Direct Mail

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Jan 23, 2009 11:42 am

Have any of you ever used direct mail to prospect?  I've used it for seminars in the past with some success, just never for general prospecting.

 
My idea is to send out 1000 pieces with either a simple letter asking what their current advisor has done to protect their portfolio... or a direct mail piece on a specific product like a fixed annuity or insured muni.
 
The letter might end with an offer for a free guide of some kind that they can call in for.  What do you think?
Jan 23, 2009 1:24 pm

You mail, you fail....


Unless of course it was preceeded by a phone call...

Why not just call the people.. and for those on the DNC, you could try mail, or stop by their house after hours(not during like jones people)...
 
 
Jan 23, 2009 2:09 pm
Squash1:

You mail, you fail....

 
You sound like my first BOM.
Jan 23, 2009 2:19 pm
etj4588:
Squash1:

You mail, you fail....

 
You sound like my first BOM.
 
Mine too.  The guy also hated annuities, especially in IRA's.  Thanks to him I wasted 2 years not using those products. 
Jan 23, 2009 3:13 pm

Have you ever met anyone who did directmail(not related to seminars) and got someone?

 
Do you really think that someone will read your letter about what their advisor is doing to protect their portfolio, and say "Hey what is he doing? I should call this guy who sent me a letter(and 1,000 more to my neighbors) and see what he can do for me..."
 
If it was only that simple..
Jan 23, 2009 3:22 pm

Yes, you are right... I just can't understand how those direct mail companies have stayed in business for over 100 years... nobody responds to direct mail!!


As I said, the letter might end with a free offer of a guide or booklet of some sort.  People love to get free stuff and if they call to get one, you've got a great lead and some talking points.
Jan 23, 2009 3:37 pm

Direct mail works great in some industries.  I asked my realtor friend once about all those damn post-cards I get in the mail from realtors.  He said people actually DO respond to those.

 
"Call to action" mail works too.  I will say that I used to wait for the quick-lube oil change discount postcard before I changed my oil.  I got one every few months for a good discount.  Kept me coming in.  Same goes for restaurant discounts.
 
The only time I have heard of DM working in our business (non-seminar) was people that direct mail a letter, followed-up by a call.  I have been told that it least puts your name in their head for a little while - long enough to call them.  It's really just an ice-breaker.  I just don't know if it's worth the money, if the reaction to your call is THAT much better than purely cold calling.
Jan 23, 2009 5:32 pm

I think direct mail works, for food, oil changes, coupons(for the previous).

 
I just don't think it works in our world... it's different.. similar to dentists or doctors, even then that can be a onetime thing, but to go to ad advisor, is more than that..
 
I just can't understand how those direct mail companies have stayed in business for over 100 years- There are a lot of business who sell stuff that doesn't work, that stay in business..
Jan 25, 2009 7:09 pm

Squash, here's the problem with your post-it's uninformed. Maybe you tried direct mail and it didn't work for you thus you don't blieve in it. Or, maybe you have a friend in the biz who tried it and it didn't work. But I'll tell you that I've used direct mail and that it does work. It's not effortless, it's not cheap, and it's not the holy grail of propecting, but it does work and can be very effective. So, thankyou for your opinion.

Jan 25, 2009 8:07 pm

Some time ago, i used mailers. I used it as a filler, when i had time to waste. I got a direct mail piece from my wirehouse, with a tearoff for them to return and request more info. Whenever i had down time, i sent some out. I sent out about 500 over two months.

I got responses, and actually opened a new client with 50 bonds. He was a retired wirehouse Senior Ops VP. Had his account at the wire he retired from, but was open to ideas. Every once in a while i call him with one.

It works, but its hit or miss, and i woouldnt make it one of my main prospecting activites.

Jan 25, 2009 10:44 pm
BondGuy:

Squash, here's the problem with your post-it's uninformed. Maybe you tried direct mail and it didn't work for you thus you don't blieve in it. Or, maybe you have a friend in the biz who tried it and it didn't work. But I'll tell you that I've used direct mail and that it does work. It's not effortless, it's not cheap, and it's not the holy grail of propecting, but it does work and can be very effective. So, thankyou for your opinion.

 
Any personal examples you would like to share?
Jan 26, 2009 1:07 pm

For years I mailed 2000 mailers a month. These were letters enclosed with a muni bond inventory list of selected tax free bonds. The letter invited those interested to receive a weekly copy of the list. They filled out a return sheet and popped it into the enclosed return envelope. Later I cut down on the return sheet by engineering a letter with clip off coupon. Response rates ranged from to ten to forty every month. So the response rate was 1/2% to 2% every month. Responders were every bit as good as qualified leads from cold calls. So the way I viewed it was it was like i was getting an extra week's worth of prospects every month. I did the program for years until a move to a new firm shut it down. Prior to hire it was just fine, not so after i walked thru the door. I've moved from that firm years ago, but only now am i considering ramping up this program again. I think the time is right.

 
So, as you can see,  I speak from experience.
 
Additionally, I called the list of non responders, which was my prospecting list. I opened more account from people i called but i my close rate for responders was a consistant 20%. One out of five, which usually gave me 2 or 3 accounts per month.
 
Based on that experience I will tell anyone doing direct mail that they must do mailings on a massive scale and continue to mail multiple times. If the response rate isn't satisfactory modify the message- the envelope- the list- .  But understand mailing can and does work.
Jan 26, 2009 2:28 pm

That is interesting.. And seems like a good strategy.

 
 
Jan 26, 2009 3:41 pm

It would be even better of you had a B/D that would pony up for some postage.  That's a lot of dough to cough up each month.  I would consider it once I had consistent cash flow every month and could budget it in.  I know, I know, it takes money to make money.  But it also takes money to pay the bills.

Jan 26, 2009 9:03 pm

Yeah, it's a chicken and egg thing. You've got to spend money to make money when you don't have the money to spend.


Run it like a business. Figure out what you revenue per account/household is. Calculate the all up cost of doing a direct mail marketing campaign from the cost of envelopes to the cost of postage. Then measure the results against that average household revenue to your biz. If the program isn't delivering enough new accounts to be profitable then something has to change. Unfortunately there are so many moving parts to this most brokers just give up and join the mail and fail faction. But changing anything from the number of mailers, the messege, the size of the envelope, hand addressing, the list,etc, etc, etc all worth a try. Only after all the options are exausted can one say they really worked a direct mail channel. The goal is to deliver enough average revenue accounts every month to make it worth the cost.
 
Jan 28, 2009 3:27 pm

Bond Guy - thanks for your insight. It sounds like your campaigns did pretty well. Somewhere I read the industry average was around .5% response rate for direct mail advertising. I've been looking at doing a similar type of thing - send out a business-reply fold-over post card for a free copy of my newsletter I do for clients.

Now did you recycle your leads list that you used? What I mean is that for all of the non-responders you had, did you ever follow it up with any more direct mail? or did you just do one mailing, one phone call and then remove them if you couldn't make contact or get a rejection? Most of the information I seem to get from companies that do some of the dirty work (printing/mailing) all seem to say that it can often take multiple mail drops that vary a little bit to the same list to get the best value out of any campaign. I'm curious what your thoughts/experiences were.

Jan 28, 2009 9:40 pm

Response rates?There are a lot of numbers floating around. The only number that counts is your response rate. And the only way to get a measurable rate is to do it and do it on a massive scale repeatedly over a several month period.

 
You can mail to the same list over and over. You can vary the mailings from one to the next searching for hot buttons etc. I know of one guy, mainly a cold caller who used direct mail as a second marketing channel. He mailed 2000 pieces a month for 5 or 6 months to exactly the same list.  Always professional, and always a mailing with good educational content. After the sixth mailing he started calling the list. His response rate was very high as many people recognized him as soon as he introduced himself. The purpose of his call, to see if they still wanted to get the mailing and(of course) to find out if there was something of more specific interest he could help them with. The guy's a two million dollar producer for a reason.
 
For me, I recycled the list and constantly mailed/called the same list for years. I'm calling out of the same directory i called 15 years ago. Updated version, but why change what works?
Jan 30, 2009 2:14 pm

I have run successful direct mail campaigns when I was doing mortgages.  Know this:

 


1) It is very expensive
2) You had better know what you're doing, it is not as easy as you think
3) You have three seconds to capture the recipent's attention
Feb 19, 2009 11:57 am

The challenge I think w/ direct mail is that if you're using it to generate appointments, the response will be so low, you'll get crushed on the cost for ROI.  This is because in order to get an appointment set, you have to have TRUST first from that client and a mailer sent has no chance of generating trust.  This is why for the same reason you DO often get a decent response from DM for generating seminar responses, because customers don't need trust to attend a seminar because it's with the expectation of being public and it's safe and non threatening.


Just my $0.02.
Feb 19, 2009 1:11 pm
MarketingStudy:

The challenge I think w/ direct mail is that if you're using it to generate appointments, the response will be so low, you'll get crushed on the cost for ROI.  This is because in order to get an appointment set, you have to have TRUST first from that client and a mailer sent has no chance of generating trust.  This is why for the same reason you DO often get a decent response from DM for generating seminar responses, because customers don't need trust to attend a seminar because it's with the expectation of being public and it's safe and non threatening.


Just my $0.02.
 
More uninformed info from someone who hasn't done direct Mail?
 
The only area where the "wall of trust" is easier to scale is with referrals or friends. True a seminar gives the prospect a free look see. It's also two to three times more expensive to produce.  The cost per account is at least twice as high. This is why many, if not most advisors employing semiars narrow their auduence to 401k rollver prospects ie prospects over 55 years old, or present seminars or workshops on other high asset niches like estate planning.
 
My B/D covers the cost of evelopes and statioanry. My monetary investment is postage. So let's do the math:
 
2000 pieces @ .42    =  $840
 
reponse rate @ .5% =  10
 
Close rate @ 20%    =  2
 
Cost per account  = $420
 
Average gross per existing account = $2300
 
Two accounts should give me approx $4600 in gross at about a 45% payout = $2070 net to  pocket. Of course not every account gives me $2300. But it averages out over time which iswhy i play the averages. And even though the accounts are profitable in year one i wouldn't do this if that's as far as it went. It's the long term income derived from these accounts and the referral ops that really make it work.
 
Let's look at seminars:
 
2000 pieces @ .42     = $840
 
Cold callers to call the list = $891 ( 3 callers @ 11.00/hour  calling for three hours each three nights a week for the three weeks before the seminar. They call the entire list)
 
response [email protected] 2% = 40 respondees
 
No shows = 15 buying units
 
attendees = 25 buying units BU = husband and wife
 
Dinner cost @ 30/head = $1500
 
Total cost = $3231
 
New accounts @ 20% close rate = 5 new acounts
 
Cost per account = $646
 
Again profitable but much more expensive, and not a leveraged prospecting method. It's a primary prospecting method, lots of time consuming work to get it done.  Where-as direct mail, once it's set up, is a turn key. Have an assistant run the entire mailing, about an hour or two of work per month and just wait for the responses to come in. DM is a highly leverage propsecting technique versus other marketing channels. To get ten respondees to a called a call campaign would take 7 to 10 hours of calling. Results may vary but still a lot of work compared to no work for a set up DM program. So, the comparo is seminars at $646 cost per account with a boatload of work to pull it off versus direct mail at $420 with minimal effort to get it done. DM is a clear winner here, leverage being the key.
 
However, that's not my final answer. What ever you are doing now- keep doing it. Add direct mail as secondary marketing channel. Or ramp up the mailing program to 10,000 pieces a month and make it your primary channel. regadless make a six month committment to it and tweak it to get improved results. Also know that product mailers do much better than the let me offer you my services/review you portfolio letters. Appeal to greed al ways works and these days appeal to fear. For example a well thought out CD campaign, while low gross, will really open the door and bring in the assets. As low as rates are brokered CDs almost always beat the local alternatives. Show how working with you works for them.  A year or two from now those CDs come due and it's time to cart the money to the bank. That's when you get paid. All that time to shower them with service and show them how much you care. This leads to a very high close rates on alternative biz reccos.
 
As for the "Wall of trust" nothing happens until you get over that wall. That process is the same regardless of how the intial contact was made.