Direct Mail is a key component to maximizing profits. Watch this video for Direct Mail Advice.
Tom: I’m going to speak to direct mail for a couple of minutes because it really does have a place in your marketing plan, and I think when we talk about the most successful or the source that will drive the most sales, direct mail can do that for you but you have to be careful with it because it can get very expensive and you’re kind of taking a risk with doing it.
It wasn’t that long ago where many lawn care service companies, and I’m talking mostly fertilization and some of the big companies, Truegreen and Scotts, their main source of sales came from direct mail, after telemarketing was let go how ever many years ago, it seems like forever now. When managers switched away from telemarketing to direct mail, they just pumped millions and millions of dollars into direct mail and it’s not always the most cost efficient means to make sales, but there’s absolutely a place for it, and somebody was asking about statistics in regards to direct mail.
Let me throw a couple of things out there and see what you guys think. Direct mail, you can typically expect a less than 1% response rate. When you send out a direct mail piece, 10,000, 100,000 or even, in some of the bigger companies, 1 million pieces. I remember one year at Lawn Dawg, we sent out 500,000 direct mail pieces and we got a spring northeastern. We got a snowstorm that wasn’t forecasted. It literally, I mean it was devastating. It was a lot of money to put into direct mail. That’s what I’m talking about in regards to the risk, but you should only expect about a 1% return from it, and basically, what you’re doing is you’re generating estimates.
You should be able to close those estimates at a pretty high rate, and I think at this particular plan, you’ve get them in at 62%. If we were going to generate 200 direct mail leads, we’re going to expect 124 sales from that. That’s a fairly high amount as a percent to what we’re doing from this entire plan, but it’s going to cost a few bucks to do that. Jonathan, have you had any experience with direct mail or what are you feelings on that in today’s day and age?
Jonathan: I think there’s a move away from direct mail because the web is so incredibly, it can be so successful for so many companies and it’s perceived to be near free, though it’s not really. I see direct mail as an awesome opportunity. I still love direct mail, but you nailed it. You nailed it on several fronts. There are guys who don’t even get a 1% return. Quick example, you’ve got to be very aware of your market. For example, if you’re mailing to a residential, if you’re mailing to a street where two out of every 10 people in that street are even a potential buyer of the service you’re selling, you’re mailing out an awful lot of marketing pieces that have zero chance of getting a return. Only two out of 10 even have a chance of even having a person in response.
The very first question to direct mail is, “Am I targeting exactly the right areas with the highest propensity to buy, the highest potential?” If you don’t, you returns could be 1/4 of 1%. They could be a disaster. You nailed it on the snow. I mean if it’s raining on the day the direct mail gets delivered or it’s overcast, it kills returns. There’s all these variables in direct mail that will just kill you. You can mail the same piece to the same area and you get a 2% return, and you mail it again three weeks later and you get 1/8 of 1% return and why, it’s hard to explain sometimes.
That doesn’t mean you don’t do it. I think the guys that do it are going to win in the long term. Tom, here’s how I look at direct mail. I think the web is it. I spend a lot of money on the web, and a lot of guys are shocked when they come to find out what it take to get good SEO ranking. It really does cost a lot of money, but it’s the best money you could spend, but the best way to grow your company from a profit standpoint is with direct mail, and here’s why.
This is my opinion of course, but my strategy, my belief is you spent a whole lot of money to get yourself out there on the web so that people are coming to you, so I’m using a residential example again, and they’re finding in you land on one street because you sell a client there, and then you land on another street a few miles away, and then you land on another street a few miles away from that, and if you only rely on the web, you have a business that’s scattered across your service market. All the money’s in density, and most guys hate residential, especially on the lawnmowing side because they don’t think there’s any money in it, but there’s a ton of money in it when you’re dense.
Direct mail is how you get dense. You can’t get dense just using the web, so the web drives where you land, and then when you land on that street, you go in to own that street and you own it through direct mail, and that’s why I’m a huge believer in direct mail. In the streets that the web drives you to and you land on those streets, to have a very low chance of many people in that street being a buyer of your service, you don’t direct mail to that street. You know your market and you only direct mail to the streets with the highest percentage of potential buyers and the strategy is you go in to own those streets and you do it direct mail.
That’s my belief and that’s why I so believe in direct mail, and yes it is expensive. It is a more expensive sale, but it’s the best sale because it leads to the most profit because you build density.
Tom: Yeah, and you know what, you’re nailing it, man and I can tell by the questions that are coming in here, density is absolutely the most important part of profitability, and when it comes to lawnmowing especially, if you can park that truck and do six lawns, that’s as good as having a 50,000 square foot property and plus, it’s going to be much more profitable. One of our branches in Portland at Lawn Dawg years ago, we had 750 customers in just one zip code, and the guy would literally just go and park his truck and treat like 15 lawns at a time. They were tiny little 3,000 square foot lawns, but he did 40 lawns before 1:00 in the afternoon, and it was by far the most profitable route.
People are asking questions, interesting that the way you talked about SEO or trying to generate leads on the web, and how direct mail does have a place in your marketing campaign, but many people are asking about that United States Postal Service ever do a direct mail option, and they really do reduce the cost of it, but I’m not a huge fan of it because it doesn’t allow you target the way a good list does. I think the importance of having a good list far outweighs, and it’s going to cost a little bit more, but I think instead of just blanketing certain carrier routes, if you can really drill down where you want to make the sales and where you want to mail those pieces, that’s about how you build density. That’s how you improve your profitability.
Jonathan: Yeah, can I make a quick comment there, Tom?
Tom: Yeah, go for it.
Jonathan: I think this is really, what you brought up something I think is worth just an extra minute on, because it is the difference maker in a profitable marketing strategy, and I’m going to give an exaggerated example, but if you use this mindset in thinking about marketing and especially direct mail, it will help. I’ll give you an example. Let’s again use residential example. You’re out and you’re doing estimates and you’re meeting with clients, and this is again a very exaggerated example, and you have all these clients and you go out there and you meet with them, and you walk away from the property and think, “I like that guy. Every time I meet with him, he’s a great guy. He’s a great customer.” You just keep having these little experiences.
One day you notice, and again this is a silly example, but one day you notice, “You know what, that guy that I just liked. He lives in about a $400,000 house and he’s got a BMW in the garage.” Then a week later, you’re like, “Oh, that guy, his house is about 400 and what do you know, he’s got a BMW in the garage.” What you start to do is you start to see these trends and you’re like, “You know, the guys I tend to like, they tend to be entrepreneurs, doctors, chiropractors, some kind of professional, who tend to live in about a $400,000 house.” What do you know, they tend to drive a BWM, and then you go to your mailing list company and you say, “Hey, I want to buy a list of everybody in my city that lives in a house between $350,000 and $450,000 that has a BMW and so on and so forth.”
Now, that’s a little more expensive list to buy. You’re going to spend some money to buy that list. It’s not free, but now you’re mailing to a group of people that the entire demographic probably has close to 100% chance of being your buyer, instead of mailing to a street where two out of every 10 people or three out every 10 people might be your buyer. What you’ve done is you’ve shifted some of your expense. If you’re spending 28 cents a piece to get bulk mail and post cards out the door, now you spend several pennies per name to buy the name, but you’ve immediately eliminated thousands of pieces that you would have sent that were a complete waste because you weren’t mailing to a specific list.
Exaggerated example, but that’s the mindset in direct mail, how can you narrow the market you’re focusing on and only get mail to the people that are your most likely buyers.
Tom: It’s almost as if you and I conspired about what to talk about during this and I want [crosstalk]
Jonathan: We didn’t.
Tom: We’re doing this on the fly, but what’s happening is, I think I wanted to happen is that we hit on specific things that literally make the biggest difference to implementing a marketing plan. Let’s stay on this for a minute because I think we need to actually take that exaggerated example that you gave of the BMW, but bring it down to a realistic point of view. In my opinion, a list is huge. Yes, it is more inexpensive to do that than if you do a direct mail. You can blanket as much as you want. Bulk mail is an option, but I’ve always been a firm believer in that if you can identify who your best prospects are, you’re going to increase your closing percentage drastically, or even your response.
If you’re getting a 3/4 of 1% direct mail response, by increasing the validity or the quality of your list, you can get 1% or even higher than 1% response, and when you’re talking about the numbers we’re dealing with direct mail, that’s a make or break 1/4 of 1%. I think that the BMW again is perfect, but when you get right down to it, you want to deal with a couple of parameters in regards to your list. You want to only deal with single-family dwelling units. If we’re talking about residential here, you want to clean out the condos, you want to clean out the apartments. You want to get rid of the renters. You want to deal with single-family dwelling units only and you want to use two things as your main cutoff with who you want to mail something to. It has to be home value and income level.
Most of these companies can actually take it beyond that, and you’re absolutely right, man. You can get lists based on specific interests, whether the people like to play golf, what kind of car they drive, whether they have a vacation home, kids, everything. In our case, if you’re trying to sell organic lawn care, whether or not somebody has children is a big deal, right? If you can specify that in your list, it’s very important, but I think it’s different in different types of the country, but you want home value and income level to be the two main things. I don’t know if you want to speak to that at all, Jonathan, but I think it’s important that we let you guys know that the list is a big deal.
Jonathan: Yeah, I’m going to second that with one little comment, and that is that’s not that expensive a list to buy. The common list is the one with the home value, the age, a few demographic pieces of information. For example, the age of the person. That’s a very common list to be able to get a hold of, so it’s not a lot. It’s not very expensive. When you go and add my exaggerated example of the BMW to it, that gets more expensive because now, you’re matching up multiple lists, so it ups the price. Tom, the list you’re talking about, it’s a very affordable, doable list and I’d add one little thing that I just learned over the years. Part of building your company is about building your company with clients you like, and clients that you like doing business with that pay you on time.
You don’t want to build your business around a company you hate because you’re dealing with a bunch of people that drive you crazy, and years ago, I spent $200, had this huge wall map of my market made. This was back when I was still working the phones at City Turf in the early days, hung this thing up on my wall and every time I got off the phone, I put a push pin in the wall for a lead and I put a different push pin in the wall for a sale. The thing that happened was I realized that in my market, there was this one section in my entire market that was about a 1/2 mile by 1 mile and that’s where all our best customers were. They would buy anything we want to sell. They weren’t million dollar homes. They were in $275,000 to $450,000 homes and just that little activity clued us in where we wanted to be, and then we bought, Tom a list exactly like what you just described.
We used that and we thought we bought that list in that area. That, so add to what you just said, what kind of homes, how old are they, now the next question is in what area, and you can get even more refined in just the zip code. That’s how we’ve done exactly Tom what you described many, many times, it’s a very successful, very affordable approach.