Exploring the World of Direct Mail Marketing

Transcript lightly edited for spelling and punctuation. The conversation is unabridged.

Mark Evans: Hi. It's Mark Evans, and you're listening to Marketing Spark, which features conversations with entrepreneurs and marketers about business, sales, and, of course, marketing. Many brands are heavily invested in direct mail to attract and engage prospects and customers. Direct mail can be personalized, tracked, drive online and offline sales, and support the entire customer journey. Dave Fink, the CEO and founder of Postie, lives and breathes in this world as a direct mail expert. In today's episode of Marketing Spark, we're gonna take a deep dive into direct mail marketing and how it plays with social media and other platforms. Welcome to Marketing Spark.

Dave Fink: Thanks for having me.

Mark Evans: I've listened to a bunch of other podcast interviews that you've given, and, obviously, the sexy part of your story is your involvement with Dollar Shave Club. Everyone knows how successful that was and how marketing played such an amazing role in driving the brand and ultimately billion-dollar acquisition by Unilever. Walk me through your journey with Dollar Shave Club, which I guess started with an incubator or an accelerator called Science Inc.

Dave Fink: That's correct. Look. It is a fascinating story, and I've never seen anything quite like it before. That entire story really unfolded in four years, which I guess Internet time is maybe eight years or ten years. But you think of an entrepreneur starting with an idea, a category, a product or service they wanna disrupt or improve and bring that to market, drive awareness, become really a household name globally, scare the pants off of a $50 billion incumbent and then get acquired for a 10-figure-plus outcome that doesn't happen very often. My involvement, yeah, I got to see it from the start. So I was a partner at a tech studio in Santa Monica called Science, and we had a focus on marketing technology investments and business creation as well as direct-to-consumer brands. So now I think we're all buying from brands that were created online in a direct-to-consumer way, but it's still pretty early back in I think this is 2011. And Mike Dubin, who is a first-time entrepreneur but a very experienced, I think, creative mind, had this idea to go right at the men's grooming sector starting with razors, which I think everybody said considered that business suicide. No one really had been able to put a dent in Gillette for many, many years, and that was because they owned retail distribution and wholesale distribution, and the world changed. And so, literally, Mike showed up and was looking to raise capital and figuring out ways to get this concept off the ground. And we just we were fortunate enough to convince him to do it with us at Science, and we were first money into his venture. We saw the launch of the website. We saw the creation and explosion of awareness through his, you know, amazing viral video and follow-up videos. And we saw him grow a business that acquired, I, you know, I think between three and four million subscribers within just a few short years. It was it was it was incredible. Let's take

Mark Evans: a step back. Mike Dubin, very personable, charismatic, creative person, walks into your office with this idea of taking on Gillette and all the big razor makers. What was your first impression? Were you impressed by the way he carried himself? Were you impressed by his vision or his audacity? Why did you decide to strike a partnership with Dubin when he made the viral video and sort of emerged as this very dynamic entrepreneur? It was easy to see why, yeah, that makes sense. What spurred your involvement with Mike and the Dollar Shave Club?

Dave Fink: Yeah. So at that point, subscription commerce, which I think is a pretty common method for engaging with consumers these days, was kinda just becoming a common business model. And it was a thesis that we were spending a lot of time researching, playing, thinking about. Right? And it's this idea of how do you both introduce consumers to or prospect consumers to your product offering, and then how do you think about investing advertising dollars to acquire consumers at scale? And one of the methods is, as probably many of your listeners think about, is this idea of understanding what your customer acquisition cost is and then understanding what your expected lifetime value and lifetime margin is of that customer to know just how aggressively you can kinda spend into your growth. One of the things that was interesting about subscription commerce is in theory, there's a built-in lifetime value because you're not just acquiring a one-time transaction like you may do it at a Walgreens or a CVS or Lowe's or whatnot. You acquire a customer that's buying into this idea of being a part of a club or accepting the convenience along with the quality product or fair pricing that you can get direct-to-consumer. To us, what was interesting is that this fell smack within that category of an obvious need or consumer willingness to engage and commit to this idea of a subscription. It's a consumable product. You go through razor cartridges. There was kind of a built-in, you know, mechanic. Whereas there are other businesses that we've all seen where they've, like, tried to force this subscription model into a business that doesn't necessarily make sense. I don't need a new pair of shoes every three months. I might like a new pair of shoes every three months, but I don't know when my soles are gonna wear out or whatnot. But with razors, you generally know that each month you need more blade. That was appeal one, just kind of that business model. Appeal two was I mean, look. Mike is as you have said, he's just a dynamic, larger-than-life personality, had a tremendous amount of passion. He had incredible motivation, and he had this vision of telling of kind of cracking this kind of formula of digital storytelling in an era where social media was just becoming social media. I mean, you like, we all take for granted what YouTube is and what Facebook is now, but this was eleven years ago, those platforms still existed, but marketers had not yet figured out how to crack the formula of how to engage consumers and delight consumers through those platforms at that time. And Mike had a bit of a twinkle in his eye, and the nature of his background, had him well positioned to be a storyteller first as a marketer and then maybe a customer acquisition engine second. So you put those together, and it seemed like an interesting project to engage with. I am not gonna claim that any of us had any idea that he was gonna launch this video. It was gonna, you know, go viral overnight, and he was gonna be sold out and scrambling to figure out how to build his infrastructure literally overnight. That no one could have predicted or certainly we didn't.

Mark Evans: Yeah. When people look at the success of Dollar Shave Club, they focus laser-focus on that viral video, which he made for a few thousand bucks and opened the floodgate for sales and, arguably, a global brand. When you, as a marketer, look at Dollar Shave Club's success aside from the viral video, what do you see as some of the things that Dollar Shave Club was really effectively able to embrace? What did it do well? Where did it stand out? And how were those marketing decisions made?

Dave Fink: They did a lot of things really well. I mean, you obviously don't have that level of success if you didn't do a lot of things well. And, you know, I think Mike's traveled around the world speaking to business school classes and MBA programs, trying to deconstruct some of that success. When I look at it, first and foremost, and I've talked about this in some of the other, you know, podcast conversations I've had, and I really truly believe in it. There are two types of businesses that I've seen created and had the benefit of kinda getting a front row seat to seeing dozens and dozens of businesses launched just being in this market, in this world, and then certainly being at a company that was built around investing in and launching startups. The kind of the big divide that I've seen is that there are those businesses that start out opportunistically and those businesses that start out mission-driven. And what I mean by that is there's no shortage of companies where the founders come from the industry that they're playing in with their next business. They have deep expertise. They understand the supply chain or something about improving a product or service. And they have a business model that they know that they could monetize, and those are fine. There are lots of businesses that have been wildly successful built kinda opportunistically. To me, what's more interesting is these mission-driven businesses. And I don't mean you're out trying to solve the most challenging problems in the world. What I mean is, like, you've uncovered a problem or a solution or a pain point that is real or even that there's a perception of in the consumer side or business psyche, and you're mission-driven around trying to solve that pain. It could be really nuanced and focused. It could be broad. Well, if you look at Dollar Shave Club, I mean, from the start, as that amazing script and viral video, that, you know, talked about, there was a bit of a pain point in, you know, in men's grooming and razors in particular. Razors were tracked as the number one stolen item in retail. There's a reason, like, you feel like a criminal when you walk into a retail outlet and an alarm goes off and you, right, lift the plastic in, or you have to get someone to unlock the case so that you could buy this product. And then you ask yourself, like, well, why is that? For the same reason that the viral video talked about, there was, you know, one brand or, you know, one conglomerate that owned 80% of the market could charge what they wanted to charge for a product, probably were greatly overcharging for this commodity. And we've all had the experience of, you know, going through Target checkout, and maybe we have, like, five items, and you're like, it's $117. And you're like, what in the world did I buy? And you bought razor blades. That's crazy. Like, nobody wants to spend that kind of money on razor blades. Nobody really wants to even be shaving, probably. Like, it's something we do because we don't have a choice so that the hair on our face will keep growing if we don't. That was Mike, I think, through his really creative approach to storytelling and being able to leverage social media at a time that it was less competitive than it is now, and if you get things right, you could really get a lot of earned media. He was able to unlock that kind of pent-up frustration about, yeah. Yeah. Gillette is overcharging me for these razors. Like, this is crazy. Like, why don't I add more consumer choice? Like, this is nuts. And even the name of the company, right, Dollar Shave Club. Right? Most of the products were not a dollar, but just everything about that was this irreverent approach to being mission-driven around the idea that, look. There's you can get an equally good shave for a lot less money and not feel like you're being taken advantage of by a conglomerate just because they can. That was really the beginning of all these direct-to-consumer brands that were waking up and saying, like, hey. Like, don't buy this product just because it's what your parents bought 30 years ago, and don't use this toothpaste just because that's what you, you know, were told you were growing up on. Like, open up your eyes, ask your own questions, make your own decisions, and then be a part of those brands that you think represent you. And I just think that more than anything, Dollar Shave Club got that right.

Mark Evans: When I work with B2B SaaS companies, one of the challenges they face is that the marketing buffet is extensive. There's so many things that you can do. Inevitably, you find startups that rally around one or two channels. For Dollar Shave Club, obviously, it was video. For a lot of companies, it could be social media or content marketing. How did you come around to or what was the reason why you decided to focus on direct marketing, which is not as sexy as a video or social media, but it's been around for a long time, and it's super effective. Two questions. One is why your interest in direct marketing, and how is Postie's approach to direct marketing different from all the other companies out there?

Dave Fink: Well, I have to admit I love both those questions.

Mark Evans: Of course.

Dave Fink: First and foremost, my cofounder Jonathan and I didn't come around to the mission of solving the direct mail space or problem or challenges in this channel. That wasn't where it started. It really started as a reaction to the big walled gardens that are search and social just gaining way too much power and creating a lot of great value, but also creating a lot of heartburn up and down brand and executive teams and marketing teams. It's true as we say, the Dollar Shave Club era. Those were the golden ages of platforms like Facebook and Google and YouTube, providing tools that we'd never seen before. Partly, it's just the pure scale. Right? At one point, like, everybody was on Facebook, and it was ubiquitous with the Internet. And it was really nice and convenient to be able to reach everyone on one website, essentially. The sophisticated tools and use of data and the emergence of machine learning and predictive modeling, all these things that we used to do but in a more analog way with less sophistication, those channels really were able to invest in. And it made us all look like really smart marketers, and for a long time, we got tremendous amounts of gains. But we all have felt the pain point of, you know, Google changing the algorithm and the bottom falling out of our search marketing or Facebook deciding that after milking tons of profits from us buying fans to our Facebook, you know, fan pages and building the engagement on their platform, they're not gonna turn around charges to reach those fans where you paid to acquire, and that has dramatic effects on our growth and our P&L. For us, the kind of final straw is, like, just the oversaturation. Every brand, you know, the beginning, it was, like, the disruptor brands that we're finding out how to work on, how to manage demand gen on Facebook, and then Facebook did a great job pulling over lots of, you know, huge portions of brand advertising dollars in automotive manufacturers and entertainment platforms and CPG brands, etcetera. We're pumping lots of their marketing budgets in those platforms, and ad rates go up. And it seems like the savvier we get at marketing those platforms, we just can never catch up with the inflation on ad rates, and so you never are able to run those channels profitably. So for us, it was just a matter of, okay. Well, what's the next channel? Like, we need to diversify our media mix exactly what you were just talking about. And we first started looking at other digital channels and emerging channels, and there was nothing that had enough scale to make it worth the effort. Snap was just getting started. They didn't have an ad platform at that point. There was no TikTok. There just was nothing that rivaled the scale of Facebook, of YouTube, you know, Google. We started spending more time offline. And in offline, there are a lot of great channels, but DM caught our attention again because a lot of the components of it are very, very similar to digital channels. It's a channel that allows for targeting and applicable data use so that you can be razor-focused on who you engage with. There's direct measurement. You're able to understand who you're engaging with, and you're able to triangulate, you know, that conversion data. So what's working, what's not working from your marketing experience, and it's big and scalable. It's bigger than Facebook. It's bigger than Google. Everybody has an address, and anyone with an address is reachable through direct mail. So you put those three things together, big and scalable, lots of data, which makes it a test-and-optimization and measurable channel and direct measurement. And the reality is it looks very similar to how we execute Facebook campaigns and Google campaigns. So that's how we got there. It wasn't a direct path to direct mail. It was a reaction to a big macro challenge we saw in the marketing landscape.

Mark Evans: Scott Galloway talks a lot about the digital duopoly between Facebook and Google. And if you're a brand and you want to leverage advertising, you have no choice. You have to use one or the other. And at the same time, I think a lot of marketers are scrambling because every single channel is chockablock with competitive options, and everybody's trying to leverage them. Direct mail seems old school. It really seems like, in some respects, an anachronism, but it's not. I mean, it's alive and it's well and brands are still using it. Do you think the modern marketer is thinking about direct mail these days? Is it front and center to them, or do they have to be educated on the benefits, the impact, and the fact that there are lots of ways to measure it? Because the modern marketer, it's all about quantifying their performance. If they can show that they're doing the job, that's awesome. But with the rise of the dark web, which I wanna talk to you about, those things are becoming less obtainable.

Dave Fink: I think the same mindset of marketers that first looked at Facebook and thought, there's something interesting here. Even before Facebook was building ad tools or, you know, marketing tools to their own platform, they were trying to figure out creative ways to engage the Facebook audience. Those same marketers are absolutely engaged with direct mail and have been for a while and are recognizing the value, and we're trying to kinda infiltrate that channel in a very kind of test-and-optimization and measurable way. We've seen it from the start, and we've been at it about six years now. With that being said, there's also a sea of really savvy brands that have relied on direct mail even through the digital era. This year, the last numbers that I saw published said there's gonna be about $50 billion spent in direct mail by advertisers just in the U.S. alone, and it's a non-national election year. That just tells you something. Ad dollars are up in the channel, and that's not happening by accident. That's, you know, partly because I think we recognize, like, the value of everything has grown. Right? The venture dollars that are flowing in bigger than ever. Consumer spending's never been stronger. Expendable income's never been stronger. And so there's opportunities to market into your, you know, target audience more aggressive than ever before. But at the same time, the platforms that you've relied on, you know, namely Facebook and Google, have become harder and harder to actually find profitable customers on or at least beyond a certain ceiling of scale. Definitively, the savvy marketers that are cutting-edge and forward-thinking, ironically, are well aware of and very focused on direct mail. I think that type of advertisers are the ones that are on our platform or have been for years, and we're very grateful to have a company like Postie that was building technology to give them the same access to predictive modeling and measurement and targeting and programmatic capabilities than kind of traditional methods of deploying direct mail. And every day, we have more and more inbound marketers and brands that either are looking for a better way to do direct mail that have already kind of experimented with the channel and seen some positive benefit but aren't satisfied with the tools. And then we have new advertisers that are aware that their competitors are deep in the channel, and they don't have the experience and are looking for kind of the fastest path to scale and success within the channel.

Mark Evans: Without getting too deep into the weeds, can you talk about how marketers, how brands can quantify their success with direct mail? Because the model is that you do some targeting by geography, postal code, ZIP code, however you wanna do that, then there's some kind of reaction that happens. What are the metrics? What are the KPIs involved in direct mail?

Dave Fink: Yeah. So the beauty of direct mail is it's an addressable channel, meaning that it's not about contextual targeting or doesn't have to be about ZIP code targeting or census block targeting or whatnot that some more traditional marketers might remember on the channel for. It's an individual living in a household the same way that it's one-to-one on programmatic or email or SMS or search or Facebook. In a world where there's so much access to first-party data within brands and an ability to really get to know and understand your consumer directly, you're not relying on understanding the basic demographics of a ZIP code around a retail location that your product is sold in. You're now selling directly to that consumer or some portion of your revenues generated from direct-to-consumer sales, and you can unlock a lot of insights into that. Those insights can be used to target on digital channels and can also be used to target through direct mail. Direct mail, you're targeting individuals at specific addresses. And when you're selling direct-to-consumer or you have a POS system that is capturing a one-to-one identity map between a transactor and who that person is, a converter and that person, the Postie platform, it's not the only one, but Postie makes it clean and real-time and simple to map that identity from a transaction back to the recipient of a piece of direct mail. But there's much deeper methods that we can certainly go into. For fear of boring, talking too deeply about measurement. But any action where identity data can be captured, whether it's a mobile application action or a website action or POS action at a retail outlet that captures that data, that can all be used in real time very cleanly to map back to audiences that received an ad through the mail. And part of the game with measurement is then, you know, understanding not just what was successful in the past, but being able to make good decisions and that will deliver reliable similar results the next time you execute that same strategy or tactic. We all think about, like yeah. You actually mentioned it as well, like, measurement as being this way to kinda justify that what

Mark Evans: we did is right. When I think about growing a business as a CEO, I think about, you know, measurement more as the confidence in believing that if I do more of what I just did, I'll get similar results. And direct mail enables that. You could argue that many marketers have this myopic view of digital marketing. The marketing landscape is digital, and many of them have been raised in an all-digital, all-web environment. So they don't know anything different. Magazine advertisements to them, newspaper ads seem like anachronisms more than anything else. How does a marketer blend digital marketing with direct mail? How do they create a value proposition in which one plus one equals three? Is it easy to do? Is it easy to get those two different vehicles to seamlessly work together?

Dave Fink: Look. Nothing is easy. If it was easy, we'd all be launching, you know, brands and reaching certain levels of success. It's really hard to do. But I think your question is probably more when you take the savvy, you know, trained marketer who's used to a sophisticated set of tools. Does direct mail or, you know, omnichannel become more difficult? And I think the answer depends which channels that you're using and the clarity of measurement in them. There are just channels that are easier to measure, and there are channels where there's more transparency. Facebook and Google have positives and negatives. They make it really easy to have complete transparency on their own platforms with their own reporting structures, so you understand exactly what Google thinks your KPIs are and what Facebook thinks their KPIs are, they make it much harder to understand things like incrementality, your lift of using those ad platforms on top of other channels. And that's something that's been going on for years and years. Right? There's the argument of first touch, last touch, media mix modeling, and multi-attribution, whatnot. Yeah. Direct mail is a unique channel in that: You have a lot of variance in the KPIs that you're using at different times to measure effectiveness of your campaigns, the return on ad spend, etcetera. For example, there are times when you're in growth mode and your due north is the most amount of scale, it's a land grab, and the most efficient cost per acquisition. And if that's your due north, direct mail as a channel can play really nicely with your digital channels and help you understand exactly what your cost per acquisition from budget spent in direct mail is. You may be a more mature brand that's looking and saying, we have a media mix, and we're more about profitability right now. It's not so much a land grab. Any new incremental channel, we also wanna be able to see what the incremental effect over other channels are. Direct mail, because it's not a walled garden. It's not Facebook owning the data and dictating what data they're gonna give you and what data they're not gonna give you, oftentimes, pump up and make performance of ad dollars on their platforms look better. Your direct mail, you have control over. So if all of a sudden, what you're looking for is how does this specific addressable audience within my target CRM or my prospect pool perform when direct mail is added? What does the incrementality look like? What does the lift look like? Well, direct mail measurement or, you know, has the capability to show you exactly what the incremental value of that media spend looks like and really anything in between. To me, that's one of the things that's beautiful. It can be dangerous as well because direct mail offers more views, in many times, a cleaner view of performance than even Facebook or Google will. And so a marketer needs to come to the channel understanding that they need to look at different measurement tactics or strategies differently. That, you know, just because Facebook says this is your last-click CPA. That doesn't mean that there's any incrementality in the value of that ad dollar or those ad dollars that you've come to that channel. And if you're comparing last-click Facebook CPA to incremental, you know, lift on direct mail, that probably is a dangerous comparison. But if you're looking at like measurement, then I think you come to trust the direct mail channel a bit more than you can trust your digital channels.

Mark Evans: Earlier in the conversation, I mentioned the dark web, and a lot of marketers are grappling with the idea that not everything can be quantified given that in their experience in recent years, everything is quantifiable. And I think a lot of marketers are trying to figure out how do they generate ROI, how do they show their boss that what they're doing is working, how do they prove that they're doing what they're supposed to do. And I am curious about how direct mail fits into this whole dark web, dark social, not-terribly-able-to-quantify what we're doing landscape.

Dave Fink: Well, the beauty of direct mail and those marketers who are engaging and exploring the channel right now, which if any of your listeners are not yet engaging the channel, I highly recommend them starting to as it becomes more and more difficult to measure performance online through changes in operating systems and privacy regulations, etcetera, the beauty of direct mail is that the match key is not a cookie. It's not an abstract, you know, digital fingerprint. It's a name and an address. And when you engage with a consumer that's, you know, willing to share name and address, you know, they know exactly what data they're sharing with you, and they're doing so in a very compliant, upfront, transparent way, which is respectful to the consumer and the brand is presenting respectfully. But it also means that if iOS 14 blows the cookie away, affects, you know, your ability to measure just as cleanly in direct mail because address still exists. The U.S. government didn't take away our addresses. Right? That's not a thing. Right? The way that Apple can take away a cookie or deem it irrelevant. I don't think per se that digital advertising is gonna die in any respect, but some of the ease and transparency of what works online and what doesn't work online is not gonna be so clean. There are gonna be challenges. It's gonna create some fits for marketers and brands. By the same token, I think what we're all gonna see. I've done, you know, my own analysis and research through many times throughout the years is that the ROI or the return on ad spend that some of these big, you know, walled gardens were telling us we were getting, we weren't actually getting.

Mark Evans: Mhmm.

Dave Fink: We start pulling back budgets and we don't see the same, you know, proportionate decline in total conversions or total customers or revenue. And I think that's just the byproduct is gonna be. It's gonna shed some light onto maybe some of the inaccuracy and overreliance on some of the performance KPIs that these walled gardens were giving us access to. It's something that, again, for the life of our company, direct mail just doesn't have that same pain point. There's a lot more transparency in how measurement works because it is one-to-one tied to an actual consumer rather than this ephemeral digital representation of a consumer.

Mark Evans: Well, thanks for all the great insight about direct mail, something that I haven't explored in recent episodes of the podcast. One final question. Where can people learn more about you and Postie?

Dave Fink: Our website is filled with information, use cases, case studies, how to get started, etcetera, and gives a request for information or functionality as well, and our team will get in touch with you. Certainly, I'm always reachable through LinkedIn. That kinda is my go-to, so feel free to find me there. And I think that'll be a good way to get everybody started.

Mark Evans: Well, thanks for listening to another episode of Marketing Spark. If you enjoyed the conversation, leave a review, subscribe via Apple Podcasts or your favorite podcast app, and share via social media. To learn more about how I help B2B SaaS companies as a fractional CMO, strategic adviser, and coach, send an email to mark@markevans.ca, or connect with me on LinkedIn. I'll talk to you later.