Evolution of Direct Mail Campaign Proves Patience Worth the Wait

By Casey Conrad

Five years ago, when I was a full time consultant with a marketing company that produced advertising campaigns for clubs, I stumbled onto a unique marketing idea; to send out Birthday Cards to non-members of the community and “gifting” them a trial membership to the club in honor of their special day. The idea was actually born out of statistical information a client shared with me after spending a considerable amount of money having a specialist analyze their club membership data.

In an effort to try and identify the primary forces that were influencing new enrollments, this data specialist quite by accident stumbled upon the finding that a significant percentage of their members had enrolled during the month of their birthday. Interestingly enough, as it related to the time of year an individual enrolled, one’s birthday was the third most common statistical factor identified after New Years and Back to School.

Although this information initially surprised me, when we began to discuss the possible reasoning, it makes sense. For adults, and especially those approaching or past the age of 40, one’s birthday can be a significant event that results in a time to reflect upon all areas of their life, personally professionally, spiritually and certainly physically. And, after New Years, one’s birthday is probably the most popular time to set new goals for oneself.

The First Effort

Always eager to try something new, I designed an attractive one-color birthday card that had a nice verse inside about what influences the process of ageing along with a salutation that wished them a happy and healthy birthday. On a separate card-stock insert we included a one-week trial membership gift card for them.

Once the card was printed and designed a mailing list was purchased. The criteria used was adults, 25-65 years of age, with a household income of 50,000 or more and within a certain set of zip codes that reflected the areas where the majority of club members were from. With that criteria, the list company gave us the names of individuals whose birthday it was by month for a six month period. (6-months had to be purchased in order to reach a certain minimum number of names. This particular club averaged about 500 names a month).

For that first month, the average per-piece cost to send out this first generation Birthday Card was around .75 cents, for a total investment of $450. The cards got a 1% response rate and the club closed 3 out of the 5 prospects on annual memberships, worth around $800 each. This meant the Customer Acquisition Cost* (CAC) for this promotion was $150, $100 less than their normal $250 CAC; certainly nothing to nothing to do back-flips over but worth the effort.

Second Effort with Changes Improve Results

Personally, I was disappointed with the 1% response rate because I believed that if the data about people having a higher propensity to enroll around their birthday was true, that the piece should have enjoyed a better than average response. So, as is the case with most direct mail campaigns, we set out to find ways to make it better and re-test the piece.

One thing about the first mailing that bothered me was the fact that the piece was a one-color job. Of course, the reason for this was purely a cost issue; because we were in the testing phase, we were printing small quantities of the cards, which meant doing 500 pieces of a two-color job would have drove the per-unit cost over $1. Because the piece had proven to be cost-effective once, we felt more confident in printing more pieces for the second run and, as a result, upgraded the card to two-color on a glossy card-stock paper. The insert remained one color card stock BUT we decided to do a split-run on the offer, having half the cards remain a one-week trial membership with the other half changing to a full month trial. The reason for such a split was because in marketing you must be able to measure each and every change made to any piece. If we had changed both the quality of the card and the offer, we would never be certain which one was having the influence. By doing the split run, we could make an accurate comparison.

Because we had printed enough cards for the remainder of the mailing list, the per-unit cost of this second generation of Birthday Cards remained at .75 cents, which was our goal. This time however, the response rate improved. The cards with the same one-week trial membership jumped an entire percentage point to 2% and the one-month trial jumped to a 3% response, making the average response rate 2.5%, which is excellent for direct mail. The higher response rate on the one-month offer convinced us that a longer trial was more enticing. After the final calculations for the second mailing had been made, the new changes and the better response rate drove the Customer Acquisition Cost down to just under $100 (closing percentage wasn’t as high, which is normal with a higher response rate).

More Distinctions & Improvements in the Third Generation

After 6-months of the Birthday Card promotion behind us we knew we had a winner. The question now became how could we make it even better? I began to evaluate the data from all the prospects who had responded and one thing struck me; where I thought the response rate would be highest among Baby Boomers and older, it wasn’t. Rather, many were in the 30-35 year old range.

In an effort to get some perspective, I did something that would forever change my strategy with all marketing materials. I sent a copy of the card and the inserted trial membership coupon to my Mother. Not only was she the age group I had expected to attract, but she was the director of nurses at a hospital and had access to getting many opinions from her employees who represented the very prospects we were trying to attract. My instructions to her were very clear and vague all at the same time. “Mom, I’m sending you something that I would send a potential prospect of the club. I want you to look at it and tell me honestly if you would respond to it. If the answer is no, ‘why not and what would have to change to make you respond?’ Show it to as many people at work as you can with the same goal and don’t tell them your kid sent it to you. I don’t want ‘that’s nice’ responses, I want insights.”

When I called her back I was at first disappointed because she told me that the 8 people she had showed it to all said “No, they wouldn’t respond.” When I asked her “Why not and what would have to change to make you respond,” my disappointment quickly faded and turned to jubilation. This is what she told me: “It was a very nice card and a nice gift but most of us said we wouldn’t use it because we didn’t feel comfortable about working out. Is there any way that you could make it for us and a friend so we wouldn’t have to go alone and that would be much more fun anyway?”

Have you ever had one of those moments in life when “Ding, ding, ding, ding,” the lights in your head went off? What my mother was saying made total sense and yet none of us who were involved in creating the piece even thought that—probably because we were all fitness people!

As a result of that one insight, we changed the offer to read, “You and the friend of your choice will receive a one month trial membership.” With the very next mailing we say a significant increase in responses—especially among older women—and by the end of another 6-months of mailings our average response rate climbed to 4.5% and further drove down the Customer Acquisition Cost to below $60.

Another Twist, Still Greater Response

For the past two years we have been using the Birthday Card Promotion at our RI HEALTHY INSPIRATIONS locations and continue to enjoy a response rate of 4-5%, depending upon the month. Recently, however, following a month that had a lower response rate, one of the managers decided to put an additional gift inside the card to see if it would improve its’ success. The gift was a free Synergie Facial, worth $40 to the consumer. (Our cost is around $7.) Sure enough, the response rate jumped another percentage, with the average response in any given month staying around 5.5%.

Since then we have explored with some other gifts, like our Shiatsu Massage chair and Aromatherapy treatments but the free facial seems to be the one gift with women that elicits the increased response rate. And although this promotion doesn’t pull in a huge volume of people (simply because we only have an average of 250 names per month since it is an all women’s facility), the economics are incredible.

Because of the volume of printed cards we have the total cost down to .68 cents each, out the door.
A Center is spending around $250 per month (cost of mailing plus cost of gifts) but selling anywhere from $6-8,000 worth of memberships!
The Customer Acquisition Cost is averaging $38, which is less than half the normal cost.

Minor Inconveniences when Compared to Overall Success

With those types of numbers one must be thinking, “There has to be a downside.” There is; the limitation on the number of pieces you can put out! The fact is, since you are buying a list of birthdays within a specified age, income and geographic area, you will only have a certain number of names each month. Of course, the larger the population of the area you are in, the more the names you have to pull from. Certainly you could expand the age bracket, lower the income level and increase the radius of mailing, but that would probably only increase the cost without significantly increasing the number of leads. Further, by lowering the age bracket and income levels there is a good chance that you will attract a less qualified lead, driving down the closing ratio, which will only frustrate the sales staff in the long run.

I actually don’t think there is a downside to this promotion, but rather a few minor inconveniences. These include:

The need to hand address the envelopes to keep the response level at its’ highest.
Coordinating that the cards go out between the 10th and the 15th of each month. (If you have large numbers it may be economically possible to have a mailing house do this for you, but they will use labels or laser printing, which will typically lower the response rate.)
Calls from angry card recipients who want to know “How did you know it was my birthday this month? Take me off your list immediately.” (You must train your staff to handle these nicely!)
Calls from widows upset that you sent their deceased husband a birthday card. (Often widows don’t take their deceased husbands off the phone directory because they don’t want people to know they live alone. Again, you must train your staff to handle these carefully.)

Conclusions

There are many marketing insights and learning’s from the Birthday Card promotion but I think there are two that really stick out in my mind. First, when putting together any marketing promotion or piece, always give it what I now call “The Mom Test.” That is, get un-sensored feedback from the audience you are trying to reach. Listen to their concerns and suggestions and made adjustments accordingly.

Next, be patient with marketing ideas—especially if they are new and unique. If after getting just a 1% response with the first Birthday Card we dismissed the concept, a successful promotion would have been lost. Make measurable, well thought out changes and track the response rate to ensure you are moving in a positive direction.

With some creativity, patience and consistency, you can find fun and interesting ways to bring new prospects through your club’s doors and help drive membership sales.

* CAC = Total cost of marketing campaign divided by the number of enrollments.