without that RE. That’s a fact.

Now the more subtle: Does the type of RE (return envelope) impact returns? Consider the options as there are financial and philosophical considerations for each.

BRE vs CRE vs SRE. Let the discussion begin.

BREs (business reply envelopes) are pre-addressed to your organization and you pick up the postage. The donor/member doesn't have to pay for postage, and they like not having to pay. A BRE will probably pick up a few fence-sitters who might not respond if it cost them 44 cents.

a) you encourage more responses and
b) you only pay postage on the responses.
c) good approach for subscription renewals, donations, surveys, etc.
d) encourages prompt response

a) there is an annual fee at the USPS for having a BRM account;

b) there is the hassle of keeping money in the kitty to pay for the response mail

c) BRM postage is more expensive than first class because it is first class + a USPS handling fee. So even though you're paying for fewer pieces coming back, you're paying more per piece. You may be able to ameliorate the extra cost by asking the donor to put his 44-cent stamp on the piece to defray the cost, but you'll still pay the handling fee.

d) There are wackos out there who may want to harm you, and misusing a BRE is an easy way to do it. (see downside [b] above). Extreme case in point: in the 1960 Presidential election, some diehard anti-Catholics taped Kennedy for President BREs to bricks and mailed them back to the campaign. It almost bankrupted the campaign before the USPS recognized and stopped the abuse.

CREs (courtesy reply envelopes) meet the minimum requirement for DM Rule #1: supplying a return vehicle. CREs are pre-addressed to your organization. Typically they have a box where the postage would go, warning “Place postage here” or some similar reminder to the responder to fork over his 44 cents.

a) you're providing a pre-addressed envelope to respond to your offer;
b) the donor/member must pay the postage, so you're off the hook on that expense.

a) you'll get fewer responses because people won't/can't find the postage.
b) you’ll eliminate some marginally committed people.
c) may delay responses as people look for a stamp. Misplace the piece,
then finally mail it.

SREs. (Stamped Reply Envelopes) Here you ante up a 44-cent stamp on each reply envelope before it hits the mail.

a) a donor has no excuse for not responding, as you have made it easy for him to do so.
b) you increase your response rate.
c) You may want to reserve use of SREs for long-time or high-dollar donor/ constituents or for special emergency appeals as it is expensive.

a) expense. 44 cents x the number of pieces you are mailing can be very costly.

Those are the facts. So what's right for YOU?

The question that got this conversation going may be better phrased as “What size a boat are we missing? How many donors/subscribers/constituents have left port without us?”

If you don’t know the answer, then you’re not alone. One option may cost more in absolute dollars out-of-pocket, but what if it generates a great response rate and more dollars? One option may cost less, but it may depress response rates and dollars. Which is best for your organization?

You gotta know! But help is at hand. Direct Mail is an amazingly testable tool, and can generate statistical analysis you can take to the bank. Use those analytics to see what works best for you. And by “best” I mean optimizing returns and minimizing expense.

Here's how: Assume you mail 30,000 identical letter packages, but you’re dividing the mail into three “splits.” In all respects the letters are identical except for the return envelope. The copy is the same. The envelope is the same. Even the class of mail and how the postage is affixed is the same. But one group has a BRE, one has a CRE and one has an SRE.

Most critically, divide your data into 3 equal “splits.” Be sure the data demographics are the same for all the splits. You can inadvertently stack the deck if you load all your big donors into one of the test modules. Doing so will skew your results, won't give you a fair analysis, and will have voided this effort as a fair test.

Mail 10,000 with a BRE; mail 10,000 with a CRE; mail 10,000 with an SRE. Be sure to code each split on the reply card so you can track response rates. After all, the reply card gets separated from its envelope early in the response counting process.

Track responses for percent returned and dollars generated vs cost to generate that response. If one test split produces significantly better (or worse!) results, then you have your answer.

Ta dah! Irrefutable scientific logic wins the day.

The next time you launch a direct response effort, you won’t have to worry about missing the boat. You’ll already have your boarding pass.

1 comment:

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