We recently came across an article detailing a recent study performed by the Harvard Business Review in which they compared the performance of an email marketing campaigns versus a direct mail marketing campaign.
If you're still clinging to the "old school" method of direct mail marketing, take a look at this study and consider if it can still be of value.
The truth is, depending on the industry, direct mail can still provide a return on investment, albeit a harder one to achieve.
Email marketing has become the trend moving forward, as it's far cheaper, easier to track and measure, and as you'll see in the following study, delivers a high ROI.
For this study, a retailer that has 900 stores and 105K “loyalty club” customers were used. The 105K customers were divided into three groups of 35K, with each being marketed to in three different ways:
Direct mail only
Direct mail and email
Here were the results of the study in the table below:
When first seeing the table, there was some immediate shock due to the direct mail stats. The direct mail campaign clearly had a much higher response rate than email. So have we been wrong about direct mail all along?
But wait a second -- direct mail costs a heck of a lot more than sending out emails. Like we point out in our email marketing eBook “The Fast Track To Powerful Emails”, outbound marketing costs up to 61% more than inbound marketing techniques (HubSpot, 2012). In some instances, a direct mail campaign can cost 50 to 100 times more than an email marketing campaign, especially since for many email marketing campaigns, the only thing that it costs is time.
Email Marketing: Still The ROI Champ
It’s pretty easy to see that email marketing is definitely better when it comes to getting a greater return on your investment. One HubSpot study on this very same research revealed that the email-only marketing campaign in this instance actually performed 95x higher than a direct mail campaign when it came to the ROI -- that’s pretty impressive.
Other Costs You Need To Account For
Of course, the actual money that you sink into a direct mail or email marketing campaign isn’t the only consideration that you have to make in terms of which is more worth your while. For example, how much time was spent on creating the content? How much time was put towards piecing together each campaign? A lot of small businesses take it upon themselves to do the envelope stuffing themselves, and that takes hours out of their days, if not weeks cumulatively.
Another important consideration that has to be taken into account here is whether the type of business that uses email or direct mail will have an affect on the ROI. In this Harvard Business Review study, the company being used was a B2C company. But what if a B2B company was to be studied in this same way? We have a feeling that the results wouldn’t be exactly the same.
Segment Your Lists
With that being said, we’ve seen a lot of great success come to our clients who segment their lists and that use different marketing methods to accommodate those customers. You can segment your lists so that B2C and B2B are separated and so that some customers receive a blend of direct mail messaging and email messaging (if you want to get a better idea of how you can successfully segment your lists, check out our eBook “How An Inbound Marketing Agency Does: Lead Generation."
While that may sound difficult, we’ve been able to successfully segment leads using HubSpot’s marketing automation tools. Their Workflows tool, for example, allows anyone to create totally personalized and segmented email “workflows” based on criteria that you’re able to set.
To give you an idea of how this can work, let’s say a contact comes to your site and they fulfill the criteria that you’ve set up in your HubSpot “Smart List”. You can then send out messaging to that lead based on things like their contact properties, business type, form submissions, or their analytical history with your company. Measure the results, see what performs best, and continue to fine tune your processes. This way you’ll be sure to get the highest ROI every time – and the chance to see that email marketing isn’t dead and that unlike the undecipherable ‘Electronic Voice Phenomenon (EVP)’ that ghost hunters swear prove the existence of life after death, you really can confirm clear, un-debateable results.
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