Bringing in Business
The primary goal of Valassis is to help its clients increase their presence in the marketplace by engaging the consumer. When a furniture retailer wanted to drive new and existing customers into showrooms to boost sales during a seasonal event, Valassis helped craft a direct mail piece to highlight the retailer’s ability to customize home furnishings to fit individual styles, as well as an offer to drive store traffic.    

Valassis used the retailer’s in-house customer database to create a profile of the retailer’s best customers that could be used to target similar consumers. From there, it developed a tri-fold self-mailer with a $100 gift card, good for purchases of $500 or more, and mailed it to target households near key store locations. The sales event and gift card were valid for a two-week period, which created a sense of urgency in the offer.

The result? The direct mail offer generated a significant net return on investment. According to a Valassis case study, customers spent five times more than the promotion minimum with an average transaction size of more than $2,600, and there was no difference in the amount spent between new vs. existing customers. Results show that existing customers accounted for 64 percent of the responder’s sales and new customers accounted for 36 percent.

Operational Excellence
For Valassis’ portfolio to reach more than 100 million households each week, the company must operate state-of-the-art printing press facilities. “Our printing plants produce newspaper inserts and shared mail packaging inserts in high-volume and in large quantities,” Hogg says.

Valassis operates three large printing facilities in Michigan, Kansas and North Carolina. Additionally, it runs 17 shared mail plants for the assembly and distribution of 70 million packages into the mail stream weekly; three coupon clearing plants; and a secondary packaging plant in Mexico.

At its larger printing plants, the company operates heat-set web presses, each valued at about $13 million. “The reason we are in manufacturing is that we want to be the low-cost producer,” Hogg says. “We add equipment when we need to as technology changes. In the last year, we’ve invested $15 million in capital [to upgrade] our printing plants. In the last eight years, we’ve invested about $60 million.

“We believe that revenue should go up, but cost should go down,” Hogg says. “We are constantly looking at process improvements in all of our plants. We have applied all of the principles of lean manufacturing, although we don’t have a formal lean manufacturing program. We are committed to housekeeping and the organization of our plants so that we have efficient operations, and that includes preventative and predictive maintenance programs.”

Direct Effect
Curious about the best way to reach your target audience? According to the United States Postal Service, although the cost-per-contact can vary (mail typically costs more), direct mail’s precise targetability and high revenue-per-contact make it one of the most effective tools in marketing. 

Cost-per-Contact – Direct Orders:

• 46¢ – Mail (Flat)
• 55¢ – Mail (Dimensional)
• 57¢ – Catalog
• <1¢ – E-mail
• $1.27 – Telephone

Revenue-per-Contact – Direct Orders:

• 85¢ – Mail (Flat)
• 29¢ – Mail (Dimensional)
• $2.41 – Catalog
• 18¢ – E-mail
• $3.98 – Telephone

Overall consumer response rates:

• 8.55 percent – Telephone
• 2.48 percent – E-mail
• 8.14 percent – Direct response television
• 0.17 percent – Magazine
• 1.35 percent – Radio
• 3.67 percent – Catalogs
• 0.5 percent – Newspaper
• 3.4 percent – Mail (Direct mail, dimensional mail and postcards)
  

Sources: United States Postal Service; DMA 2005; Response Rate Report.