B2B Direct Marketing – To E or not to E

By Rich Carango
Vice President, Creative
Schubert Communications

So, you’re embarking on a B2B direct marketing campaign – you need to reach a limited audience of niche manufacturers, specifically targeting the plant manager. The goal? Qualified sales leads that prime the sales pump.

The web designer says, “let’s do a flash-based, video-streaming e-mail series.”

The sales team says, “how about a direct mail kit loaded with free chotchkes?”

Finally your team turns to you and asks, “will it be e-mail or print?”

Don’t answer that yet: deciding which format to use is not simply a matter of tossing a coin. In fact, rushing the decision can doom your efforts before you’ve even started. Consider the following five key factors before you commit to any campaign format.

1: Establish the campaign’s objectives.

Are you trying to generate highly qualified sales leads for your sales force or do you need to capture a large volume of leads for your distributor network? Are you introducing a new service or trying to get prospects to trial a new product? Are you inviting your customers to a special event or simply making a corporate announcement?

In B2B, direct mail accommodates a wide variety of objectives – not just to generate orders as typical consumer direct mail. Frankly, B2B direct campaigns rarely result in a sale without at least minimal sales rep intervention.

So, with as much detail as possible, clarify what action you want your campaign recipients to take.

For example, a multi-billion-dollar East Coast chemical company wanted to introduce a new mortar cement additive to an extremely small market of potential buyers. The company used our agency to create a highly targeted direct mail kit that included technical literature, a gift, and a sample of the additive. The product solved a major customer problem so we knew that if we could get people to try it, they would buy it. It worked. The company met its production trial target and the sales force continued to receive calls months after the mailing.

In this case, a dimensional mailing was most effective for a number of reasons: 1) the list was unusually small so there was a greater per piece budget; 2) the goal was to get the recipients to try the product; and, possibly the biggest reason of all, 3) the mailing had to get past a tough gatekeeper and dimensional print is harder to ignore than e-mail.

We needed to introduce this revolutionary product with fanfare. A dimensional mailing – with all its bells and whistles – tends to be more memorable and usually includes some kind of small gift that can sit on a person’s desk to maintain mind share. Dimensional mailings also offer more possibilities in terms of design, and, while e-mail can be enhanced with streaming video and motion graphics, these features may alert SPAM blockers and prevent the e-mail from reaching the intended recipient. [Editor’s note: insert photo]

2: Set a campaign lead conversion-to-sale goal.

Yes, this step is a doozy. In B2B, where direct marketing is most often used to generate sales leads, it’s important to assess what return you should expect from the campaign. How many leads? How many leads should convert into orders? If you’re working within thin margins or with lofty profit goals, the style and format of your campaign must match up

A caveat: be sure your conversion ratio is realistic for your sales force. Regardless of how effective your campaign is at generating leads, overall ROI can plummet if the sales team lacks the manpower to follow-up on leads. So before you get too far, determine a fair lead conversion goal for the campaign.

To get started, look at previous campaigns. Did e-mail result in more leads than print? How did the quality of leads compare? Granted, not every company will have a vast database of tracking data to refer to, but it can be helpful to analyze any information you have from past campaigns to help set realistic expectations.

Next, look at the numbers. Generally, the cost of e-mail campaigns is extremely low relative to other media. GartnerGroup estimates that e-mail costs about $5 to $7 per thousand versus printed direct mail, which can range from $500 to $700 per thousand. However, these numbers do not factor in the list costs. B2B e-mail lists, according to Worldata’s recent index, remain the most expensive of all lists despite some decreases in 2004. Worldata shows permission-based, B2B e-mail lists are more than twice the cost of postal lists with an average base of $280/M as compared to $131/M for postal lists.

In addition to being expensive, quality opt-in e-mail lists are notoriously hard to find. The CAN-SPAM Act has made it challenging to locate legitimate B2B e-mail lists that can be rented for commercial purposes.

Another cost factor to consider is postage. Of course, in electronic campaigns this adds up to $0. But with print, at $.37 per piece (or more if your mailing is a nonstandard size or weight) … the costs can add up quickly. In fact, at the time this article was written the U.S. Postal Service filed a request for an across-the-board 5.4% rate increase with the Postal Rate Commission.

3: Determine your company’s relationship with the audience.

Knowing your audience is critical to successful marketing in any format, but understanding how your direct mail audience views your company can help you determine the format to use. Is your audience very familiar with your company, just getting to know you, or completely unaware of who you are and what you sell?

Typically, e-mail is a good choice when targeting an audience who is already partially familiar with your company – the recipients are more likely to stop and read your subject line instead of trashing your e-mail along with all the other SPAM. Most B2B buyers are bombarded with e-mails. Studies show that businesspeople receive an average of over 250 unsolicited commercial e-mails every workday. To save time, they quickly scan through the “sender” section of their unwieldy inboxes, automatically deleting the e-mails that are sent from an unknown entity.

Alternatively, studies also show that when they recognize the sender, they are more likely to open and read an e-mail than a printed piece simply because e-mail’s so quick and easy to open.

Familiarity, however, also presents a conundrum. When you’re targeting top customers or special-interest groups like key distributors and vendors with whom your company already has a congenial relationship with, e-mail may be too cold. Print may be the better choice – many still see print as a more intimate communications vehicle.

4: Develop a killer offer.

Direct marketers know that the offer must be dead-on to ensure campaign goals are met – regardless of whether the campaign is electronic, print, or some combination of both. So, even if you can’t afford to implement carefully orchestrated focus groups or widespread surveys before launching a new campaign, conduct some guerilla research. For B2B companies, which typically sell to smaller, niche markets, it’s possible to gather insightful data that will help you craft a compelling offer without breaking the budget.

Here’s where electronic and print can be each other’s ying and yang. Use e-mail to test a few different offers by attaching them to other electronic communications with customers and prospects. For example, try tacking on a test offer to your next e-newsletter, an affiliate’s e-newsletter, or an industry e-newsletter or web site. Post various offers on your corporate home page. Also, take advantage of the speed and efficiency of e-mail and send a few test offers to a  short list of hot prospects and/or existing customers to see which draws the greatest response.

Thankfully, some research has already been for you. A survey completed by YesMail in July 2002 revealed that response rates increase dramatically with an increase in the number of personalization elements. The offer is a perfect element to personalize. As the number of personalization elements increase from one to seven, the click-through rate more than triples – increasing from 4.7% to 14.8%. And, at a recent web cast, Jupiter Research presented real-life B2B case studies detailing the effects of dynamically generated, personalized campaigns. Jupiter concludes that dynamically generated campaigns yield results that are four to eight times better than those of static campaigns.

If the goal of your campaign is to generate response, carefully consider how you might add personalization elements to the campaign. E-mail makes it easier and less expensive to personalize content; greeting people by their first name, providing information relevant to that individual’s job function, and making a different offer based on their gender are all examples. This level of personalization used to be extremely costly in print direct mail. But, new digital printing technologies such as variable data printing are making it more affordable.

5: Decide on the frequency of your campaign.

Due to the low cost and ease of execution, e-mail is an ideal vehicle for a widespread and/or high-frequency campaign. E-mail campaigns can be executed much faster than other channels; they can often be run over the course of seven to 10 days, where it generally takes four to six weeks to execute a print direct mail campaign.

Just be careful of list burnout – over e-mailing your list can ruin relationships. If you determine that a high-frequency campaign – say a new e-mail sent once a week for 8 weeks – is the right way to go in order to reach your objective, be sure to keep the content fresh and relevant.

When in Doubt, Do Both

If you have a good solution to a customer problem, a great list, and even better offer; your direct marketing campaign will be successful no matter what format you choose. Many B2B marketers have found that a combo campaign that includes both e-mail and print mail – personalized as much as possible – is the most effective. One of the ways we’ve successfully used both formats in a single campaign is by jumpstarting the campaign with a print kit and following up with a series of electronic mailings, each with a different offer and a variety of response mechanisms.

Gartner analysts assert that response rates measured by action taken from print direct mail are the same as e-mail, hovering at one percent. However, for permission-based emails, the average click-through rate is between six and eight percent. So before you make a format decision, carefully consider the five criteria above, and when in doubt try both and compare the results so you’ll know which to use next time.

**************

About the Author:

Rich Carango is vice president, creative at Schubert Communications – a Philadelphia-area B2B agency voted among the Top 50 B2B agencies in the nation by BtoB Magazine three years in a row. Carango began his career at Schubert as a graphic designer, and has quickly risen through the ranks. His designs have won several top awards from regional marketing associations; and under his direction, Schubert’s creative team has won gold medal awards from both the Business Marketing Association and the Art Directors Club. Carango is a graduate of American University (Washington, D.C.) with a Bachelor of Arts degree in design.

He can be reached at rcarango@schubert.com or 610-269-2100.