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Benjamin: Hello marketers, and welcome back to the MarTech Podcast. This podcast is sponsored by Searchmetrics. Searchmetrics sets the standard for innovation in content and search engine optimization industries. They support businesses who care about understanding how to both use content as a marketing channel, and how to improve their organic rankings in Google. If you're an enterprise level marketer, the Searchmetrics suite of software and services will help you optimize your existing content, help you understand what topics you need to cover next, and how to ensure that your writers produce effective content. There are billions of Google searches happening every day, Searchmetrics gets your stories to the top.
Benjamin: Okay, today we're going to hear from an expert in a marketing channel most people don't associate with technology. Mike Gunderson is the President of the creatively named direct mail service, Gunderson Direct. Mike and his company have provided direct mail services to start ups, SMBs, and enterprise level companies like SoFi, Post Mates, and Square. In the first part of our interview which you'll hear today, Mike is going to walk us through what his company does, who he is, what career experiences led him to start a direct mail agency, and an overview of the industry of direct mail as a whole. Okay, welcome Mike Gunderson to the Mar Tech Podcast.
MIke: Thanks so much, Ben.
Benjamin: It's great to have you hear. Let me start off by asking you, what does your company do?
MIke: Our company focuses on direct mail marketing. So really, trying to get companies into the direct mail channel, and trying to ensure that they have the most exposure possible to their marketing dollars. Direct mail has done a pretty good job of making a comeback over the last couple of years, and we have been very, very busy working with both start ups and Fortune 500 companies in driving direct mail creative marketing through their organization.
Benjamin: Great, tell me about your role at the company.
MIke: Well I'm President of Gunderson Direct. I started this company about 15 years ago. Right now, what I do specifically is really drive the vision, the growth, and the strategy of Gunderson Direct.
Benjamin: So, it's not a coincidence that your last name is Gunderson, and the company is Gunderson Direct then?
MIke: No, back when I started this company 15 years ago, I was not that creative with the name, and I come from a long line of folks that own their own businesses, including my grandfather who named everything Gunderson. So I may have gotten it from him, but essentially I named the company after myself, because that's just what we did.
Benjamin: For what it's worth, I named my company Ben J. Shap, LLC, and the reason for that is because Benjamin Shapiro was already taken by a political commentator, so once you name it, it's there and it's stuck, and you kind of have to live with it now, don't you?
MIke: I agree. I will say that if any young entrepreneurs are out there, not naming the name of your company after yourself, might not be a bad idea. It's a lot more marketable, once you grow it, scale it and sell it.
Benjamin: So walk us through your career, what led you into starting a direct mail company?
MIke: Sure. I started back at Providian Financial, which is one of the largest credit card issuers in the United States, back in 2000. I had a small little corporate job down at Chevron Oil down on Market St. and I wanted to do something a little bit more, and I found a career at Providian. Somebody told me about it, and I went in to interview and they told me I'd be designing mail. And I was kind of blown away by that, I really didn't know what to expect, but I felt that this was kind of a next step in my career. I took it not knowing what to expect, and at the end of the day, I really found it to be an enjoyable medium, and really found it interesting that by combining the science and creative of a graphic design piece, you could drive more performance and interaction with audiences.
Benjamin: So was your background on the creative side prior to working at Providian?
MIke: Yeah it was strictly creative. I was a graphic designer. I've always wanted to do that, and basically found my way at Providian Financial, designing everything from envelopes, to letters, to disclosures and white papers. So it was really a large variety of different components, and I really started understanding all the nuances between, really the copy, the design, the offer, the audiences, and the data that goes behind that to really drive the performance of those campaigns.
Benjamin: Okay so you have a creative background by training. You started working for Providian, which is a financial services company that was creating direct mail. And then what led you from that experience into starting your own company?
MIke: Yeah, well just about two years or two and a half years after I started with Providian, there was some issues with the FCC with Providian Financial, and essentially that whole company kind of imploded, and was bought up and gobbled up by Washington Mutual at the time. And it was about that point where I'd decided to exit the company, and start my own bank.
Benjamin: I've always heard, and I guess I can speak from my own experience, that the creativity comes out of lack of other options. Seems like the job that you had dried up and then you needed to go find work, and ended up going down an entrepreneurial path.
MIke: Yeah, you know it's interesting, I belong to a really great entrepreneurial group called, Entrepreneurs Organization. And I always find that there's a lot of folks that are just born to be entrepreneurs, but I do believe I kind of fell into that role, and was able to kind of make something out of nothing. Even when I was at Providian Financial, there was a lot of side work. I like to do side work and stuff for friends, and I got two little side projects going, and so I think I parlayed that knowledge of kind of a running a little side business into something a little bit more full time, really out of necessity, because essentially I just wasn't getting too many bites at the time on my resume, and finding too many companies that I really wanted to work for.
Benjamin: So when you first started, you're designing logos and direct mail pieces for people, having left the financial sector working at a day job, and now it's, I think you said 15 years later. Tell me how the company has grown, and what's the sort of size and scope of the company that you run now.
MIke: From the first five years I was really starting to build up a base of clients, and I worked with some of the great ones. I was lucky enough to have quite a few marketing managers leave Providian right about the same time I did, and they needed creative support. So they reached out to me, or through out network, and I was able to pick up some work here and there. And then I was able to land some fairly large Fortune 500 clients, including Wells Fargo, and Union Bank, and a couple other large companies, and really got to work on developing direct mail created specifically for a lot of those clients.
MIke: During those first five years, I also worked on everything, because I'm struggling, I'm just trying to make ends meet, and so it's the other logos, and websites, and I learned how to code, and did signage. It really, any graphic design that would come by, I would pick up. And it wasn't until about seven years into my own business where I realized, I think it would be a lot better to just try to focus on something I really loved doing, and while everybody during this time was really chasing the cheese for digital marketing, I was really kind of leaning towards doing more print, and more direct mail design, because I again, really liked the science and the data, and really marrying that with the creative part of graphic design and communication design.
MIke: So, I changed the name from Gunderson Design to Gunderson Direct, and really just changed our whole value proposition to really focus on getting response, and direct mail response in particular. And that single change has really propelled our company to be just a lot stronger, and it's also propelled our growth in the last five years.
Benjamin: So talk to me more about the industry of direct mail. You've been focused on it for, I think you said, was it five to ten years where it's been a specialty? And you mentioned that it is making a comeback. Talk to me about what you've seen in the industry, and why is that channel one that's becoming more valuable to marketers.
MIke: I think that a lot of people got really, really into digital marketing, really coming off of 2002, 2003, and started growing very, very quickly after those years. And at the time, we also were kind of heading into 2008 where we had a big financial crisis and marketing budgets were starting to dry up. So the one thing about direct mail which is kind of hard sometimes, is that it takes a lot of financial support, unlike digital and sending an email, there's quite a bit of extra costs, including printing, postage, and of course, agency service costs.
MIke: So we saw a little bit of a dip, however my company was so small, we were so agile, that the few companies we did work with saw the benefit of working with a smaller agency at the time. We actually grew during the 2008-2009 time period, picking up more work, but maybe just not as big of mailings if you will. At that time too, it's important to note that we really only focused on creative, so really design strategy, copy. Not production and not mail services.
MIke: But what we realized in the last, I would say about seven years, is it's really started to pick up momentum again, as the digital channels start to get more and more saturated, and the cost per account or the cost per acquisition become higher, and higher in some of those digital channels. Direct mail actually has remained fairly flat, and cost per acquisition remained a very good price point compared to a lot of digital. So that's enabled us to continue to grow our direct mail side of our business, bring more folks on board. And it's not just Fortune 500 companies, it's everybody at start ups, it's non-profits.
MIke: We work with an array of consumer and B2B companies to really reach the type of customers that they're really looking for. And direct mail has just been a constant and consistent way of driving those responses to our clients.
Benjamin: So Mike, tell me what are some of the industries that focus on direct mail? Who are some of the categories of clients that you see, both the traditional ones that have been around for a long time, and then the new wave of people that are testing direct mail?
MIke: I think that you're always going to see a big financial sector taking advantage of direct mail. With pre-screened data, for these folks it's really important for them to go out and be able to target clients, or customers that will come back to them, sign up for something, and then being able to approve them. It's super important, not just the lead flow, but the conversion flow of their business. So, that sector's always gonna be important for direct mail. And it's been fantastic for it in the last 15-20 years and beyond.
MIke: But new sectors really coming in now are technology companies and on demand services. These people wanna come in. They wanna be able to reach the type of customers that they're trying to reach, and they wanna be able to have a specific focus message, and give that prospect a little bit of time and enough detail and the materials in order for them to make an informed decision, and then to eventually get them to respond and convert. One thing with direct mail in particular, is that we really can be really targeted, when it comes to the type of product and service that we're trying to sell, and then again by getting them more informed on that direct mail piece, so it's not a banner ad, it's not a quick message. It's not a billboard. It's enough information for them to make an informed decision, drive them to respond, and then have that higher conversion at the end of the day.
MIke: And even from a B2B play, just really driving leads and getting that conversation started with some of these larger SaaS companies, or software as a service companies, or larger business services, it's important to make sure that these folks that are coming, and you're handing them off to sales folks, that they are fairly well informed. They're already up to speed, and you're not re-educating them on what the value proposition of your business is.
Benjamin: So you mentioned a couple of interesting points, I wanna dive in a little bit deeper. Specifically you said, that there's a difference between using direct mail for lead acquisition, and then also for conversion. Tell me some of the use cases where people are trying to drive behaviors that are in different places of the funnel. How do people use direct mail?
MIke: So, the two clear ones are really direct sell versus a lead generation mailer. With lead generation, what we're trying to do is start that conversation. Many times that could be a longer lead funnel or a longer time to close, so what we need to do is get folks to kind of raise their hands, get them to sales people, and let all those sales people start to train those leads long term, for an eventual close down the line. And a lot of times this happens in B2B, where it's just a very, very long conversion. Funnel where there's multiple steps in the process, including contract negotiations and so forth.
MIke: Where there's another, you know know like consumer products where we can send direct mail, put an offer on there, and drive that interaction and that intent to buy. So trying to get them to a website, get them to the offer, get them excited about it, then get them closed. Get it shipped, then it's on its way. So, direct sales versus lead generation, oftentimes can look really, really different as a package, but they have two completely different focuses on what we want that end consumer to do.
Benjamin: So, I understand that direct mail can be used for lead generation, reaching out to someone who the company doesn't already have a relationship with, and it can be used as a conversion generator, somebody that you do have a relationship and you want them to re-engage or basically to get them across the finish line. How do people use direct mail for their existing customers? Are they doing any cross selling, or how does that work?
MIke: That's a great question, and yes is the answer. What we find is if there's a dormant customer, they haven't done any transactions in a while, or if we're trying to cross sell or upsell a particular product within a suite of products, direct mail can be really, really powerful. We know that just based off an infinity relationship, we can get two or three times the response rate just off the fact that these folks know who it's coming from. And I think that, another really great use case is happening right now, is, and I'll go ahead and say, a company called [Pebble Pulse 00:15:08] is doing some really great things around, which is retargeting direct mail. So if you're a mom, and you're going to order some baby clothes, and you're getting busy because your kids are pulling at your leg, you abandon cart, you move on. Within 24 hours, that interaction can be recorded, it can be sent to [Pebble Pulse 00:15:26], who can then turn it around and push it back out to that consumer, with a 20% coupon or something similar.
MIke: So just like re-targeting on a website, you can actually start to re-target on using a direct mail channel. And its so far had very, very good early success, and it seems to be gaining momentum every day.
Benjamin: That's really interesting, so you can use direct mail not only as a lead acquisition, as a conversion driver, but also as a re-targeting tool. I'm interested in hearing a little bit from you, about the targeting of direct mail. Tell me about the technologies that go behind figuring out who your direct mail should be sent to.
MIke: So, really a lot of the technology has been around for a very long time, it's just getting a lot more sophisticated. So, a couple of things we make sure we like to uncover, especially when we're doing direct mail for the first time for our client, is figure out what our current customer base, and from that current customer base is their data we can use. A couple examples are things like, look alike models and cloning models. We utilize those with very, very high accuracy and with very good results. Then of course, once they have some mail out in market, and they start to receive those responses, we like to then couple that cloning model with a response model, which just enhances that targeting even more.
MIke: And my goal here is to not just send everybody a piece of direct mail, and it's not a spray and pray method. At Gunderson Direct, we're very cognizant of the fact that people don't want junk mail, and we always say to our clients like, "We're not in the business of junk mail." We don't ever wanna think that way. What we wanna make sure is that your product and your service is highly relevant to that target, and that it's something that they're truly interested in. Does that mean that they're all gonna respond? Absolutely not, but at least if we're getting close, we're not bugging them with stuff they don't want. Hopefully the stuff we're sending them is relevant.
MIke: And a couple other data sources we like to tap into are co-op and transactional data bases. We're able to actually take that skew level of products that like folks have bought, and then be able to build a model based on that, and then use that for acquisition and for prospecting. That's been super successful with a lot of our consumer products. Specialty and prescreened lists as I mentioned earlier. Prescreened lists as I mentioned earlier. Prescreened's fantastic for any credit product that you might have. If you're looking to get folks in the door that you can actually qualify, prescreened data is the only way to go. Specialty data, such as magazine lists, and other vertical lists that might be relevant to those products might be super helpful.
Benjamin: When you say magazine lists, is that, you know I am a subscriber to Gold Digest, and then you can figure out everybody who is interested in golf based on that subscription? Is that data available?
MIke: That's absolutely right, so it can get a little bit more expensive, especially as it becomes a little bit more refined. And people out there might be saying, "Magazines, who's doing magazines anymore?" I think that's actually a really good point, but there's still these subscriber lists out there. And they could be through a website subscription, it could be through other type of subscription services, but ideally that's exactly right what it is. I have an interest or affinity towards something, and I'm able to tap into that as a marketer and be able to send you relevant products and services, based on that affinity.
Benjamin: So what I'm hearing is, the same targeting criteria that people use for their digital display ads, mostly what I think of for Facebook advertising, you can look at household income, you can look at demographics, but then you can also use an algorithm to use a like audience, and figure out who's most likely to convert using a direct mail piece.
MIke: That is exactly right. In fact, when we talk about cloning models, we often reference Facebook because it's the exact same process. It's simply uploading your customer list into something and then getting attributes from those customers and then being able to match those attributes with a compiled audience. And that's exactly what we do.
MIke: One other really successful way to target folks is life event data, and trigger data. So new mover data, new moms, people have just been married, people who have just been divorced. These types of lists can be really, really great for all kinds of retailers and marketers, because they're able to pinpoint certain life stages within those prospects, and be able to send them real event products and services.
Benjamin: So where does that data come from? How do you know when someone gets divorced or has a baby?
MIke: A lot of it is local, and list providers are out there scraping that data. But new movers is an easy one, so whenever you move from one house to another, you put in an NCOA, which is a National Change of Address to the US Post Office, and once that's done, that is now public record. Compilers go in, they grab that public record, and that is why you receive a 25% discount coupon from Bed, Bath, and Beyond when you move to your next apartment or home.
Benjamin: So Bed, Bath, and Beyond, looking at national mover's data base to use direct mail to re-engage you, when you need a new bed cover.
MIke: That's correct.
Benjamin: Great. That wraps up this episode of the Mar Tech Podcast. Thanks to Mike Gunderson for joining us. In part two of this interview, which we'll publish later this week, Mike is going to walk us through some best practices for testing direct mail campaigns, and tell us how Gunderson Direct thinks about customer segmentation, their products, and the methodology of measurement for direct mail. If you can't wait until the next episode and would like to learn more about Gunderson Direct and direct mail, go to gundersondirect.com.
Benjamin: A special thanks to Searchmetrics for sponsoring this podcast. If you're looking to grow your online presence, go to searchmetrics.com to request a free tour of their platform. If you'd like to read the transcript of this podcast, we've published it on our website, martechpod.com. If you're a subscriber to the Mar Tech Podcast, thank you very much. We want you to feel like you're a member of our community, so if you ever have any questions, comments, or would like to be a guest on the show, feel free to reach out to me directly at email@example.com. You can also reach us on Twitter or LinkedIn. Our tag is @BenJShapLLC. B-E-N-J-S-H-A-P-L-L-C. Also if you're feeling very generous, we'd love you to leave us a review in the iTunes store.
Benjamin: If you haven't subscribed yet, and you want a weekly stream of marketing and technology knowledge in your podcast feed, in addition to part two of this episode with Mike Gunderson, we've got some other great episodes lined up for the next few weeks. if you're interested in learning about topics like paid social, growth hacking, B2B marketing, go ahead and hit that subscribe button in your podcast feed.
Benjamin: Okay, that's all for today, but until next time, my advice is to just focus on keeping your customers happy.
Benjamin: Hello marketers and welcome back to the MarTech Podcast. This podcast is sponsored by Searchmetrics. Searchmetrics sets the standard for innovation in the content and search engine optimization industries. They support businesses who care about understanding both how to use content as a marketing channel and how to improve their organic ranking in Google.
Benjamin: If you're an Enterprise-level marketer, the Searchmetrics' suite of software and services will help you optimize your existing content, understand what topics you need to cover next, and how to ensure that your writers produce effective content. There are billions of Google searches happening every day. Searchmetrics gets your stories to the top.
Benjamin: Okay, today we're going to finish up our conversation with Mike Gunderson, who is the President of the creatively-named direct mail service, Gunderson Direct. Mike and his company have provided direct mail services to startups, SMBs, and Enterprise-scale technology companies like Sofi, Postmates, and Square.
Benjamin: In our last episode, Mike walked us through an overview of the direct mail industry and how he ended up running a direct mail agency. If you missed that episode, I highly recommend that you give it a listen. That said, in this episode, Mike is going to walk us through some best practices that you can apply if you are thinking about testing direct mail as a marketing channel and explains how his company provides and evaluates the services they provide to their customers. Here's the second part of our interview with Mike Gunderson.
Benjamin: Okay. So, Mike, welcome back. It's great to have you here again. In our last conversation, we talked a little bit about targeting. But what I'd like to understand from you is, outside of understanding the triggers and events where you can send direct mail, what are some of the best ways to get your mail to the right person, with the right message, in the right format?
Mike: Well first, thanks again, Ben, for having me back. I think that that's a very complex question but I think it's really understanding what our customers' goals are, really understanding who those audiences are or who they might be, and then making sure that we do our job in making sure that that targeting is on point so that those offers, that creative, that product is relevant for that particular individual.
Benjamin: So when a new customer comes in to you and they haven't used direct mail, what's the process that you apply to educate them on best practices?
Mike: I think one of the biggest things is, when we put together a proposal for our clients, sometimes there's a little bit of a sticker shock there. They often want to come in at a $5,000 or $10,000 buy-in to try to figure out if it works. And then, of course, they're always like, well then we'll scale however much it takes.
Mike: But in our experience, when we bring on new customers, we really need them to think a little bit bigger when dipping their toe into the direct mail waters. Because it is quite a bit of a science to really figure out who those customers are and how they're going to respond to different products, to different services, to different messages, offers, and formats, it's really, really important that we test and we aggressively test during the first couple drops of their campaign.
Mike: What we try to get folks to think about is, let's try to think about a 50,000 to 100,000 of quantity test audience to start. That allows us to put in some testing around targeting, lists and targeting, around offers and around formats, so that we can get a read on what that campaign is doing and be able to start rolling that out at a much higher and more efficient quantity in order for them to get the most out of their direct marketing campaign.
Benjamin: It's a logical benchmark. When I think about digital advertising, which is something I'm a little bit more familiar with, when somebody asks me how do I get started with Facebook advertising or with AdWords, you can start getting data for pennies on the dollar. The issue is to get enough data to really be able to make conclusions about whether a channel works or not, you need tens of thousands, if not hundreds of thousands of impressions, and that goes with your channel as well.
Mike: That's correct. In fact, what we're trying to do is educate our clients as much as possible. If a client comes to me and says, hey I have a CAC or a CPA of $50, quite frankly, that's probably not going to be a good use of direct mail marketing dollars. Knowing that we're only going to get about a half percent to a one percent on prospect mail, and depending on how great your product is, how good your offer is and how good your targeting is, being able to convert 20, 30, 50, 60% of those customers, that's a lot of money to spend in order to try to get a CAC of under fifty bucks.
Mike: So we've put together an ROI calculator on our website and it sounds fairly simple but it has actually helped inform our clients or prospects to becoming clients of Gunderson Direct early on. And it's been very helpful to say, is this a yay or nay on direct mail? Is this something that I can actually start, grow, and scale? And if so, can Gunderson Direct help me get there?
Mike: So we just try to get our clients focused on higher budget amounts at the beginning and I can tell you that the ones who do that and the ones that we optimize for and the ones that we have better success with, will then scale those campaigns considerably over the course of three, six, nine, twelve months.
Benjamin: So what's the reason why the entry point for direct mail is higher than, say, a digital channel?
Mike: I'd say the biggest reason is production. So printing on paper and postage. Even at scale, whether I'm doing 20,000 or whether I'm doing two million, postage is going to run between 22 cents and 28 cents. And it doesn't really fluctuate beyond that too much. There's things like saturation mail. There's EDDM, Every Door Direct Mail, that can be a lot less expensive to mail but that's more of using a spray and pray method and it doesn't allow for the kind of targeting and the type of analysis that you're going to want to perform on that direct mail later.
Mike: So if you're doing pure prospecting, USPS presort standard is the way we want to go and that's going to run you anywhere between 22 cents and 28 cents.
Benjamin: So essentially every piece is direct mail. You have to pay for the stamp, there's no getting around that. And then your production costs, it sounds like those go down at scale to the point where it makes more sense.
Mike: Well and that's the other reason where, if I can even get 20 or 30 thousand dollars more, so say the client says, hey I got a $20,000 budget. If I can bump that to $30,000, I can actually get quite a bit more mail out the door for that money because my agency services go way down, right? At the end of the day, the more quantity you have, the less the cost per piece on agency services, the creative fees is going to be. And then if we can scale and bulk that up a little bit, we're going to get way more efficient when it comes to production and that enables us to then drop the cost per piece down for the production aspect of the campaign. The only one again that doesn't really see a reduction is that postage cost and that will always be immutable and it always stays the same as we start to scale the program.
Benjamin: You gotta pay for the stamp but the more creative you produce, the less expensive it gets per piece on the agency side and on the production side.
Benjamin: Okay. So talk to me about the best practices for creative production and for the format of direct mail. What's the different between sending somebody an enveloped letter and a postcard?
Mike: I think that's a great question and we get it a lot. I would say that on a postcard what works the best is affinity to, say, that merchant or that business. So say if you've shopped at a retailer in the last three or four months and you've received a postcard with a 20% discount on similar items that you bought, that's a really great vehicle. Visually, that's stunning. It gets your attention in the mailbox. It's something that you can easily pull out and bring to a retailer later or redeem online. A postcard works really well in that aspect.
Mike: But where it becomes a little more difficult is when you have no relationship with a customer and you maybe don't have a sexy, shiny object to show on the outside of an envelope. Then that's where we find stealth or blind envelopes work really, really well. It's not really meant to trick a consumer into opening the envelope, although there is a little bit of deception there and it does get that consumer to open the envelope and find out what's inside.
Mike: Our goal is, if we do end up going with a stealth or a blind envelope in order to get that customer to open it, that making sure that that message is relevant to them. Making sure that the copy and the visuals catch their attention and get them to read more throughout the piece. And at the end of the day, make sure that those calls to action are as strong as possible to drive them sooner and convert them sooner so that we can see higher ROIs a lot faster versus other channels.
Benjamin: So if you're marketing to a customer that you already have a relationship with or a lead that you already have a relationship, big product imagery, remind them of how big and beautiful your brand is, and if you're doing lead acquisition or reaching out to someone new, the element of mystery helps create that initial impression.
Mike: Yeah, I think that that's a good call. One thing that I would say about pure acquisition mail, though, is if you have a widget or you have something that's really targeted, a good example is maybe somebody who has a little bit lower than normal FICO score and they are looking to get into a credit product or some sort of debt consolidation or something like that, that is something you could actually put on the outside of the envelope and get them to take action. Credit card mailers as zero percent consolidate, these types of messages are still very popular in the mail, especially if you have more detailed data about those prospects.
Benjamin: So essentially there's a call and answer effect when you know you're very targeted to someone that has a specific problem.
Mike: That's right. I always say, if we're going to do anything promotional on the envelope, it's gotta have just a kick-ass offer, something that's really going to entice them to take action or it's going to be so perfectly targeted to somebody's need to solve that problem, that that then will also be a really good candidate for a promotional envelope.
Mike: Other than that, we try to stay with a lot of the B2B that we do 'cause we have to get through the gatekeeper, with that we just try to stay a little bit more official. Try to get it to the right people, get them to open it, and again, try to have relevant messaging to get them to take action.
Benjamin: So talk to me about the evaluation component. How do people measure the ROI of these campaigns?
Mike: I think that's an important question and channel attribution is a really, really important topic. Many of my marketers right now are finding fairly large challenges in really figuring out that channel attribution, what those attribution models might look like. So we really try to push our clients into figuring out the best ways to measure their direct mail campaigns right at the very, very start. That can be everything from a drop-down box on a lead gen form that says, how did you hear about us? To unique offer codes that actually tie back to the actual unique record that we mail, to even just generic offer codes, vanity URLs, and purls, which are personal URLs. All these can help tie the attribution back to the direct mail campaign and be able to then see the direct mail was successful.
Mike: The main way that we actually match back consumers to the direct mail program is a match back analysis report. And that's where we take the backend file that we mailed and then we bump that up against all the leads and all the conversions that they may have seen during the promotional period. And then once we do that, we match it back. We're able then to match it based on what packages they mailed, what offers they mailed, what audiences they mailed and then we're able to then provide an analysis back to them so they can make informed decisions about how to roll out or adjust their next mailing.
Benjamin: So what you're saying is, there is the ability to measure direct response because you're using unique tracking codes or URLs, but there's also the ability for you to look at the entire universe of people that you mailed and count the conversions.
Benjamin: Are you doing AB testing where you're taking people that haven't been exposed to direct mail to try to understand lift?
Mike: Yeah, absolutely. We do hold out testing for a lot of our clients. And essentially, that's just holding out a certain part of that audience that didn't get mail and then if there's leads or conversions that come in during that same period, we're able to see what the direct mail lift is over that hold out sale. And that is actually a great comment and that actually works really, really well. So with fairly close accuracy, we're able to see the attribution of direct mail and the effectiveness of each of those packages individually.
Benjamin: So let me ask you about your conversion metrics and some benchmarks. What are some numbers that somebody who's new to direct mail can think about when they're evaluating the channel in terms of what they might expect from a campaign?
Mike: I would say that here at Gunderson Direct, what we're really responsible is that response rate. And many clients really go straight to conversion and that's their main metric that they really want to take a look at. But what we're responsible for is response rate. So I would say that generally for response rates in both the B2C and the B2B industry range between about a half percent to one percent in prospect mail and about one percent to three percent in house mail or affinity or customer mail. So because of that relationship to that company, consumers have more trust and they have a relationship and therefore respond and convert at a higher rate.
Benjamin: Got it. So basically if you're reaching out to somebody you don't have a relationship or there isn't aware of your brand, half a percent to one percent to engage them, get them to a lead form, get them to raise their hand. And then if you're targeting someone that you already have a relationship, you're looking at one to three percent response rate.
Mike: That's correct.
Mike: Well we have seen in prospect mail higher response rates. A good example is when we built and started the Square program, they were essentially giving away a free credit card reader and that was the ask. That was a direct mail piece that went to a small business owner and said, hey, we're going to give you this free credit card reader, all you have to do is go online and download the app and we're going to send it to you. That had very, very high response rates and had very, very high conversion rates in getting people to download the app and then receiving the credit card reader.
Mike: Where there was some hurt on that is usage, right? So once everybody got it, they thought it was cool but then maybe they didn't use it or maybe the transaction or the interchange rate was too expensive or whatever the reason might be for them to not continue using it long-term. We as an agency don't have any control over that. Our only control is to be able to drive people there, get them to take action, and then the company to put them in their sales funnel and nurture them throughout.
Benjamin: That's more of a product of the offer, being we're gonna give you something of value for free and everyone claims it and then realizes that they don't need the tool, less about the direct mail piece.
Benjamin: So what are some of the best practices or things that people need to think about when they're considering testing best mail against some of their other channel possibilities?
Mike: Well one of the great things about direct mail is that we can actually refine the targeting to get that mail to a specific household or specific person within that household. So if you're trying to build awareness around a product or service, sending a direct mail piece to a relevant prospect is pretty much the best it's going to get.
Mike: Pay-per-click is awesome because people are looking for you. But with direct mail, you're really trying to find people or get them to know about your product or service. So we find it to be very, very effective to really refine that targeting, that messaging, and that offer strategy to get the mail to the people that are going to be the decision-makers and get them to take action.
Benjamin: So talk to me a little bit about your company. What is Gunderson Direct's approach? Why are you different than some of the other direct mail options that are out there?
Mike: One of the things that makes us unique is that we're solely focused on direct mail marketing. I think that there's agencies out there that do direct mail and I think there's a lot that are probably do a decent job at it. But because that's our focus and we're constantly refining and coming up with new ways to reach people, we've really become a leader in direct mail advertising and people are calling us for that reason. We've built a lot of relationships with a lot of different companies and a lot of different marketers over the years, so when they are looking to move jobs or if they're looking to increase sales or conversions within their companies, they start to look at the direct mail channel as being something that's viable for them to meet and exceed those goals.
Benjamin: So if I had to summarize, you specialize in direct mail and that makes you unique. And then on top of that, you have the technical capabilities and all of the targeting criteria that some of the digital ad platforms have as well.
Mike: Yeah, I think that's true. And the other thing is, is we notice when folks are going to get into direct mail they often want to have their in-house creative teams develop it or they have their printer develop it and I think it's important to know that, again, we started as a creative agency that then eventually rolled out data and production services and mail services. Whereas a lot of the people doing direct mail creative now are production houses or printing companies that have said, hey, we should maybe start to offer creative services to try to get more printing. And at the end of the day, they're just not really that great at direct response. So I think from building a company from the ground up, really focused on direct mail, and more importantly response, I think you're getting a leg up when you're hiring an agency like ours and you're investing the kind of dollars it takes to do a meaningful test by having that knowledge and that expertise already on your side so that you're not falling into the pitfalls or the mistakes that you might encounter early on.
Benjamin: So talk to me about your goals for the company. It sounds like you've established a great specialized agency focusing on direct mail. You've built on top of your core competence of design, all of the targeting capabilities. What's next for you?
Mike: One of the cool things about direct mail now that wasn't really there four years ago is, I don't get these weird questioned looks. Like, direct mail? I don't get it. When I speak about direct mail or when I'm at different entrepreneur groups or if I'm at different conferences, I mention direct mail and people are like, oh, yeah. That's interesting, I was actually thinking about doing something like that for our company.
Mike: So it's been a lot easier to sell direct mail to my clients and the solutions of direct mail to my clients in the last two years than it really has been in the last 10 years. So for the goals for this company is we really want to continue that awareness around the effectiveness of direct mail, continue to make direct mail a top marketing channel for our clients.
Mike: Of course just from running a company perspective, I want to make sure that we foster a fantastic work environment for our employees and make sure that they also understand the value that we're bringing to our clients. And then continue to grow our company at a really steady pace and not lose sight of what's most important, which is getting response for our clients.
Benjamin: I think the last question I'll ask you and we ask this to everyone who's on the podcast, what are some of the skills and lessons that you've learned that you'd like to pass on to people that are relatively new in marketing or junior in their career?
Mike: Just from a career perspective, I found working for a large corporation invaluable. In the small amount of time that I was both at Chevron and at Providian Financial, the mentors that I had and the people that I met have carried my career for many years after. I still get calls from folks from that fraternity, from Providian, looking to start a direct mail program at the new company that they're at. So I think that that's really invaluable to really build that core early on and then be able to tap that network long-term.
Mike: And I think from a direct mail perspective, some of my advice would be, don't diss it 'til you've tried it. It's so easy to say, oh direct mail, it's old-school. Nobody's doing that. But the numbers and the data don't lie. I mean, it is a top performing channel for many of my customers and if you take a look at gundersondirect.com you'll see that we have quite a few clients listed there. And these are large, very successful companies that have embraced direct mail marketing as a lead acquisition channel for their marketing.
Mike: One other piece of advice I would say is definitely make sure you have budget to test into this channel effectively. I think an average budget that marketers should really consider is between $50,000 and $100,000. I think that might sound like a lot to a few folks out there, but that's a really realistic budget to get the kind of analysis that you need in order to make long-term decisions.
Benjamin: So it sounds like obviously networking is important. Being at a big company gives you the opportunity to do that. Direct mail is a channel that's been a top-performer for some big companies and small alike, but the budgets to get started are relatively high, 50 to 100 grand.
Benjamin: Before we let you go, anyone you're looking to meet, how can people get in touch with you? Anything we can help you promote?
Mike: I would just say when considering direct mail program, think about Gunderson Direct to do that. We are the leaders. We've been doing this for over 15 years and we can definitely help you out. And I did mention an ROI calculator early on. You can email me directly at firstname.lastname@example.org and I will send you the link to that ROI calculator and you can see if direct mail will be effective for your marketing dollar.
Benjamin: Great. Mike Gunderson, Gunderson Direct. Thank you so much for being on the podcast.
Mike: Hey, thanks a lot, Ben. I appreciate it.
Benjamin: Okay. That wraps up this episode of the MarTech podcast. Thanks to Mike Gunderson for joining us. If you're interested in learning more about Mike and Gunderson Direct, go to gundersondirect.com. A special thanks so Searchmetrics for sponsoring this podcast. If you're looking to grow your online presence, go to searchmetrics.com to request a free tour of their platform.
Benjamin: If you'd like to read the transcript of this podcast, we've published it on our website, martechpod.com. If you're already a subscriber to the MarTech podcast, thank you. We want you to feel like a member of our community, so if you have any questions or comments or if you'd like to be a guest on our show, feel free to reach out to me directly at email@example.com or you could reach us on Linkedin or Twitter. Our handle is @benjshapllc.
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Benjamin: Okay, that's all for today. Thanks again to Mike Gunderson. And until next time, my advice is to just focus on keeping your customers happy.