Why EDDM Is Bad for Business

What’s more important to your business – Expense or Profit?

Take a closer look at EDDM (Every Door Direct Mail)… Can you say “junk mail” at its worst?

The post office would have us believe that you should not send marketing messages to the “right target at the right time”… You should send your message to “Everyone – Every door – Every time”.  Let’s look at both sides of the question above.

Expense:

The post office is advertising on TV, (what a waste of taxpayer $), that you can send your mail without a name or address to every door for “as low as $.145 per piece”… (It’s perfect wording – I use it in my cable efforts: You can get digital phone & cable for “as low as $49.95”… but of course there are limitations).  And with the EDDM there are many limitations.

First – You must mail to every household in a carrier’s route… even if the property is vacant, (they are in the count you’ll get), or if the household has a “vacation hold” for their mail. Remember, this is the same USPS that told us marketers to “clean up our lists” so they don’t have to throw away undeliverable mail!

Second – You must mail to every household in a carrier’s route… so you must print enough pieces to send out to all households!  What if my best customer is a family with 2 kids and has a household income of $100,000 and they like to travel?  Forget targeting to the 250 best targets in your marketing area…The USPS would have us just print 2,500 pieces and send them to everyone!  At $.145 postage for EDDM, that would come to $362.50; or I could send to the 250 best targets for an average postage of, say, $.28 per piece & a targeted list of $.15 (standard bulk mail) for a cost of $107.50!

Extend the numbers out to a true “effective marketing plan” – Say you mail 2,500 every other month: 15,000 pieces per year – WOW I only paid $.145 for postage – $2,175. BUT, my “best prospect” is only 250 homes – so I really only should have spent $645 (.43 x 1500 pieces).

Remember – I’m ONLY talking about the postage & list expense here… you’ll still have to print your larger “flat sized” pieces to qualify for this special program. And, yes, you’ll have to print 5-10 times as many pieces as well to cover “every door”.

And forget about being “environmentally friendly”!  Just print more pieces!  The Post Office loves this!

Now let’s look at the Profit side of the equation…

Profit:

First – Is EVERYONE in my marketing area a good prospect?  If the answer is yes, why are they not knocking on your door? Maybe you make pizza, maybe you’re a dry cleaner… If not, consider this: Most of the time we marketers understand that there are certain demographics, certain lifestyles, and many characteristics of our “best customers”.  Did you know that only 5-8% of a bank’s customer base is profitable?  Ask any bank president – he’ll tell you that “not every customer is a good customer”. That also means that “not every prospect is a good prospect!”

So, targeted marketing is the only way to truly be effective as a marketer. Taking the small numbers in the example above, (2,500 in my market area when only 250 are my best target), Return on Investment (ROI) calculations mean I can expect to gain 5 customers in my market area each time I send a mail piece…

EDDMTargeted Marketing
# of Pieces2,500 Pieces250 Pieces
List Expense$0$37.50 ($.15 Ordered in Quantity)
Postage Expense$362.50 ($.145 x 2,500)$70.00 (Standard Bulk Rate x 250)
Printing Expense$1,125.00$112.50
Mailing Expense$0 (Prepared by Hand)$100.00
Total Expense$1,487.50$320.00
Total New Customers55
Cost per New Customer$297.50$64.00

What would you like to spend for a new customer? How much TO GET TO THE SAME 5 CUSTOMERS?  $297.50 or $64?  You could end up spending 4-5 times more to get a new customer if you take marketing advice from the post office!

Again, there are many other factors that will make a difference in your overall ROI on a targeted marketing project. Why print 15,000 pieces when you only need 1,500?  In that case, why print 25,000 pieces for a marketing effort when you only need to print 5,000?  I haven’t even touched on the cost of printing a larger piece, i.e. to print a “flat sized” piece vs. a “letter sized” piece. Don’t forget, you’ll also have to print a lot more pieces!

Forget it if your “geography” is a few counties, or a portion of a state. I did a list count today in an area that had over 500,000 households and, with just a bit of targeting, I’m recommending a mailing of 10,000 pieces…

Oh yes, and “personalization” makes more responsive direct mail pieces! Just ask the DMA or even the post office… They used to preach “targeting” back in the day when they were in the black. Now in the red, they have rolled out this “as low as $.145 per piece” cost for postage…. And it’s sooooo easy! Of course, they don’t tell you that you have to put a “facing slip” on every bundle OF 50 PIECES… and submit their forms with the number per carrier route & the 3602 for your mailing. We mailers have been doing that for the post office “saturation mail” for years!

Targeted marketing is responsible marketing, and, it GENERATES MORE PROFITS!

Yes, there is a place for “saturation mail”, but it’s certainly not as easy, or cost effective, or as profitable as the postal commercials make it seem.