Editor’s Note: Today’s post on how to create a compelling offer while keeping ROI in mind was written by Mark Hasland and originally appeared on the Overnight Prints blog. It is reprinted here with permission. Enjoy!
The promotions businesses offer consumers is one of the three pillars on which successful direct mail campaigns stand. By utilizing lucrative offers, entrepreneurs may be able to encourage customers to make purchases they wouldn’t have made otherwise.
A recent article from Direct Magazine discusses the use of the four basic types of offers: free shipping, promotional items, flat dollar discounts and percentage discounts. When used wisely, each one of these promotions can help business owners generate sales and manage return on investment.
Free shipping is often the most effective offer, especially for online businesses. According to Direct Magazine, free shipping can generate 20 percent lifts in sales. The second-best promotion is flat dollars off, followed by percentage discounts and free merchandise.
No matter which offer companies pick, it’s critical they determine the goal of a direct mail campaign first. If customer acquisition and brand awareness are primary objectives, entrepreneurs may want to consider promotions they will only break even or even lose money on. Conversely, if bottom line is an issue, organizations should use more conservative offers.
This is especially the case when using the least effective offer, promotional merchandise. Direct Magazine says that offers of this type can generate returns of 5 percent. However, for many direct mail campaigns, response rates hover around 3 percent. The potential customers acquired and 2 percent sales lifts generated by a promotion should be carefully weighed against the cost of the actual items.
Additionally, the source suggests considering whether discounts are needed at all. For example, seasonal businesses may pull respectable numbers during peak times of the year and don’t need subsequent deals to encourage sales. Once the company is out of season, though, then they may want to consider using promotions to attract customers.
Finally, Direct Magazine highlights the importance of observing both consumer response and competitors. Businesses should stay competitive with rivaling companies, offering discounts that make them a viable alternative. Entrepreneurs should also analyze direct mail recipients to determine which offers are successful and which are not.
A recent article from Target Marketing Magazine also recommends including time-sensitive calls to action with offers. Time-sensitive phrases including “hurry” and “buy now” may encourage consumers to act promptly and make purchases sooner rather than later.
