EDDM Marketing

The EDDM (Every Door Direct Mail) program is an offer from the post office that allows you to send low-cost marketing pieces to a very specific part of the map. I want to talk about why you should use such a thing and how you could use it.

The What

EDDM is a new-ish program that allows you to send direct mail for a very low cost. It’s easy to use for them because there’s less sorting. They hand the package off to the carrier and he takes one to each address on his route.

You don’t need to know addresses. You choose specific postal routes, most of which are around 400 addresses.
You don’t have to deal with a huge minimum; you can do as few as 200 per mailing, or as much as 5,000 per day.
You can choose commercial, residential, or both.

The cost: 14.5 cents per piece. With first class postage at $.45 and bulk rates no lower than $.20 per piece, you can see what a deal this is.

The post office site that describes it all in full detail is here.

The Why

Game retailers like to think of their stores as magnet stores that draw people from halfway across the state. They brag about how Bob stops by faithfully every time he’s in town, even though he lives 3 hours away. They point out Dave, who drives an hour once a week to play Warhammer 40k. They haven’t collected the data that shows that most of their customers live within about 5 miles of their store.

Sure, gamers are loyal. But this kind of thinking is an easy trap to fall into. You look at the most visible customers and ignore the 90% of them who, combined, pay your bills.

This area—the map circle from which you get more than half your customers—is called your primary draw. That’s the richest area for you to target with any traditional media (or online media, if you can target that precisely). For most of us, it’s about five miles. For those in more rural areas, it might be larger. For highly-populated metropolitan areas, it could be less. Knowing what this area is can be vital to your advertising, but most store owners don’t spend the time and effort to calculate it.

The How

Sign up. Go to that USPS url above and sign up for an account.
Choose your message. What do you want to promote? A new store opening? Adding Games Workshop? Magic tournaments?
Design your ad. That’s a huge topic and gets a couple of paragraphs in a bit.
Order your printing. Printing prices vary, but I’ve seen as low as $475 for 10,000 full-color UV coated pieces, including design work.
Choose your target. Start anywhere within your primary draw. Target routes that are “downstream” from you first. That is, customers who pass by you on the way home from work (you are on the right side of the road for that, right?).
Take your materials to the post office. Take your pieces, your instructions, your customer ID number that they gave you when you signed up, and cash or a debit card. They don’t take credit cards.

Ad design is everything. I am not a designer. I’m like the anti-designer, apparently. My ad design attempts generate laughter from my designer friends. Therefore, I will not attempt to advise you on ad design except in the most basic of suggestions that even I can’t get wrong.

Include a call to action. A call to action encourages some type of response from the customer. What do you want them to do? Go to your website? Visit the store? Call? In most cases, you want them to go to the store. Use unambiguous language like “Come by the store.”

Include a deadline. That’s the real reason coupons have expiration dates. Make it soon enough so that the customer won’t forget about it, but give enough time for them to plan. Two weeks is fine. A month is probably too long.

Because EDDM is not very common, your local postmaster might not be familiar with it. Plan on taking extra time at the post office the first time. One of the documents that you print when you do the paperwork has complete instructions for the post office employees.

The Math

Here.
is a spreadsheet I created showing some yummy, delicious math.

The first column is the rate of return. I’ve included figures from 1/100 to 10/100, which would be ridiculously high. Given the factors that favor ads of this type (direct mail, large, colorful pieces, mailed near the store, etc.), you can expect to use figures of 2-3/100. This assumes that your ad doesn’t suck. If your ad design is weak, just don’t bother with the math, because your ad will suck money out of your pocket and you will die poor and miserable.

The second column is the number of pieces. I used 10,000 for each case because that’s the buying unit that gets you the best price. Do not send out all 10,000 at once! What happens if you do get 100 customers coming into the store looking for something that you normally stock 5 deep? You anger your potential customers and have done more harm than good. Meter your mailouts according to your ability to handle the expected return, both in terms of inventory on hand and people at the counter.

The third column is the cost. Because I kept the number of pieces the same in each situation, the cost is the same. If you want to experiment with the figures on a smaller scale, say with 5,000 pieces (and an attendant higher per-unit cost), go ahead.

Next is the average sale. This figure is important. They all are, really, but I need to stress this one because it relies on one of your key abilities to translate bodies into sales in the store. If you have poor salespeople working your counter, this figure will be low. If you have great salespeople working your counter, this figure will be higher. Thus, it’s a key variable in this particular table.

Let’s say that you’re advertising that you’re now carrying Games Workshop, and you want to support this merchandising decision by offering a $30 box for $25. If you upsell nothing with your purchases and just sell the offer on the ad, your average ticket should be exactly $25.

If you sell a couple of paints and brushes with the purchase and boost the discounted sale with some full-priced sales, your average ticket might be $40. It really should be much higher, but I’m using very conservative sales figures for the purpose of this discussion. The last part of the table shows a $50 average ticket for comparison.

The last columns are easy. They multiply out the total earnings from the sales your ad achieved, the gross profit after deducting the cost of goods, and then subtract the cost of the ad campaign for a net effectiveness for the campaign. You’ll notice that I used a 43% gross margin for the CoGS instead of the more common figures of 47% to 50% you can get from distribution. I’m assuming that you offered a discounted rate of up to 20% to encourage a response.

Of course, a full ad campaign would also include your social networking, in-store marketing, possibly manufacturer support, etc. This discussion is just measuring the effectiveness of the EDDM.

As you can see, only in the worst-case scenarios are you losing money on the campaign. In reality, many of these customers will be new customers, and their lifetime expenses will be much higher than the figures generated here (over $2,000 for Magic customers, $1,500 for Games Workshop customers, $2,500 for D&D players, etc.).