TAKING THE MYSTERY OUT OF DIRECT MAIL
By Robert W. Bly
Direct mail may be a natural for high-tech, but to many marketers it's uncharted--and unfathomable territory. Direct mail is booming among high-tech marketers:* Marketing Logistics, a research firm that monitors the direct- marketing industry, reports that mail-order sales of personal com-puters, consumer electronics and related products reached $1.5 billion in 1985. Business-to-business mail-order sales for computersoftware and data-processing supplies for the same year were $1.7billion.* According to a survey as long ago as in the July 1986 issue of Family Computing, 72 percent of personal computer owners said they had purchased computer equipment or software by mail. Half of these buyers cited lower prices as the most important reason they buy through the mail. Imagine what the numbers would be today!* The Direct Marketing Association, a trade group, reports that revenue from direct marketing for all product categories, now around$44 billion, is growing 10 percent a year--about twice as fast asretail.But despite direct mail's appeal to the high-tech industry--it allows marketers to target their select audiences without spendingbig advertising dollars, and is a natural for products that facestiff competition for dealer attention--direct mail remains a mystery to many high-tech marketers. They view it as an advertisingmedium filled with more unknowns than knowns, and are reluctant to commit to large-scale programs.What works, they ask, in high-tech direct mail? What doesn't? Is high-tech fundamentally different from regular direct mail? Or do the basics of good direct mail apply equally to all product cate-gories? Can sophisticated products and systems be sold directlythrough the mail? Or is direct mail appropriate for lead-genera-tion only? HIGH-TECH MARKETING bounced these and other questions off nearly a dozen high-tech marketers experienced in direct mail. Although their answers were as varied as their products, they did provide some general guiding principles. Boiled down, their advice was simple: Never underestimate the importance of testing and tracking,of stressing benefits and offering guarantees, and of sticking toyour "best-shot" mailing lists. A sampling of the formulas these direct marketers use follows. The price is right. According to Ken Sullivan, marketing manager of Soft Logic Solutions Inc. of Manchester, NH, price is a key ele-ment in selling software through the mail. For the past two years,Sullivan's company has used direct mail to sell microcomputer soft-ware packages priced at approximately $50 per program."In microcomputer software, any product priced at $100 or under isbasically an impulse buy," explains Sullivan. "Over $100, it becomesa major decision that the customer has to think about. At $50 to $100, it's less of a decision.Sullivan's basic message: Get the reader to respond today. The longer he takes to think it over, the less likely he is to respondat all.Soft Logic mails 250,000 to 300,000 pieces a month, and Sullivanconsiders each mailing a "test." That is, he expects to gain spe-cific knowledge that will help him improve his response rate everytime he mails a new package.Soft Logic has tested many variations and offers, including mail-ings that offer one, two, three and four products. Sullivan saysthat mailings offering two related products, with a discount on thesecond product if a customer buys the first, seem to work best forhim. He considers a mailing successful if it pulls 1.2-1.3 percent response.Soft Logic uses a "standard" direct-mail package consisting of a sales letter, brochure and reply card. Sullivan is very particularabout the way his mailings are written and designed."To begin with, don't use a teaser on the outer envelope," he says. "This makes it look like junk mail. People will throw it away."Use a short letter, with short paragraphs. The longer the letter,the less appeal. People don't want to read. They will breeze throughyour package very quickly."On the front of the brochure, put a simple explanation of what theproduct does. Put a lot of information on the back page, including technical specifications and features."Repetition is as important in direct mail as it is in space adver-tising. Sullivan says. Soft Logic mails repeatedly to the same listof software buyers, continually testing new letters and new offers.Direct mail has been so successful for Soft Logic that every promo-tion the firm does is designed to generate a direct sale by mail. Even ads, once used to build image, now carry a toll-free number andcopy that asks for the order up front. "For a $50 to $100 software package, it's better to get mail orders than leads," Sullivan says."For us, mail order is very profitable, while leads are a waste oftime."Testing, testing. Eugene M. Schwartz, president of Bi-IntelligenceInc. of New York, has also had great success selling inexpensivemicrocomputer software directly through the mail. But unlike Sullivan, who has strong notions about how to structure a mailing,Schwartz tests many different approaches."You have to test everything--price, offer, headline, copy, format, theme," he says. "There are no answers in direct mail except testanswers. You don't know whether something will work until you testit. And you cannot predict test results based on past experience."Schwartz is something of a mail-order maven. In addition to runninga successful company that sell health books by mail, he serves as a freelance consultant to major publishers and direct marketing clients. He has 35 years' experience in mail order and is the author of a book on the subject."The essential rules of direct mail are the same no matter what youare selling--including high-tech." Schwartz says. "A product is just a bundle of benefits; your direct-mail copy lets the consumer 'sample' the product's benefits before he buys it."Most marketers are very much in love with their product--and theyshouldn't be. The customers don't care about you and your product.All they care about is what the product can do for them."Although Schwartz is known in the industry for his long copy ads and letters, he says that content, not length for length's sake, iswhat makes for successful direct mail. "If a person wants to knowwhat you're saying, he'll read a 20-page letter, blurred, in 2-point type," he says, half joking. "Copy should be as long as isneeded to make it complete and interesting."Schwartz also contends that percentage of response--the yardstick bywhich most companies measure direct-mail results--is a meaninglessstatistic. He says the real test of whether a mailing works is theprofit it makes. Schwartz considers a mailing successful if it gen-erates revenue 150 percent above "break even"--the point where theincome from sales equals the cost of doing the mailing.The technical target. Vivian Sudhalter, director of marketing forMacmillan Software Company of New York, faces a slightly differentchallenge than Sullivan and Schwartz: selling expensive ($495 to$2,000 per product) scientific software to scientists, engineers,and researchers. According to Sudhalter, the two markets--technicalvs. consumer--are quite different."Despite what tradition tells you, the engineering and scientific market does not respond to promise or benefit-oriented copy." saysSudhalter. "They respond to features. Your copy must tell themexactly what they are getting and what your product can do. Scien-tists and engineers are put off by copy that sounds like advertisingjargon."Sudhalter's lead-generating self-mailer for Macmillan's Asyst and Asystant software follows this mode. The copy has a scientist-to-scientist tone and talks about such arcane matters as Hermitian matrices, spectral slicing and QR factorization. Yet it is success-ful, having generated a four percent response with Macmillan's in-houseprospect list.Sudhalter's technical audience seems to respond well to visual treat-ments of complex concepts. "Scientists are excited when you show them something rather then tell them," she says.What types of visuals are used to illustrate a mailing piece promo-ting software? "Show screens of your program if they are unusual orinteresting," Sutter advises. "A diagram with call-outs is much moreeffective than volumes of prose. Scientists like tables and graphs.They will ignore copy but pour over a table of specifications and features. And they resent it if you talk down to them. When writingcopy, don't try to be clever; just give information about the prod-uct."Sudhalter says that finding good lists is a problem when usingdirect mail to sell high-tech. Because of poor results with outsidelists, she mails primarily to Macmillan's in-house list--people who have previously inquired about Macmillan software through advertis-ing or publicity. But she will use outside lists to announce a newproduct or product enhancement. Sudhalter has experimented with a variety of formats in her career, but chose a self-mailer for the Asyst package because self-mailersare less costly than the standard direct-mail package (consistingof outer envelope, letter, brochure and reply form). She says that skyrocketing paper prices and production expenses have made it increasingly difficult to do cost-effective mailings."Today I find that there are two kinds of direct mail that work," she says. "For a cold mailing, you've got to go for glitz. You can'tsend out a two-color mailing and expect to generate much excitement.You need four-color, slick design, high-quality paper, slickcopyand a larger typeface than the old-fashioned tiny type used in tra-ditional direct mail packages."However," Suchalter says, "a cheapo mailing can work well with your in-house customer and prospect list." To prove the point, sherecently mailed a one-page form letter to prospects who had tele-phoned in responses to ads and PR (no bingo-card inquiries were onthe list). The response rate was more than 12 percent. Why so suc-cessful with such a simple package? "People who are already inter-ested in your product just want the facts," she says.High impact. Rochester, NY-based Xerox also is following Sudhalter's"go-for-the-glitz" formula. The company is investing heavily in"high impact" direct mail--expensive three-dimensional pieces de-signed to stand out among the clutter of direct marketing that de-luges today's professional.To launch its new Conference Copier--an electronic "blackboard" with a copier attachment that can make reproductions of anything written or drawn on the board--Xerox targeted several major busi-ness centers, starting with San Francisco.In each city, Xerox compiled a list of approximately 500 key corp-orate decision-makers. The company sent each prospect on the lista series of four high-impact, three-dimensional mailers based on atheme showing how the communications process for meetings has evolved. The first mailing contained a miniature rosetta stone; the second, a quill pen and parchment; the third, a slate and chalk.The fourth mailing introduced the new Conference Copier, which sellsfor $3,295.Although Xerox would not release response figures, test results are"encouraging," according to Dick Martin, manager of Advertising andSales Promotion for Direct Marketing.The high-impact mailing was just part of the Conference Copier direct-mail campaign. Another mailing, an invitation to a product demonstration, was sent to 15,000 prospects in each target city. In San Francisco, approximately 150 of the people invited actuallyattended the demonstration.Kam Shenai, product manager for the Conference Copier, points outthat for mailings inviting people to a public seminar or demonstra-tion, the mailing list must be carefully segmented by zip code.The reason: The farther the prospect's office from the hotel where the demo is being held, the less likely he or she is to attend.A third mailing piece in the program was a self-mailer sent bulk rate to approximately 200,000 prospects in each target city."The self-mailer is the most economical format," Martin says. "Wetested the self-mailer vs. a standard package, and the self-mailergenerated a better response."In an unusual offer for a product as costly as the Conference Copier,the self-mailer asks for the order directly. By giving a credit cardnumber or sending a check for 10 percent of the purchase price, prospects can try the copier free for 15 days.So far, the self-mailer has generated many sales. Says Martin: "Wehave learned that it is possible to sell high-priced equipment dir-ectly by mail and phone. And we do."The critical list, "Regardless of whether you're about to do your first mailing or your one-thousandth, no factor is more critical toyour success than choosing the right mailing list," says SteveRoberts, a senior account supervisor with Edith Roman Associates, afirm that specializes in high-tech mailing lists. "The best list canpull 10 times the response as the worst list for the identical mail-ing piece."Roberts explains how his clients use both response and compiled lists."Response lists are generally better," says Roberts. "People who have previously responded to direct mail are twice as likely to respond to your offer as people who aren't proven direct-mail buy-ers. With compiled lists, you risk mailing to the one-third of Americans who don't read direct mail."But Roberts does recommend compiled lists for total penetration ofa particular market. "Let's say you want to reach every manufacturerin Kalamazoo, Mi," he says. "Only a compiled list can do that. Aresponse list won't have all the names, because not every manufact-urer in Kalamazoo has responded to direct mail."The best high-tech lists around, says Roberts, are publishers' sub-scription lists for controlled-circulation publications. "You havea greater degree of selectivity with a controlled vs. paid circu-lation list, because people must give a lot of information about themselves to quality for the free subscription," he says.An example of a "hot" high-tech mailing list, says Roberts, is the subscription list ot NASA Tech Briefs, an official publication ofthe National Aeronautics and Space Administration. This list allows direct marketers to target recipients by job function, type of in-dustry, number of engineers at the location and--importantly--type of products and components purchased."With NASA Tech Briefs, you can mail to engineers who buy test equipment, or purchasing agents who authorize the purchase of elec-tronic components," Roberts says. "You can't get that level of se-lectability with a paid-circulation subscription list." He adviseslist users to make sure that the controlled-circulation lists they rent are from a BPA-audited publication.Roberts acknowledges that there is a great deal of duplication amongmany of the subscription lists, but he notes that larger companiesin the list business have sophisticated "merge/purge" computer sys-tems that eliminate duplication. For this reason, he urges high-tech marketers to rent all their lists from a single broker, com-piler or list management firm, rather than go to the publications directly."There is no extra cost in going through a broker, since the brokergets his commission from the list owner," Roberts points out. "Also,the broker gets to know your products and can use his expertise to recommend the best lists for your offer."Opting to co-op. Because of rising direct-mail costs, more high-techmarketers are opting to co-op with their dealers. Says Mark Toner,who runs the direct-mail program for Amano, a manufacturer of com-puterized time recorder and data collection equipment: "If a dealerwants to do a mailing, we split the cost. Then we let them decidewhether they want to use our mailer or do their own. The manufac-turer should be happy to let dealers do whatever they want."Amano also does its own mailings, independent of dealers. A good response for a lead-generating self-mailer, says Toner, is two to three percent.Toner believes that unlike consumer marketing, where a host of look-alike products may compete for the same customers, half the battle in high-tech is simply reaching the right prospects to tell them about your product. "You have to educate the market," he says. "With an unusual product like ours, most people don't even knowof its existence."Segmenting mailing lists provide the key to a good response, Tonersays. "Using SIC codes, we select only those portions of the listthat reach our best prospects. For example, our best markets arehotels and restaurants. We also segment geographically."Toner says that his response from outside mailing lists ranges fromless than one percent to three percent. When mailing the same piece to his in-house list, he can get as much as five percent.Finally, Toner has discovered that his fellow direct marketers are rather open about discussing their successes and failures. "Askyour competitors and associates about which lists have worked best for them, " he advises. "In most cases, they'll tell you.Browser Fixed
