How Direct Mail Can Lower Your Customer Acquisition Costs

Are you operating at a first-purchase loss? Breakeven? We know tons of brands that are.

It's brutal out there. The CACs are too damn high.

The good news is direct mail can help you slash your CACs and reel in new customers.

Lower CACs? Acquire customers? You read that right: direct mail isn't just for retention.

It can fight against those CACkling their way to the bank, namely, Google.

Big Tech’s (Google’s) Shenanigans Are Making Growth Expensive

Apple’s 2021 iOS updates forever weakened the digital marketing toolkit, and in the process, it became public enemy #1 among digital marketers. 

Thankfully for Apple, Google’s taken over the hate. Recently, Google’s become a much more expensive channel, and Gmail changes have been driving marketers nuts. 

(BTW... Not a topic for this article, but the GA4 launch was a disaster of epic proportions too. C'mon, Google.)

Recent Big Suck #1: Google Search CPCs

Google search CPCs are up by a staggering 19%, which has pushed ad spend up by 17%. This is a significant hike, especially for eCommerce brands that rely heavily on Google for customer acquisition (in other words, everyone). 

And while we hate to bring bad news, it doesn’t look like this trend is set to change anytime in 2024. 

With the upcoming election in the US, things are expected to get even worse in Q3 and Q4 as political campaigns flood the digital ad space, further driving up costs.

So, what can brands do? 

It's time to rethink your marketing mix and explore alternative channels for customer acquisition. The days of relying on Google Ads for acquisition are numbered––you need to diversify your approach to stay ahead in the game.

Recent Big Suck #2: The Impact of Gmail Changes (Lower ROI, Higher Reacquisition Costs)

Enhanced Spam Protection

Gmail's enhanced email filters are increasingly preventing prospective customers from seeing marketing emails, pushing them into the promotions tab or even the spam folder. 

Your carefully crafted messages might never see the light of day, hurting your email marketing ROI.

Current guidelines say that your spam rate must stay below 0.03%. There are many brands that may not pass this test, even ones that may send good emails. (And other variables are at play: sometimes, people report emails out of spite.)

Klaviyo has some best practices to fight spam complaints here.

Easy Unsubscribing

One in four email users relies on Gmail, and it’s the second-most used email client globally. 

But Google’s made that client harder for marketers. 

It's now much easier for users to unsubscribe from emails. Unsubscribing is as easy as opening emails, and Google even encourages users to unsubscribe from emails:

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Takeaways: Google’s ROI + Higher “CRAC”

On Spam: 

More spam reports may reduce email’s efficacy and ROI: “In April 2024, Gmail will begin rejecting a small percentage of emails that do not meet these requirements and will increase the number of rejections over time.” 

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TLDR: Your audience may not even see your messages, reducing the effectiveness and ROI of your email marketing campaigns.

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On Easier Unsubscribing and CRAC: 

The conversation around email unsubscribe rates seems to stop around the unsubscribe numbers themselves and how to send better emails. The bigger problem that we never see covered is customer reacquisition cost. Or as we call it, CRAC.

The fact is, your CAC's probably a lot higher than you want it to be, but it’s even higher than you think. 

You have your initial acquisition cost, but when your customers unsubscribe from your email, SMS, and push notifications, your connection with them is severed. 

You’re left to spend money on non-owned channels to reacquire them.

Many brands don't factor this into their marketing costs.

They end up overspending on marketing and wonder why they’re not as profitable as they think they should be, or why the money in their bank account is quickly running out. 

TLDR: CRAC kills.

How to Lower Customer Acquisition Costs With Direct Mail 

While everyone's inbox is overflowing with emails (many of which go unopened), there's something special about receiving a physical piece of mail.

It stands out, it's tangible, and it can create a more personal connection with your customers.

By allocating some of your budget to direct mail and employing targeted acquisition strategies, you'll lower your customer acquisition costs. 

How? 

Direct mail is a fixed cost per send.

That fixed cost isn't going to change much, either: it takes an act of Congress to increase the price of postage. 

(Congress’s last postage increase was a whopping 2 cents. How much did your Google and Meta ads fluctuate last week?)

And your dollars are put to good use.

Direct mail has 28x the engagement rate of ads and emails, and you can use data to power lookalike audiences, ensuring that your super engaging mailers are sent to people with traits like your VIP customers. 

Plus, direct mail has a certain staying power that digital ads just can't match. A well-designed postcard or brochure can linger on a customer's desk or fridge, keeping your brand top-of-mind for longer.

Compare that to a digital ad, which someone might see for 0.1s.

In short, direct mail is a full-funnel, low-and-predictably-priced strategy.

But let's break it down further.

1. Cold Prospecting 

You can target prospects who share traits with your best customers using lookalike audiences.

By identifying and reaching out to people with similar characteristics to your existing customer base, you increase the likelihood of resonating with your audience and driving conversions.

You can also send direct mail to people based on specific life events and attributes. For example, if your product is aimed at expectant parents, you can tailor your messaging and offers to that group. 

Take Caden Lane, a baby bedding and decor company. They leaned into direct mail for cold prospecting with PostPilot and saw remarkable results.

To fuel growth, they needed to get as many new and expecting parents as possible into the customer pipeline. 

But they also needed to reach families at the right time. With PostPilot, they built a mailing list of 60,000 expecting moms. They sent a postcard that showcased products that would be perfect for their baby’s arrival. 

Their first cold prospecting campaign resulted in a 3.8x ROAS, proving that direct mail is a game-changer for reaching new customers.

2. Retargeting Customers

Changes to iOS and data privacy laws have made life hard for marketers wanting to run retargeting ads, which tack on $ to your CAC. 

Many prospects won’t even see your retargeting ads. Direct mail puts your message directly in customers’ hands, bypassing digital hurdles. 

With PostPilot, you can set specific criteria for targeting site visitors who have shown interest in your products but haven't made a purchase yet. 

SiteMatch™ enables brands to add a pixel to their eCommerce site via Google Tag Manager or the site’s backend. The technology can ID and match 20-40% of anonymous site traffic to a physical address.

Existing customers and visitors who don’t demonstrate valid intent signals are filtered out automatically, boosting acquisitions and performance.

And it really works.

Take Gozney, the beloved outdoor pizza oven brand. They sell higher-priced products, so typically, they see a long consideration phase.

The team decided to send direct mail in the form of Cardalogs™ featuring a few of their products, encouraging those previous visitors to “Give the gift of fire.”  Cardalogs—our reinvention of the catalog—gave them an innovative way to showcase products and offers in a concise, attention-grabbing format.

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As a result, they achieved an impressive 10x+ in ROAS. It’s an effective approach for retargeting, as it keeps your brand top of mind and encourages repeat visits and purchases.

3. Lower Your CRAC

CRAC kills, but it shouldn’t. 

Direct mail can turn expensive customer reacquisition into a standard, low retention cost.

After someone churns from your email/SMS/push notifications, you’re ordinarily $hit out of luck: you’re left to hope that they come back via Google/Meta retargeting at some point, which may cost 49 impressions, 5 clicks, 2 adds-to-cart, and a partridge in a pear tree.

But direct mail laughs at unsubscribes and churn. 

You can still send “churned” customers offers at home, and your CRAC be lowered from 30% of your original CAC to the cost of postage.

With direct mail, what was once a churned customer can simply be a less engaged customer. 

Take Bones Coffee Company, a brand known for selling beans and brews with unique flavors. Any coffee drinker will tell you they’re loyal to their daily rituals (their go-to beans and favorite mug). 

So staying part of their customers’ coffee-drinking rituals is critical for Bones. 

When customers run out of beans, they should come back for more. 

But what if they don’t? 

If a month goes by without the customer returning to the site. Bones Coffee Company knows they need to take steps to win them back.

But what if these same customers have unsubscribed or aren’t on their mailing list? 

Social media ads are pricey. Plus there’s no guarantee anyone will look at them for more than 0.1 seconds. Bones Coffee knew they could end up overspending on lackluster results. 

Enter direct mail. Unlike with social ads the campaign cost was clear upfront. And they could reach customers without worrying about not having their address. 

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PostPilot’s Klaviyo integration and segmenting tools allowed the team to focus on a group of customers that were unlikely to see Bones Coffee promotions elsewhere, so the team could be confident about attribution.

They used the multi-product postcard to call out three new flavors, with the aim of enticing  lapsed fans and demonstrating that there was more for them to discover. 

Within days of the first mailing, the orders began rolling in. 

Just two weeks after going out, the fall flavors campaign had already achieved more than 7.35x ROAS.

Overall, less than two months after Bones sent its first postcard, it was able to attribute more than 1,600 orders to its PostPilot campaigns, each one from a customer who would have otherwise been gone for good.

4. Drive People to Buy In-Store

Direct mail can also juice mass retail as an acquisition channel, at low cost (added bonus: great for keeping retail partners happy). 

Using ShopDrops^TM, you can use geo segmentation to send mail to relevant, hyper-local audiences and drive them to buy at the Target or Walmart (or any other retailer) near them. Using thousands of attributes, our tech identifies new prospects that look just like your best customers.

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For instance, if your ideal in-store customer lives within 15 miles, has a dog, and has particular shopping habits, we can identify them using first-party data. 

Then within days, you can deliver a personalized offer to their mailbox, redeemable at their local store. This strategy works particularly well if you’re rolling out a new product or into a new market. 

5. Complete the Funnel by Retaining Customers

Since we’re here and we already mentioned it, we might as well talk about completing the funnel with direct mail. The short of it is if you can do it with email and/or SMS, you can do it with direct mail:

• Reactivation: Reach out to customers who haven't made a purchase in a while with a special offer or update on what's new with your brand.
• Replenishment reminder: Remind customers when it's time to reorder a product they've purchased in the past.
• Winback: Offer a special incentive to win back customers who haven’t purchased in a while.
• Subscriber reactivation: Drive customers back into your subscription program. 
• Cross-sell: Suggest related products or services that complement what your customer has already purchased.
• VIP: Recognize and reward your most loyal customers with exclusive offers or early access to new products.
• Second purchase: Encourage customers who have made one purchase to make a second one with a special offer.

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For instance, Dr. Squatch, began sending postcards to win back customers who hadn’t ordered in seven to nine months. 

The front was personalized and offered 20% off the next purchase of at least $30. 

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The campaign yielded an impressive 12.66% conversion rate and a ROAS of more than 10x. The best part is that the campaign wasn’t a one-hit wonder. 

Dr. Squatch tested other segments and achieved incredible results.

Customers who hadn’t purchased in months or even years started buying again when they received the brand’s direct mail. People who were subscribed to email but hadn’t opened messages in months also converted, giving that campaign an 10x+ ROAS. 

~1 Week to Lower CAC (and Better Retention)

Direct mail sounds great, but I don’t have time for it.

Not true.

You don't need to learn new skills or spend time testing and iterating. PostPilot is here to take the reins. 

We plan, design, and strategize for you. 

We’ll analyze your data and record videos explaining what we’ve found.

We'll factor in your existing email and SMS strategies to create a complementary system that enhances your overall marketing efforts. All you need to do is approve the materials to be printed, and we'll handle everything else.

Working with PostPilot is almost literally zero lift on your end beyond giving the green light for printing and deployment.

And all of it will happen in around a week.

So, why not give direct mail a shot and see how it can transform your marketing strategy, lower your CAC, and boost your bottom line? 

To learn more about who we are, check out:

• The Nerd Marketing Podcast‍
• (Many more) Direct mail case studies