Cents Off: How to Control Your Direct Mail Costs

Cents Off: How to Control Your Direct Mail Costs

We see them all over, those direct mail pieces that offer buy one, get one free or half off the total purchase, but when it comes down to dollar and cents, how much of a discount do you offer in order to drive traffic through your door and still remain profitable?

1. The Direct Mail Discount: In some cases, the clich, "the more the merrier" is appropriate, but when it comes to offering a discount, "three's a crowd" makes more sense. In today's economic climate where consumers are watching their pennies, it seems logical that a steep discount on goods and services would certainly entice any conscientious buyer to open his wallet, but that's not always the case.

Researchers actually tested the psychological impact of discounts and found that the response rate to different monetary discounts varied, but did not conclude that the higher the discount, the higher the response rate. In fact, the survey found that the response rate for a $5 incentive was just three percentage points lower than it was for a $20 incentive. And the $20 incentive got the same response rate as a $40 incentive.

2. Does Your Direct Mail Piece Offer Too Many Cents Off?: When you offer people too many incentives just to get them to buy at least once, you inadvertently discount the value of your product or service. If your customers are used to always getting a discount from you, they will begin to perceive that bottom dollar is all that your product or service is worth. There is a science to pricing, so know the long and short-term gains discounting can bring.

3. Does Your Direct Mail Offer Come at a Risk?: There is a direct correlation between the overall price paid and the risk perceived for having bought the item. The higher the price or the higher the price in proportion to income, the greater the perceived risk.

You can offer the best financial incentive to lure people to buy, but if they still perceive a greater amount of risk from parting with their money, the incentive will mean very little. Remember steep discounts don't always lure more customers and does not mean they will continue to stay loyal to your brand. Also, take into consideration that people fear risk and buying something that won't meet their expectations. Even adding some sort of guarantee, such as a 30-day trial, with your discount to increase your response rate can help combat this perception.

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