Steve owns a niche automotive trade school with several locations across the U.S.. Due to the competitive nature of his industry he requested to stay anonymous. Enrollment is up and he is opening two more schools. This unusual growth is in spite of the anemic economy. Many of his competitors are closing their doors. Like many educational enterprises the last 15 years has seen a major shift from the more traditional methods of attracting new students to Internet based solutions. This worked very well for many years, but recently several market changes have slowed down online enrollment. What Steve has done to reverse this trend is to go back to more of a tactile way of connecting with potential students. His business has found new life with direct mail marketing. But first, we should cover what he has been doing for his schools and why they are not as effective any longer.
Email Marketing worked well for a few years, but it has dropped off lately. “It has become more and more difficult to get my emails past the various spam blocking programs. I always use opt-in emails from various partners that have relationships with my students, yet most of my emails are getting blocked or not opened. I seem to have a good response rate for the few emails that are opened, but my cost per student is high using email to boost enrollment.”
PPC efforts using Google and Bing are also missing the mark. Educational PPC traffic just doesn’t convert as well as natural search engine traffic. It’s also gotten much more expensive the last few years. The best PPC traffic has a very tight focus and is more expensive per click. Unfortunately for Steve, there is just not that much traffic when he is tightly focused. It converts well, but he can’t fill up his classes.
Many companies have been discovering the same thing that Steve found out – Social Media traffic is not like other web traffic. There have been a few high profile companies that have paused all advertisements from Facebook because once they put in good tracking software they were not able to find conversions. Marketing departments and consultants love social media traffic because they can often drive large amounts of traffic. But, what good is traffic if it doesn’t convert to customers? That’s the conclusion Steve came to, “Our Facebook traffic has not converted into one enrollment. Either the messages in the ads were bad or the traffic was never really interested to our offering to begin with. Regardless, it’s been a complete waste.”
When we discuss what brings in business most companies have SEO at or near the top of their list. Natural search engine traffic converts well and can drive large numbers of targeted visitors. Unfortunately, there is a downside – the ever changing search engines. With increasing regularity the search engine results are being turned upside down. The search companies say it’s to combat their version of spam. Others have different ideas, “Each time Google changes their search database my website loses traffic. Most of it eventually comes back, but it’s become unreliable. It’s too up and down to count on when we need to enroll more students. Ultimately, we end up spending more on Google Ads when our natural rankings drop”, declared Steve.
Experimenting with Direct Mail
Steve explains what led him to reconsider direct mail::
“I got the idea to jump into direct mail from my Chiropractor. We were just talking shop, one business owner to another, when he mentioned that much of his new business came from direct marketing. I was a bit surprised – I figured he ran PPC like Adwords, but he told me the overall return was better for direct mail. So, I took a serious look at it.
What I first noticed is there is an obvious up front cost to direct mail that is not there for Internet advertising. I was originally planning on sending 5,000 pieces of mail, but that was going to cost more than what I felt comfortable spending on my first test. So, I went with 2,000. I have to admit that I wasn’t really sure how it would turn out. One day, I would think I could get a 4% conversion rate and the next day I was sure it would completely bomb. As it turned out, the campaign was a huge success as far as the number of new enrollments, but the costs were higher than my Internet campaigns.”
Steve’s results highlight one of the major differences between Internet marketing and direct marketing. The difference between efficiency and effectiveness. His overall conversion rate from his highly targeted mailing list was 1.1% (22 new enrollments – very effective). He will likely get better as he develops more experience with AB testing and conversion optimization. His total costs for the design, printing and mailing came to $1,675. He spent $76 per student for his direct mail campaign – When he markets using Google Adwords his average cost per enrollment is only $23.
Just looking at those two numbers would make you think the direct mail campaign was a failure, but that’s where the effectiveness of direct mail shines brightly. While the average cost for Adwords was only $23 per enrollment (very efficient) he never managed to get more than 9 students. He landed 2.4 times as many students by using direct mail, but it cost 330% more to get them.
Fortunately, it was still very profitable for his school to pay $76 per enrollment. Now, Steve is using direct mail and direct Internet marketing as a combined effort to grow his school. With more students enrolled his fixed costs are reduced – increasing his overall profit.