Introduction to Mail Planning

by Bill Ruppert

Who to mail? How often to mail them? Does including a BRE increase response? Is the new cover better than the old? Coming up with the answers to questions like these is a key part of running your business. Great mail planning provides the information you need to answer these questions and is a key to success in Direct Marketing.

Over the course of the next year, I will present a series of articles on mail planning that I hope you will find useful. This first installment discusses what a mail plan is and some issues affecting the mail planning process.

What is a Mail Plan? Why have one?

The mail plan shows the mailings that are to be done for a period of time, typically covering a year.

The mail plan is critical for sales forecasting and budgeting. When updated with actual results, it becomes an important document for building future mail plans. It is also very important for catalog production planning.

Figure 1 shows a small part of sample mail plan. To save space, only the most important columns are shown. Some columns left out include key code, prospecting list cost, total contribution, and sales per piece.

Here is an Excel spreadsheet showing the small example with all columns:
Sample Mail Plan Spreadsheet (.xls, 22k)

The most important pieces of information are the mail date, the segments or list being mailed, the quantity, and the piece being mailed. The mail plan is also a key part of the sales forecast showing the forecasted response rate, average order size, and sales.

This fragment of an imaginary mail plan shows the "very best" house segments. As one might expect, the results are very good!

Figure 1. Sample Mail Plan Fragment
Segment Mail Qty Orders Sales %Pull Avg $/Order CPM Contrib Per Piece Contrib Per Order
Sub Total Best House 9,475 1,120 $260,536 11.8% $233 $615 $9.82 $83.10
0-12mo 2+x $201+ 3,058 474 $129,402 15.5% $273 $615 $15.45 $99.67
0-12mo 2+x $101-200 2,706 276 $41,952 10.2% $152 $615 $5.27 $51.67
12-24mo 2+x $201+ 1,717 211 $56,970 12.3% $270 $615 $11.98 $97.49
12-24mo 2+x $101-200 1,087 89 $13,172 8.2% $148 $615 $3.98 $48.67
25-36 2+x $201+ 907 70 $19,040 7.7% $272 $615 $7.35 $95.29

Of course, the mail planning spreadsheet looks very similar to a mail results spreadsheet where forecasted numbers are replaced with the actual results.

Strategic and Tactical Mail Planning

Mail planning has strategic and tactical elements. Strategic mail planning begins with management looking at the previous period's results and making some key decisions. Should we spend more or less on house mailings? Should we spend more or less on prospecting? How much, roughly? What kind of pieces should we mail? How often should we mail them? What major tests should we run?

These decisions are used to determine how much money to invest in each house segment by specifying the number and kinds of pieces the segment is to receive, as well as the overall level of prospecting activity.

This is the input into tactical mail planning where the exact details of the plan are worked out - what dates to mail, what segments to mail on each date, what prospecting lists to test, retest or roll out.

The forecast generated by this process may well trigger revisions in the higher level decisions, and another planning cycle is executed.

House and Prospecting Planning

The goal for the house mailings is to maximize the profits that support the entire operation.

The goal for prospecting is to gain as many new customers as possible at the determined acceptable cost per customer.

Given these different goals, it is not surprising that planning house mailings is much different than planning prospecting mailings. Future articles will explore both of these in detail.

Seasonal and Non-Seasonal Businesses

I have worked with both seasonal businesses, such as holiday greeting cards, and non-seasonal businesses, such as advertising specialty, office supplies, and safety products.

While these businesses are very different operationally, they are not so dissimilar from the perspective of mail planning. Nevertheless, there are some important differences that I will point out as needed. And there are important lessons found in seasonal businesses that can be applied to non-seasonal catalogs as well.

The Key to Creating a Mail Plan - Historical Data

The lack of historical mailing results is the biggest problem that I have had to face as a consultant helping businesses with mail planning.

The next mail plan is always based on the last plan, and especially on the results from that plan. Building a mail plan without prior results is a very frustrating exercise in advanced guesswork.

It is essential to segment and key code your mailings, and to capture the key code when orders are placed. Keeping the segments comparable from year to year is also very useful.

Even more detailed data is valuable to have, such as long term item level order history and customer mailing history but these may be beyond the reach of some. At least start keeping carefully coded results.

Steps in Creating a Mail Plan

Here is a summary of the steps in creating a mail plan. Future articles will cover these in more detail.

High Level or Strategic Planning:

  • Determine financial goals.
  • Set the high level mailing parameters described above.
  • Determine the major test goals.
  • Gather data from prior years' mailings.
  • Determine acceptable cost per new customer.
  • Decide on the level of prospecting investment.

Low Level or Tactical Planning:

  • Choose a house file segmentation scheme.
  • Build a matrix showing how many times and what to mail each segment.
  • Choose mail dates.
  • Spread the house mailing matrix over the mail dates.
  • Determine prospecting lists, quantities, and mail dates.

Budget Review:

  • Plug in sales and cost estimates for each line.
  • Compare forecast to financial goal.
  • Revise the plan as necessary.