Aug 07, 2011
Using Direct Mail to Drive Retail Purchases
It might feel compelling, as a retailer, to back off of direct marketing in favor of web marketing or social media as a way to drive in-store traffic. But savvy retailers have found great success driving sales with direct mail - especially when the mail is targeted, and personalized.
Factory outlets are a great example. The old formula for their success was location, location, location (i.e., tourist areas off the highway). Then it was said to be price, price, price (i.e., great discounts). But location and price may no longer be sufficient to drive business to factory outlets and other discount retailers. That was Advertising Age's conclusion in a recent article "Price Alone No Longer Enough for Retailers."
The magazine cited the example of Mervyn's in Colorado, that surveyed its 5,000 customers and asked them "What do you want when shopping for clothing?" The answer: More fashions and a better shopping environment. This came from customers shopping at a discount retailer - customers you might expect to put price at the top of their list.
Is a shift happening? Yes. Price is no longer the primary factor separating retailers. That means stores need to better communicate their differentiators - what makes them different than the next guy? As consumers increasingly demand to be marketed to as the individuals that they are, targeted direct mail can be a great way for retailers to accomplish both goals.
How retailers use direct mail
Indeed, many retailers have found success using direct mail to create boutique-like, individualized experiences for their customers. Here are some examples.
Building a targeted database with membership and loyalty cards. The savviest retailers give membership or frequent buyer cards in exchange for the customer's mailing address. Some cards offer a free gift or discount after a certain number of purchases, others offer members-only access to new merchandise, sales, and other promotions.
The retailers use the card number to track the customer's purchases and then target mailings to that person based on past purchases. That sort of customer loyalty program is a great way to keep customers coming back - and spending more when they do.
"Please come back and try us again." One retailer offered customer comment cards to fill out while the customer's purchase was being wrapped. If a customer indicated that they were unhappy with something - anything - they received a personal letter of apology from the vice president of operations, with a $5 gift certificate for their next shopping trip. The company mailed 800 letters a month with a redemption rate of 35%.
That was a brilliant multi-win direct mail campaign. Since the customers felt that the business was listening to them, it got the customers back in the door to make another purchase, and it gave the retailer valuable information about opportunities for improving its customers' experiences.
Competing with bigger, better known old stand-bys. A small 20,000-square-foot factory outlet center was opening in Reno, Nevada. Retailers there were concerned about how they would compete with the glamour and glitz of the much larger shopping areas.
So marketers mailed 27,000 fortune cookies to selected affluent households in Reno. The accompanying mailer promised that each cookie had a gift certificate inside. But to redeem it, the recipient had to bring the unopened cookie to the mall and open it in one of the shops there. Incredibly, every single prize was redeemed. The mall had excellent traffic and good sales.
Maintaining sales outside the peak tourist season. The peak tourist season in Naples, Florida ends in April. Local retailers, who are there year-round, wanted to pull in both tourists and locals in the slow months.
Marketers sent a direct mail package offering customers a $50 discount on Continental Airlines when they spent $50 or more in any of the shops. As a result, store traffic increased 6% and sales increased 12% over the previous year. Individual sales averaged 74% over the minimum $50 purchase.