Direct Mail Incentives: Are they Worth It?

So? How badly to you want to grow and/or update or your customer database? Yeah, me too. But I just lost a battle that's going to significantly cost me new subscribers. It's a battle that could cost you too.

Our "complete" database was missing about 7,000 e-mail addresses, making it not really complete at all. So I had my graphics staff create a truly nifty postcard offering a $25 coupon for customers that sent us their correct email address. Flyers to be inserted into invoices were also printed.

You know that rule we all live by in corporate marketing America? That 20% of your customer base that will account for 80% of your sales? Well, if you are missing a good hunk of customer data, how exactly are you planning to market to that 20%? Or the rest of your database that you might be able to talk into joining that elite group?

We started getting responses. But…

One of the division presidents decided that incentives are not the way to go. So we pulled the postcard from the printer, and recreated the flyer without the incentive but with more corporate benefits.

You want me to tell you want happened, or do you already know? It dried up. Sure, I was giving them lovely benefits like online tracking of their orders. But I wasn't giving a discount on their orders. So what was in it for the customer?

Incentivized rental lists have long been a topic of much negative conversation. Honestly. Truthfully. Tell a marketing director or media agency that a list comes from an incentivized lead gen portal and—kaboom!— it's just been devalued significantly. Savvy marketers realize that "Get a FREE iPod if you give us enough information to put your name, email, address and cell number on every imaginable list under the sun" is going to net a specific type of respondent.

But, the rules are quite different when you are dealing with your own customer database. If your customers are buying from you, they like you. Hopefully, you know who they are. (This is a whole other topic for another day.) An active customer that is missing an e-mail address is a huge problem. That empty space in their e-mail field represents the empty potential to raise their spending.

Similarly a low-spending and lapsed customer with missing or incorrect data is one that will be tough to entice and lure back onto the playing field. This group especially may need a bit of bait and a smile to try the waters once again. Win them back. Show them love. And you may very well transform an ugly lapsed or low spending duckling into a beautiful spending swan. But, ya gotta know how to get in touch with that duck to talk to it.

According to a study by Dartmouth University incentives increase response rates by 12%-24%.

My own individual research may not be as academic, but when I was with a B-to-B direct mail company we tried sending out surveys and signup requests both with and without incentives. After watching a few departments experience lack luster results, I came up with an idea to offer a $5 Blockbuster Card. We literally had to go out and buy more cards cause we ran out. Needless to say our response rates went up WITH the incentive.

So here's where being penny-wise and pound foolish comes into play. Before you decide to pull an incentive off of a customer campaign know what the value of a customer is worth to you. Is it worth it to take $25 off a customer's next order or give them a gift to get their correct data so that you can market to them again and again and perhaps raise their spending level to a new customer category? It most likely IS worth it—big time.

So what's going on with my e-mail quest? I argued and argued and decided to try it this way and document the results, or lack thereof for the next few months. And you know that I still have the incentivized postcard and flyers all set to go.

Carol Lustig is marketing director for Sonny's Enterprises, a direct marketer of automotive aftermarket products.