As costs rise, choose carefully when to use direct mail.

• Author: Turner, Jim
• Position: Direct Mail Essentials

Costs for most advertising media are rising, and direct mail is no exception. In fact, some of its components such as paper and postage, even inks, have had strong price increases recently. At the same time, as the Internet and more media channels compete for your prospects' attention, direct mail becomes ever more useful as a targeted and unique medium.

So, when is direct mail efficient and when are other media more appropriate? Here are several situations to consider:

High margin products. On a cost-per-thousand basis, direct mail is an expensive medium. But it also has one of the highest response rates, although that varies with the product and offer you promote.

Thus, because loans have a relatively high profit margin, they can often be sold efficiently by mail. For example, a low response rate on a home equity loan promotion could still be significantly more profitable than a higher response rate on a certificate of deposit promotion. In the case of loans, direct mail gives you the advantage of providing more information and an application, not possible in most other media. And, despite the downturn in housing, many banks have had good results in marketing mortgage refinancing via direct mail. In these cases, targeted mailings can be more efficient than general media.

Mail can also be used efficiently to sell deposit products. But, depending on your goals, you may be able to use other less expensive media for those promotions. When a large volume of deposits is needed, direct mail often can be justified, while smaller amounts may be secured with small ads in other print or broadcast media.

Relationship management. Banks often are frustrated in their attempts to call on either prospects or customers through their business development program. The issue may be the availability of staff time, staff motivation, or even staff effectiveness when a call is made...