Test designs for evaluating the effectiveness of mail packs
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Leonard Paas previously worked as a senior consultant at the Database Marketing Centre of Postbank. He worked on issues such as data mining, predictive modelling, controlling data quality, customer segmentation and credit scoring. He is currently working on similar issues at a consulting firm. He is also a PhD candidate at Tilburg University.
Abstract There has been a tremendous increase in the attention paid to interactive direct channels like online call centres and the Internet. Despite declining interest in the literature, direct mail can still be considered an important channel for offering products to consumers. Large investments are made in direct mail and many companies still send out millions of mail packs a year. Many marketers, however, are unaware of the best ways to determine which mail packs get the best response. The latter is the topic of the current paper.
Leonard Paas Tilburg University, Rietlandpark 223. 1019 DV Amsterdam, The Netherlands. e-mail: [email protected]
INTRODUCTION In the 1990s there was a massive increase in the use of direct channels, such as online call centres, direct mail and the Internet. This increase occurred at the expense of personal channels, such as intermediaries, clerks and independent agents, particularly in the financial services sector. The first direct channel that was exploited on a grand scale was direct mail. Early direct mail campaigns can be characterised by their massive size — millions of prospects receiving the same mail pack offering the same product at the same time, via the same message. This started to change when decision makers in companies found that some prospect segments had extremely low response propensities. For example, it is now generally known that shares should not be offered to individuals with few savings and low incomes. Because of their situation they will not acquire the product, regardless of the manner in which the offer is forwarded. Moreover, it was found that certain products were
䉷 Henry Stewart Publications 1350-2328 (2002)
Vol. 9, 2, 163–169
not suitable for marketing via direct mail. For example, in the Netherlands a complex product such as a mortgage is still acquired via personal channels by most consumers. Other observations are that the timing of the offer and the features of the mail pack influence a prospect’s propensity to respond. For example, sending a reminder increases the response rate by 50 per cent. In addition, response rates can be enhanced by including gifts, by offering different ways to respond (by phone, in writing etc.) or even by changing the colour of the mail pack. These insights led to the following factors which influence the success of mail campaigns: — propensity of selected prospects to respond — product characteristics — timing — mail pack characteristics. The last factor is usually considered the least important. It is, however, proposed
Journal of Database Marketing
163
Paas
that this does not mean that the characteristics of the mail pack are of no consequence. To illustrate this the
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