Case Study: 35% Response Rate

Case Study: 35% Response Rate

How do you get a 35% response rate on direct mail? (How about 40%?)

I was showing some of my past work to a prospective client the other day, and I happened to pull out a dimensional mailing we did years ago for Nordstrom … the one that got nearly 40% response when it was mailed.

(This usually gets people’s attention.)

As I was walking the group through the mailing it dawned on me: Although they were some special circumstances that contributed to the overwhelming success of the mailing, it also succeeded because it stuck close to several important principles of direct marketing … building blocks of a successful creative approach you can leverage regardless of the budget involved.

First, some background. The intent of this mailing was to get a group of Nordstrom’s top private label card customers to opt-in to the (then) new Nordstrom Platinum Rewards program.

Because of the vagaries of credit card regulations, we could not simply issue these cards as replacements for the customer’s current private label card, so the offer had to be presented as a positive option.

The criteria used for selecting this group were pretty simple: They were the top 1% of Nordstrom customers, as determined by the amount of their annual spend on their Nordstrom card. Now, this was a pretty elite group … more than a few of these folks spent well in excess of $1 million a year, just at Nordstrom.

While the value proposition was very inviting (get rewarded for the shopping you are already doing) it was EXTEMELY important to Nordstrom’s ongoing financial health not to lose these high spenders’ charges … either to another card or worse yet, another retailer.

By the way, if you think that “deals” don’t hold any appeal for wealthy shoppers, check out the demographics of the typical Costco shopper.

That was a legitimate fear, because, back when this card was launched (it was one of the first co-branded retail cards) many shoppers saw their private label card – their “house account” — as iconic … a badge of their affinity for Nordstrom. Tangible evidence that they were “in the club” and had been for some time.

And some customers, of course, we’re used to saying “Just put it on my account” without showing any plastic. And, at a place like Nordstrom, that’s exactly what happened.

We weren’t 100% sure how receptive customers would be to trading in their Nordstrom “charge plate” … even for a fancy and shiny new Platinum Visa.

So, because we were asking for several changes in behavior, we felt that it was important to proceed very carefully and leverage the best aspects of direct marketing without antagonizing a population who, in their own minds at least, were too savvy to be influenced by a mailing.

Ever notice, by the way, how many participants in a typical direct marketing research project, all of whom were recruited because they were direct response customers, say they are “never” influenced by mail?

Here’s how to do it.

    1. Start with a strong strategy. Tie everything back to it.

In developing our approach to this campaign, we started with a simple and direct strategy and judged every creative decision on how well it reflected: We are not marketing a credit card … we are presenting a gift.

Once we had that nailed down, everything else followed.

    2. Rise above …

From the moment the customer first saw this mailing, we wanted to immediately pre-empt any potential perception that this was another piece of “junk mail”?

Slide1
Yes, I know most of us in the DM world hate the “J Word”. But let’s be honest … a lot of it is junk. So remember:

If you don’t BREAK THROUGH the clutter, you ARE the clutter.

By the way, when you have the budget, and the right offer, a dimensional mailing is a really good option, particularly when immediate ROI is not the primary consideration. I’ve had tremendous success in using boxes, tubes and other dimensionals over the years

    3. Manage expectations from beginning to end

Since this mailing did not leverage an OE teaser (because, really, when was the last time you put a teaser on a gift you mailed to a friends), we wanted to shape expectations as quickly as we could. By tucking a note in a band around the gift box we were able to immediately establish the concept while also pre-empting potential feelings of disappointment that might occur once the recipient realized there wasn’t any actual Nordstrom merchandise inside.

Remember, every creative choice that was made in developing this piece had to link back to the strategy of an upscale gift. The treatment of the letter is a good example: The look of the stationery, the wide margins, even the decision not to print on the back all work to differentiate this from any typical DM letter.

Slide1

The reply device and return envelope complete the impression of exclusivity and specialness. Note that the reply is a fold-over RSVP on heavy stock, not a free-standing insert or perf-off reply … and that the reply envelope is pre-stamped (a sure first way to increase response, by the way.)

    4. Invest Wisely

Yes, this was an expensive mailing. Several dollars per piece, plus postage. You never want to throw money away, but you do want to invest intelligently … putting your DM budget where it is most likely to deliver strong ROI.

Let’s do a little back of the envelope math.

Assume a mailing of 20,000 at $3 per piece. That’s an investment of $60,000.
Now imagine that each customer who opted-in spent an average of $12,000 in the first year. ($1,000 a month was a modest estimate for this group.)

At 10% response:

Cost: $60,000
First-year spending: $24 million

Of course that’s just the amount the consumer spent, not the revenue from their account, and the additional interchange income from the non-Nordstrom Visa purchases. But even so, the math gets pretty favorable, pretty quickly.

At 35% response:

Cost: $60,000
First-year spend: $84 million

Did we know that this was going to get almost 40% response? Of course not.
What we DID know was that this audience was worth the investment. And while there was always some pressure to use a less expensive carrier or to eliminate some of the “nice but not essential” elements like the note or the belly-band, at the end of the day I’m glad we didn’t. And I think the client was, too.

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