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Direct mailings give dealers more bang for their marketing buck

People who see it in their mail boxes call it "junk mail," but dealers who make sales thanks to direct-mail marketing hold it in much higher esteem.

Marketing experts and dealers who use direct mail well, say sending highly targeted messages to a very specific list of potential or current customers is the most cost-effective method of advertising.

Direct mail has a higher cost-per-thousand (people who will see the message) than television, radio or newspaper advertising, but it is interactive and trackable, say's Ty Damon II, vice president and managing director of the Chevrolet account at Campbell-Ewald's CE Communications.

"Direct marketing, because it's targeted, interactive and trackable, allows a dealer to evaluate a customer on a lifetime-value basis," Damon says. "You're not talking about one sale, you're talking about a lifetime of sales."

With leasing as popular as it is, there are many more opportunities to do business with customers, so it's more critical than ever to stay in touch with them. In other words, every, mailing doesn't have to offer cars for sale or lease.

"The interactivity doesn't have to have an immediate response," Damon says, noting that a mailing could invite people six months away from lease expiration to a cocktail party to look over new models. This sort of activity is being called relationship marketing.

The results of a mailing (usually 1-2 percent) are directly trackable, since you start with a list of customers or potential buyers from a certain demographic group and can simply check people in as they visit to compare what you started with to the response. That is impossible with a media buy.

"The reason direct mail is better than television, radio and newspaper advertising is it's the only source that a dealer has to get information into the hands of the people in the exact area they want," says Ben Vetrano, president of Impact Direct Mail in Birmingham, Ala. "With every other form of advertising, you're paying for regional coverage, when you only need certain areas. [With direct mail] he can use a rifle shot rather than a shotgun blast."

Lists can come from a variety of sources. Vehicle registration lists can be obtained from R. L. Polk in Detroit and demographic lists can be purchased from Donnelly Inc. in Chicago. Now, lists are emerging that give credit ratings.

In some states, however, dealers won't be able to get their hands on vehicle registration information. Lists in Georgia, Arkansas, Hawaii, Indiana, Kansas, New Jersey, New Mexico, Oklahoma, Pennsylvania, Rhode Island, Virginia and Washington are completely restricted. In states like Alabama, California, South Carolina, Nevada, Oregon and Connecticut, lists are somewhat restricted.

The cost of a direct mail piece, including the list, printing and postage, can cost between 50 cents and 70 cents each. So, a mailing of 10,000 would cost between $5,000 to $7,000.

The most critical element of the piece is the list, which can cost between $17 and $100 per thousand by itself.

"The more criteria and the more specific you want the list, the more expensive it'll be," says Vetrano. "A credit-worth list gets more expensive because they're getting a better buyer."

So even if a dealer gets a mere 2 percent return on a direct mailing of 10,000, since about 20 percent of all people who walk into a dealership drive away in a new car, some 50 cars could be sold as a result.

"And the return in a rural area is better than in an urban area because they don't see as much direct mail and are more likely to respond," Vetrano adds.

Mark Catron, director of new car sales at Champion Chrysler-Plymouth Jeep-Eagle in Clinton Township, Mich., says he sends about 200,000 direct-mail pieces per month for two stores.

"We get 2 percent into the store, almost on the nose, every sale," says Catron. "And we sell to 7 or 8 percent of all that come in, so that's pretty good."

He says a half-page ad in a newspaper costs $8,000 and a direct mailing with incentives and gifts costs $10,000. "With direct mail we're guaranteed 250 people will walk through the door. You don't get that from the Detroit papers."

A typical Champion direct mail sale will generate about 20 vehicle sales (60 percent new and 40 percent used), Catron says.

"You can custom tailor the direct mailers," he explains. "If you have a large used-car inventory, you can target people who are more likely to buy used cars."

The tailoring can be even more specific, says CE's Damon. He says you might offer potential customers more incentive to buy than current customers, because they need more of a reason to come to the dealership. "Why give someone $1,000 off when $500 will do nicely," Damon asks.

A recent Champion direct mail piece included a voucher worth $1,000 toward the purchase of a used car and $500 toward a new car.

Matt Vazana, sales manager at Tamaroff Nissan in Southfield, Mich., used direct mail recently to advertise a one-day used-car acquisition sale, which asked a mere $29.50 down payment for program cars. He says a typical Tamaroff mailing will go to 5,000 to 7,000 people.

"A 1 percent to 2 percent return on a direct mail sale is successful," Vazana says. "Any more is pretty darned good. But the consumer is so bombarded by direct mail pieces that we don't want to do more than one or two a year."

Direct mail is so critical in this day and age that Woodfield Ford in the Chicago suburb of Schaumburg, Ill., dedicates a full 40 percent of its advertising budget to direct mail.

Damon says the keys to successful direct marketing are the list, the offer and the message.

"You need to get your message to the people who are in the market to buy, that's the kicker," he says.

Impact Direct Mail's Vetrano has even more keys to a good direct mail campaign.

"The envelope has to interest the person enough to open it," he says, adding that many direct mailers like to make the envelope appear to come from the government to make people more likely to open it. "But that's frowned upon and we don't do it.

"Once it's opened you have five to six seconds to capture the attention of the reader," he explains. "You have to give the reader a reason to buy, a reason to buy today and a reason to buy today from that dealer. What that means is a good deal on a car the reader might be interested in buying."

A premium gift or a rebate of some kind often is offered as an incentive. "But a gift has to have a definite perceived value for that customer," Vetrano notes. "For a Cadillac prospect, that would be a piece of crystal or a Cross pen instead of an inexpensive 35 mm camera."

Other direct marketing media include telemarketing, broadcast faxes and to a certain extent, the Internet.

The Internet, says Damon, is a medium that is just starting to be come more directable. "It's hard to say right now (if it ever will be directable)," he says. "It's still defining itself. Now it's a pull medium rather than a push."