Variable data projects are more expensive than traditional direct mail, so ignoring the basics can cost you. Disasters can be avoided if you keep your eye on three components that you're already familiar with in effective direct mail: data, testing and ROI.
Find Data Where It Hides
Where does a direct marketing manager begin in designing a VDP campaign — with the data or with the creative content?
Forest Wathen, prepress manager at EU Services, notes that with traditional direct mail, typically the creative drives the data. With VDP we're seeing a shift. "The question for direct marketing managers becomes, 'What can I do with what I have? What data can I segment or append to drive the creative content to improve responses?'"
Begin by segmenting your list by information that is almost certainly in your database: name, geographic location, customer or donor segment, acquisition date, and purchase history.
Data appending helps you build on what you have. The Helen Woodward Animal Center, a no-kill shelter that provides animal adoption for all types of pets in California, took data they had on their current donors and sent it out to be analyzed. The shelter was looking to identify unique characteristics among donors.
Now that they knew more about their own donors, Helen Woodward then used this information to find people like their current donors on new lists. Information from other sources was set up to match such donor demographics as average age, profession, education level, home and asset average, and contribution information.
From there, the animal center looked at lists with similar traits and identified some they would never have thought of using. They purchased three lists outside their normal scope. That meant fresh contacts not necessarily common to other animal organizations, which, in turn, reduced over-saturation.
Start Small and Test
If you're new to VDP, it's important to start small and test. Work with your direct marketing production company to design a test run that will determine whether or not to roll out a larger project.
Consider testing not only aspects of the VDP campaign itself, but also a test against a control group of a conventional direct mail campaign. It's much better to find out at this point whether your test provides ROI that makes the additional investment feasible.
With the higher per-unit cost of VDP pieces, breakeven points for response rates are inherently higher, so also examine your number of mailing cycles and number of pieces with a view toward tweaking those elements of the campaign.
Calculate Return on Investment
Though they generate better ROI, VDP projects are more complex and cost more than generic non-personalized direct mail. Undertake a standard cost-benefit analysis to ensure that the potential ROI justifies a VDP investment [Note: The ROI is the number generated when you divide the gross receipts from the mailing by the total cost of the mailing].
Remember, depending on your campaign, ROI is not the only measure of success. Projects launched to raise brand awareness, for example, may not show tangible results for some time to come, if ever. ROI analysis is, therefore, well suited to many types of campaigns, but should not be considered the be-all and end-all of your direct marketing project.
Crystal Uppercue is the marketing manager for EU Services, a 330-employee direct marketing production facility based in Rockville, MD. Download EU's free white paper, "A Marketing Manager's Guide to VDP Project Management," at www.euservices.com. You can reach her at cuppercue@euservices.com.
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