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Direct Mail – It’s Old School, But Still Effective!

We live in an ever expanding multi-channel world. Pharmaceutical brands continue to develop their promotional tool set to include a broader range of digital tactics, including those delivered by trusted third parties, such as Medscape and Physicians Interactive. What continues to surprise me is the extent to which stakeholders are willing to exclude direct mail from the multi-channel mix. Often, the desire is based on anecdotal evidence such as feedback from reps, personal bias against this medium, or pressure to demonstrate thought leadership by trying something more exciting.  Without a doubt, we all have personal experience with specific industries (financial services and telecommunications are two of my favorites) that continue to bombard us with mail, despite years of non-response. In other cases, clients are relying on market research studies that reflect the low importance of direct mail relative to other sources of information, in an effort to justify the elimination of this channel. 

My advice to clients is that they should base their decisions on more than just subjective and/or qualitative observations. As we know, there is often a disconnect between stated preferences and actual behavior. Indeed, Merkle has numerous examples of campaigns in which direct mail not only drove incremental revenue, but did so profitably. While this should not be viewed as evidence that direct mail belongs in every promotion plan for every brand, it does reinforce the importance of test-and-learn strategies that can help with:

  • Identifying the physicians that are responsive to this channel and those who need not receive direct mail
  • Determining whether and how direct mail complements other channels
  • Quantifying the returns   

Recently, a client fielded a well-controlled test that randomly assigned customers to receive either a single communications channel (DM, EM, mobile, etc.) or a specific combination of 2-5 channels for the duration of the campaign. While the ROI figures are still being calculated, the test yielded valuable insights regarding engagement. Most importantly, we established a strong complementary relationship between direct mail and email. In a single channel test, email outperformed direct mail by 27%. When customers received both of these channels together, their engagement rates far exceeded the performance of single-channel deployment.  (See figure below.) 

 

Pharma Graphic

 

The ROI analysis will further seek to establish whether or not the increased customer engagement among the DM+EM segment produced greater levels of incremental revenue that would justify the additional cost of sending direct mail. In other words, if the brand decides that it wants to eliminate direct mail, how much revenue will be left on the table? This leads us to the question of who is engaging with direct mail. Are they high- to medium-value targets that cannot be reached through other means?  Perhaps they are lower-value targets that are best reached through less expensive channels? 

What’s heartening is that more and more brands are recognizing the importance of multi-channel communication and are taking the time to uncover their customers’ stated preferences.  But the learning and insight doesn’t end with market research.  Properly designed, in-market tests provide powerful evidence of actual behavioral preferences, that, leveraged effectively, lead to increased customer satisfaction and financial outcomes!  

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