Do you want to start a direct mail marketing business? If YES, here is a complete guide to starting a direct mail business with NO money and no experience.
Okay, so we have provided you an in-depth sample direct mail business plan template. We also took it further by analyzing and drafting a sample direct mail marketing plan backed up by actionable guerrilla marketing ideas for direct mail companies. In this article, we will be considering all the requirements for starting a direct mail business. So put on your entrepreneurial hat and let’s proceed.
What is a Direct Mail Marketing Business?
If you are planning to start a lucrative business with less start-up capital, then direct mail business is one business you should look into. A direct mail business is defined as the act of using the mail service to deliver your sales pitch directly to a prospective client. Direct mail business is a form of direct marketing that uses mail service to deliver promotional materials to your target audience.
Direct mail has to do with sending a wide variety of marketing materials which include brochures, postcards, catalogues, newsletters and sales letters. Direct mail may be targeted at either a business market or a consumer or both. In some cases, it is often directed to a target geographic or demographic market. It is mostly email sent in bulk although emails can also be sent in smaller quantities.
Why Start a Direct Mail Marketing Business?
Advertising your business through direct mail is one of the most profitable and effective ways to reach out to new and existing clients. Companies usually obtain a mailing list and target their advertisements to specific demographics such as age, gender or income groups.
The direct mail business is unique and different from all other forms of advertising because it allows you to communicate one-on-one with your target audience, unlike other forms of advertising where you are never sure of who is getting your message.
Starting a Direct Mail Marketing Business – A Complete Guide
- Industry Overview
Direct-mail advertising has provided us with a less expensive alternative to conventional advertising outlets like television, radio and magazines. Over the past five years, the increase in employment and consumer spending increased corporate profit margins, which made available extra company cash leading to higher marketing budgets.
Conversely, it caused many clients to increase their advertising budget and expenditures; this, in turn, increased the demand for direct mail services. For example, over the last five years to 2017, the total US advertising expenditures increased at an annual rate of 2.7%, which helps to provide the basis for industry growth.
Shortly after the recession, there was an increase in corporate profit margins which led to an increase in spending on all forms of advertising. As a result of this, revenue for the Direct Mail industry is expected to increase over the next five years.
Over the next five years from 2017 to 2022, revenue in the industry is expected to remain nearly stagnant. However, high rate of consumer spending and rising corporate profit margins are expected to increase advertising expenditures, but competition from outside of the industry is expected to continue to hinder significant revenue growth and profit improvement.
Some marketing efforts focus on internet sales, but the introduction of spam-deleting applications is making it tougher to reach potential customers through e-mail. While the internet was experiencing booming growth in the early 2000s, some survey companies began to predict that direct mail would take a severe downturn. However, with the right techniques and strategies in place, and with a focus on the correct audience, direct mail can still make a positive impact as a marketing campaign.
Starting a Direct Mail Marketing Business – Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who need the services of a direct mail company cut across people and organizations who want to market their products and service to prospective clients all over the world. To clearly define the demographics of your direct mail business, you should have two sets of age group in mind, they are;
- Age group 18 to 34
This group includes young professionals from age 18 to 34. This age group is known to have one the best response rates to direct mail campaigns. A survey has it that age 22 to 34 have the highest response rate to direct mail campaigns. The reason for this can be attributed to the fact that these young professionals and college students and have been flooded with spam mails, thereby making them detest online communication. They see most ads as annoying and impersonal.
- Age group 65 and Up
Those within the age of 65 and older respond well to direct mail advertising. Most elderly people have positive response rates to direct mail campaigns. They are more likely to open their mail thereby making them a good target. They are also a good choice for location targeted mail because they are likely to live at the same location for a long period of time.
Defining demographics solely on gender, age, and income may not be sufficient for direct mail advertising. It is also recommended that you add behavioral segmentation to demographic choices so as to improve direct mail marketing. This has to do with studying people’s purchase behaviour and preferences, engagement in social networking activities and interest in coupons.
List of Niche ideas Within the Direct Mail Business That You Can Specialize in
There is an exhaustive list of niches you can specialize in the direct mail business. This will give you an edge over your competitors. The niches that are within the direct mail business are closely related as they all have to do with getting a database of targeted people for a particular business.
Some of the niche areas of specialization in the direct mail business are as follows;
- Business Mailing Lists
- Consumer Mailing Lists
- Specialty Mailing Lists
- Automotive Mailing Lists
- Healthcare Mailing Lists
- Higher Education Business Mailing Lists
- Insurance Mailing Lists
- Mortgage Lead Mailing Lists
- New Homeowner Mailing Lists
- Real Estate Broker Mailing Lists
- Residential Mailing Lists
- Telemarketing Lists
- Zip Code Mailing Lists
The Level of Competition in the Direct Mail Industry
The level of competition in the direct mail industry depends on the location of the business since all direct mail companies can effectively operate from any part of the world. In the direct mail business, distance is never an issue when competing for clients.
All your clients want is an accurate mailing list with a safe and secured service delivery, hence they are ready to hire your services no matter the part of the world you operate from as long you have a good track record and you can deliver excellent results when it comes to mail gathering and sending of direct mails to groups.
But over and above, there are several direct mail companies scattered all around the United States. So, if you intend to start your own direct mail business in the United States, you will surely meet stiff competition both in the United States and all over the globe.
List of Well – Known Brands in the Direct Mail Industry
In every industry, there are always brands that perform better or are better regarded by the general public than others in that industry. Some of them have been in the industry long enough to have satisfied customers and make a name for themselves. These are some of the leading direct mail companies in the United States of America and also across the globe;
- Modern Postcard
- Print Label and Mail
- Next Day Flyers
- Postcard Builder
- Cactus Mailing
- Mudlick Mail
Before starting a direct mail business, you are expected to do a feasibility study. You will have several factors to consider in order not to fail in this business. One of the most important factors to consider is how to create a unique brand capable of standing out from among other competitors in the industry.
You also need to devise means to get a market share of your business by ensuring that you showcase your unique strength by making it attractive enough for your customers to notice you. You will need to write a comprehensive business plan to know if this business is viable for you or not.
Another thing to consider is how to source for start-up capital. This is very important as most major financial institutions will be more favourably inclined to lend to already established and successful mobile notary businesses than to start-ups. You have to write an exciting business plan that would be able to convince the lending institution to provide capital for your start-up business.
Starting your Direct Mail Company from Scratch vs Buying a Franchise
To start your direct mail business, it would be better to start from the scratch instead of buying a franchise. It is quite easy to start this business from the scratch and make it profitable within a short period of time. You can achieve this without having to leverage on a known brand name. People will patronize your products based on excellent service delivery backed with result, affordability and accessibility as against relying on a franchise.
It is also interesting to note that most of the big and successful direct mail advertising companies around all started from the scratch and they gradually built a robust business brand. It takes hard work, dedication and determination to achieve success.
Possible Threats and Challenges You Will Face When Starting a Direct Mail Company
If you decide to start your own direct mail business today, you would most likely face a major challenge from established direct mail companies offering the same services as yours. The only way you can avoid this challenge is to create a unique niche which would be your selling point within the market.
Some other threats you are likely to face is the introduction of spam removal applications which automatically delete or blacklist your mail. There is hardly anything you can do about that than to remain optimistic that the percentage of people with such app will not be much. Another challenge is the global economic downturn which could affect your clients spending power.
Starting a Direct Mail Marketing Business – Legal Matters
- Best legal entity to use for this type of business
Generally, you have three main legal entities to choose from; either you choose general partnership, limited liability company (LLC), or a sole proprietorship. Ordinarily, the general partnership should have been the ideal legal entity for a small – scale direct mail business especially if you are planning to start with moderate capital.
But if you intend to grow the business and have both corporate and individual clients from all across the United States and beyond, then going for general partnership is not an option for you. Limited Liability Company will be more suitable for you.
Setting up a Limited Liability Company protects you from personal liability. If you suffer financial loss in the business, you will only risk losing the money that you invested into the limited liability company. This is not so for sole proprietorships and general partnerships. LLC is simpler and more flexible to operate as you don’t require a board of directors, shareholders, and other managerial formalities.
Here are some of the factors you need to consider before choosing a legal entity for your direct mail business;
- Limitation of personal liability
- Ease of transferability
- Admission of new owners
- Investors’ expectation
If you critically study the various legal entities available for your direct mail company, you will see that the limited liability company is the most suitable. You can start your business as limited liability company and convert it to a ‘C’ corporation or an ‘S’ corporation in future when you have the plans of going public.
Upgrading your legal entity to a ‘C’ corporation or ‘S’ corporation will give you the chance to further grow your direct mail business so as to compete with major players in the industry; you will be able to generate enough capital for your business from venture capital firms, you will enjoy separate tax structure, and ease of transferability; you will also enjoy flexibility in your management structures.
Catchy Business Name Ideas Suitable for a Direct Mail Company
Generally, when you reach the stage of choosing a name for your business, you are expected that be creative because whatever name you choose will go a long way to create a perception of what your business represents. If you are planning on starting your own direct mail company, below are some catchy names that you can choose from;
- Mail express
- Informatics LLC
- Postcard Express
- DirectAds LLC
- TurnIt Express Mail
Ideally, you won’t be able to operate a business without having some of the basic insurance policies in place. So, you also need to create a budget to cater for insurance policy covers. You could also consult an insurance broker to give you advice on the best and most appropriate insurance policies to choose for your direct mail company.
Here are some of the basic insurance policy covers that you are expected to purchase if you want to start your own direct mail company in the United States of America;
- Health insurance
- Liability insurance
- General insurance
- Workers compensation
- Payment protection insurance
- Overhead expense disability insurance
- Business owner’s policy group insurance
Intellectual Property Protection/Trademark
To successfully run your business, you need to make necessary plans for intellectual property protection/trademark. However, you might not need an intellectual property protection like some other businesses but you are still required to have it to protect your company’s logo and other unique documents important to your business.
To file for intellectual property protection/trademark you should forward your application to the USPTO. The final approval of your trademark will be made by the attorney as required by the USPTO.
Is Professional Certification Needed to Run a Direct Mail Marketing Business?
There are some necessary professional certifications you need to have to effectively run a direct mail business in the United States of America. Here are some of the professional certifications necessary for you to have in order to successfully run your direct mail business;
- Certified Direct Mail Professional (CDMP)
- USPS Certified Mailpiece Design Professional
- MailPro Certification course
- The Mail Design Professional (MDP)
List of Legal Documents You Need to Run a Direct Mail Company
To run any kind of business you will need to get the necessary documentation for that business. In the United States, it is very important that you get the necessary documents in order to successfully run your business in this country. Here are some of the basic legal documents you are expected to have in order to run your own direct mail business legally in the United States of America;
- Business Plan
- Certificate of Incorporation
- Business License and Certification
- Operating Agreement for LLCs
- Non – disclosure Agreement
- Employment Agreement
- Insurance Policy
- Consulting contract documents
- Apostille (If you plan to operate your business beyond the United States of America)
- VAT Registration
- Federal tax identification number
Financing your Direct Mail Business
Every entrepreneur has a great plan on how he/she wants the business to thrive, but this wonderful plan will not be actualized without the necessary financial backing. One of the first tasks to carry out in order to ensure a solid financial backing is to write a good business plan.
With a good business plan document in place, you may not have to labor much to convince your bank, investors, friends and family to invest in your business. Here are some options to explore when sourcing for start – up capital for your direct mail company;
- Raising money from personal savings
- Raising money from investors and business partners
- Selling of shares to interested investors
- Raising money from sale of personal stocks and properties
- Source for soft loans from your family members and your friends
- Applying for loan from your bank and other financial lending institution
- Pitching your business idea and applying for business grants from donor organizations
Choosing a Suitable Location for your Direct Mail Marketing Business
Every business you choose to venture into has its own challenges, so also is the direct mail business. However, you can avoid some challenges like the choice of location by choosing the suitable location for your business. Your business location is crucial to the growth and success of your business.
You should rent or lease your office facility in a visible location. Look for a location that clients can easily access you. You should also note that it is expensive to get a facility in a good location; hence you should allocate enough funds in your budget for leasing/renting. You could consult an estate agent who would help you get the right facility for your business.
Starting a Direct Mail Marketing Business – Technical and Manpower Details
The direct mail business is a profitable and highly competitive industry. To thrive in this business, you need to have the necessary professional certifications as it will give you an edge by enabling you to offer quality service to your clients. The cost of these certifications should be included in your business plan so as to raise sufficient capital.
Apart from the technical angle of the business, the manpower aspect is equally important. You need to hire the services of qualified and competent staff to work with you as a team to achieve your business goals. The overall success of this business rests on the competence of the staff at your disposal. Ideally, you will need about 3-5 competent and qualified staff to start up this business on a small scale.
The Service Delivery Process of a Direct Mail Company
The service delivery process of the direct mail business is greatly influenced by your clients’ needs at a particular time. The processes involved in a direct mail business vary depending on what your clients want. It could be providing them with a detailed email database of people in the area of specialization they intend to market, to helping them to create content for their advert, to sending bulk email to the respondent, to monitoring responses.
All this has to be negotiated while you ensure you are satisfied with the payment package. Other process revolves around client satisfaction and providing other essential services.
Starting a Direct Mail Marketing Business – The Marketing Plan
- Marketing ideas and Strategies
As a direct mail company, you would have to do a lot to gain the trust of corporate clients who give you contracts to undertake. You would need to prove your worth over and over. So, if you have plans to start your own direct mail company, it will pay you to first gain adequate knowledge about the industry you intend to serve.
So, when you are drafting your marketing plans and strategies for your direct mail company, ensure that you create a compelling personal and company profile. Apart from stating your qualifications and experience, it is equally important to state in practical terms what you have been able to achieve in the past in relation to direct mail services, and the various organizations you have worked for in time past.
This will go a long way to boost your chances in the market place when sourcing for direct mail contracts. Here are ways you can market your direct mail service;
- Promptly place your bid for direct mail contract from corporate organizations
- Send introductory letters along with your brochure to all the corporate organizations and small scale businesses in the United States
- Advertise your business in magazines (relevant to your business), radio and TV stations
- List your business on yellow pages
- Work within your client’s budget by creating different packages for different category of clients according to their pocket and status
- Promote your business with the use of the internet
- Get marketing and business development executives to help you carry out direct marketing
Strategies to Boost Your Starting a Direct Mail Business Brand Awareness and Create Your Corporate Identity
One of your goals in this business should be how you will boost your brand awareness and how to showcase your corporate identity; you should also be concerned about people’s perception of your business. One of the secrets of larger and well-established companies is that they invest a lot of money yearly to boost their brand awareness and to continue to portray their corporate identity in the right perspective to the public.
If you also intend to grow your direct mail business beyond your locality to become a national and international brand, then you need to be ready to spend money on promotion and advertisement of your brand.
In promoting your direct mail brand, you should make use of the print media, electronic media, and the internet. It is more effective in terms of reach and cost to use the internet and various social media platforms to promote your brand.
Another strategy to promote your brand is to advertise in publications that your potential clients are likely to read, sponsor relevant community-based programs, TV and radio programs. Here are some ways you can boost your brand in order to promote and advertise your business;
- Take advantage of word of mouth publicity from your loyal customers
- Promote your business via the internet and social media platforms like Facebook, Instagram, YouTube, Twitter, LinkedIn, Google+ and other platforms to promote your business
- Place your company’s website in major search engines such as Yahoo.com, and Google.com
- Get a search engine placement specialist to help you get a high ranking on these search engine sites.
- Place classified ads to invite businesses to send for more information
- Advertise in publications that your potential clients are likely to read
- Distribute your handbills and fliers in target areas around your neighbourhood
- Contact corporate organizations and small businesses informing them of your organization and the services you offer