289. Interview with Dennis Kelly – Why Your Business Should Start Using Direct Mail Marketing in 2023 to Cut Through all the Digital Noise

Speaker 00:00
Welcome to Raw and Real Entrepreneurship, the show that dares to bring the no nonsense insight to those who have the coverage to start, grow, and scale a business. Here's your host, entrepreneur, investor, and best selling author Susan Sly.

Susan Sly 00:17
Well Hey, what is up Raw and Real entrepreneurs, wherever you are in the world, I hope you're having an amazing day. And you know, it's so interesting. There's a lot of talk about economy recession, soft landing, hard landing, something else came out today that Vanguard says it's definitely a recession and there's a lot of confusion and even one of the investors at Radius sent me this infographic about all the tech layoffs and yet, if we focus on something, we definitely find it. So if we focus on the doom and gloom, we're going to find it but my guest today is the CEO of a company called Postalytics. They are a fast growing direct mail automation software company that helps marketers do more in less time with streamline production, integration into the marketing tech stack that they already have, or maybe a new one. And real time direct mail campaign analytics. This is this founder's sixth startup. And he definitely has a background in what it takes to start a company, grow a company, scale a company and has learned some lessons along the way. And he's been involved in starting and growing early stage technology ventures for over 30 years. And we're going to talk about today how, where your focus goes, your energy flows. And this company, even just prior to starting the interview, we're talking, before we started recording, and he was saying, we just closed the deal. And we were talking about how, even though it's the holidays, both of us, which is nonstop, with potential customers and existing customers, I haven't seen an environment like this in a very long time. So my guest today is the one and only Dennis Kelly, CEO of Postalytics, Dennis, welcome to Raw and Real Entrepreneurship.

Dennis Kelly 02:10
Thank you, Susan. I'm thrilled to be here today and just like to speak with your audience.

Susan Sly 02:14
So let's just jump right in. What is going on? Facebook's laying off a bunch of people. Yet you and I who are founders are here nonstop. Like I said to my husband today, Dennis I'm like, thank God, I started the Christmas shopping early I can't believe.

Dennis Kelly 02:35
Oh, that's great. Yeah. Well, you know, I think, as you said, showing a little bit of my age, I've been doing the the tech startup thing for a long time and through several cycles. And, you know, often what we see is that companies will get in these hiring frenzies. And the mindset is that we can't hire enough people quickly enough, and we can't find any talent. And you know, I can't hire anybody. And you know, they overdo it. And the moment that there's any signs of an economic turn, they kind of use as an excuse to say, hey, all right, we gotta we gotta clean up our cost side a little bit here. And so I think there's some of that that is going on. But, you know, at our company, you know, we really haven't seen much. We do have, we have some customers that are exposed to interest rates, and we've seen them cut back a little bit. But really, I mean, we're serving 18 different vertical markets in the United States and Canada. And except for in a very few instances, demand is very strong. And so we feel very fortunate to be in a position like this. And so we're not seeing a tremendous in the economy, at least impacting us very much at this point.

Susan Sly 04:09
Well, that's it, it's interesting too because I think because you're a seasoned founder and you and I, just from my research are very close in age, so this is not our first rodeo with a recession or talks of recession or whatever is going on in the economy. What impact would you say mindset has on this because where these big companies are laying off, small companies founders are in fear mode, and yet people like you, you're out there still making it happen with, depending on when someone's listening to this like, we're literally it, just have to do some math here. We're doing the show 12 days before Christmas. So 12 days before Christmas, Dennis Kelly and team at Postalytics are out there closing deals and crushing it. So what's the difference between say, you and someone who is not getting those results?

Dennis Kelly 05:05
Well, you know, I think from a mindset standpoint I believe that any type of economic downturn really represents a huge opportunity. And you know, when everybody is thinking run to the exits, there's more opportunity to get a little bit more aggressive, as long as you've got your cost structure under control, obviously, but you know, if you can amp it up when everybody else is retreating, then you got to put yourself in a great position so that when spending does return, you're in a rocket ship. In you know, I think Warren Buffett has a great saying, in, you know, he loves to talk about how, when you sense fear in the market, buy. When you sense greed in the market, sell. And, you know, often I think, in business, you can look at what's happening in the macro economy, and kind of get a sense of that fear or greed. And, and you can, you can adjust because, as you said, We've been through a few of these cycles, and we know what is going to happen, and at some point, that bubble bursts a little bit, right? So things are gonna come back to Earth. But also, we know that things are going to ramp back up again. And so how you position yourselves in the downturn will often have a huge impact on what happens during the upturn.

Susan Sly 06:52
That's brilliant. And I love what you said about the fear and greed, right. So obviously, there's a lot of fear right now. And then we look back to the last recession, and I know some of the listeners might not have been in their adult working mode in that last recession, but during the last recession, we saw companies like Uber, Airbnb, Instagram were founded during that recession. And then whether it was IPO, or acquisition, in the case of Instagram, these companies all went on to become unicorns. And we look at what Elon has done with Tesla in that period of time, and space X and all of his other ventures. And so let me ask this question. So I have, I have my philosophy of what I feel needs to happen when there's a lot of fear in terms of work ethic. But let me ask you this, do you work differently or does your team work differently when there's an economic downturn or a threat of a downturn than they would if there wasn't?

Dennis Kelly 07:53
Absolutely, you know, let's take sales just as a starting point. You know, what, when times are great, sales is great, right? It's, well, it's never the easiest job in the world. It's a heck of a lot easier when times are great. And you know, we don't want to call our salespeople order takers, because they're not, but the process can be a lot faster and a lot easier. And maybe you don't have to dig that much. So what we're talking about is saying, hey, you know, while we're not having seen any real dip in demand yet, let's start digging deeper. Let's go back to old deals. Let's go back to old lead. Let's, let's reengage, let's go find those companies that at one point had expressed interest and for whatever reason didn't close. Who's in charge now? There's probably been turnover, let's talk to those people. Right? So it's, it's digging deeper and not just taking what's coming in easily. And so I think that's sort of a mindset that can help really drive revenue over a downturn, because there's always opportunity. You just have to know where to look. You have to you have to be constantly on the lookout for it and really dig to find it.

Susan Sly 09:12
What you just said, it's like, going back to those old customers, going back to customers who maybe had some interest, like really digging and digging harder. And that, one example I give, Dennis is that during times like this, or the beginning of times like this, I know it's going to be, the work is going to be 30% harder. So I just brought on some new people onto our team, and they're all seasoned vets. And so both people I hired are in their 50s, sales professionals. They're not afraid of a recession because they know how to rock it. They're like yep, we just work harder. We go, we get on airplanes, we do what we need to do, and because doing enterprise level deals, right? And so we're going to National Retail Federation big show in New York, and Radius, we have a booth. And it's amazing to me some of the big companies who are not sending people and not going when all of the major retailers are going to be there- their ideal customers. And I'm thinking, why would you not be in front of customers? If you're going to make sure you're spending money in some area, it's customer acquisition and being in front of the customers. So from your perspective, and then I want to get into Postalytics, because I have like 50 million questions about that. But from your perspective, and if you were going to give advice to any entrepreneur right now, who's in fear, and who's saying, I'm watching CNBC, I'm watching, you know, the the market downturn or the market up one day, down the next we don't know what the Fed is going to do. I'm hearing about all these layoffs, I'm reading Wall Street Journal, what, as a seasoned startup Pro, and someone who has experienced both the sweetness of success and the wall kicking moments, what advice would you give?

Dennis Kelly 11:00
I would say, stop watching the news. It's not going to help you at all. And, really, I mean, you know, end it, don't watch the news. Focus on your business, focus on day to day fundamentals, the fundamentals of marketing, the fundamentals of sales, the fundamentals of your product development, what are you doing to be disruptive, what are you doing to get ahead? Right? And okay, maybe don't spend quite as much money, right? Don't don't put as much risk out there on the spin. But that doesn't stop you from doing the things that you should be doing every day. You shouldn't be worrying about what's happening in Russia, and what's happening with oil prices, and all the things that can make you crazy if you obsess over, you know, day to day iterations of what's going on in the world and what's going on in the economy, in the stock market. You know, forget about your 401k. Don't ever look at that, particularly now. Don't look at that. Focus on your business.

Susan Sly 12:05
Turn off the news, focus on your business, put the blinders on and, right, like it is such a distraction. And I see the people who are younger founders who are maybe you know, on TikTok a lot or they're watching, they're on reels, or they're doing these things. I'm like, unless you are running ads, paying influencers, like why are you on there? Pick up Good to Great by Jim Collins, read it, read the, read the books, audio read, do whatever you need to do, because you need to, you can't get from a well, that's empty. And so what is it that's fueling you? I love it. Okay, so let's talk about Postalytics. So first and foremost, how did you start the company? And why did you start it?

Dennis Kelly 12:50
Well, several years ago, I sold the business and took some time off. And after a few months, I tend to get bored quickly. You know, I try hard, but I'm not a great golfer. I'm not going on the Senior PGA Tour anytime soon. Right. So I started looking around and I reconnected with someone who I've worked with several times in different startups. And as you know, as you get involved in different ventures over time, and you have a wide network, you meet a lot of great people and people you say, I definitely work with that one again. And so I reconnected with a brilliant software architect who I've worked with, and he was showing me his sidekick. And it was in the direct mail space. And so this is at a time where direct mail was certainly not a focus of the, of the marketing world. And, but, you know, started digging a little bit and I saw, hey, there's a ton of money still being spent on direct mail. That being said, there's not a ton of money coming in to build tech. So, so well, why is that? Right? So start digging around a little bit. And you start talking to people and they say, well, direct mail, like, it's from the 90s, early 2000s. You know, Does it even work? Right? Do you look at your direct mail, like, you know, asking questions like this. I say, Well, you know, what about the data? What does the data say? And the data was showing that actually, the response rates of direct mail have been rising. As the volume of mail in your mailbox has been dropping. And so when you think about the fundamentals of business, fundamentals of marketing, when you've got something that is delivering value, eventually people will find it. And so the fundamentals around direct mail actually remains strong but there is really no tech happening. There's no investment, venture capitalists not interested, you know, no real startup activity. And so, what we ended up kind of coming to the conclusion was that, hey, you know, this is an overlooked opportunity. Here's a physical thing, a part of the physical economy, that hasn't been disrupted, that hasn't really been brought into the 21st century. And so we thought, that's not likely to change, the world isn't often going to all of a sudden say, Oh, my God, we got to invest everything we can in direct mail. So we thought we had some runway there, to build a startup, to go and change the way that direct mail operates in the modern marketing. And so that's what we've done with Postalytics. And so it really came as a result of a brilliant engineer, with a side gig that was built to solve a problem for himself. And then after some ups and downs of iterations, we ended up with where we are with Postalytics.

Susan Sly 16:42
That's interesting, because I love where you came from, it's like, there's still money being spent here but there's no innovation happening. And to say, there's an opportunity, and marketing, especially with the way social media marketing has gone, has become such a red ocean. And so in 2008, the Ad conversion for Facebook was so high, and then Instagram, the conversion was so high, and now it is so low. And there's the whole battle with iOS and Facebook and everything else. And so Postalytics coming in and going, we're going to take something, and we're going to make data driven decisions, and we're going to do something that really has an impact. So could you give some, like, just give some, so for business owners, they're like, I haven't really thought about direct mail. Could you give some sort of comparative data with what you're getting with direct mail versus what someone else might be getting with, say, social media marketing or something along those lines?

Dennis Kelly 17:48
Sure, sure. So, well, just just going back to, you know, what's changed over time, in 2006, the average response rate to a direct mail campaign for what is known as a prospect list, or list of non customers cold, was I believe 2.35% in 2006. By 2020, the response rate had risen to 5.1%.

Susan Sly 18:24
Wow.

Dennis Kelly 18:27
All the time where the amount of mail in your mailbox every day is decreasing. And so when you think about that, it actually makes sense that you're not getting bills that you used to get, you're not getting statements, you're not getting personal letters. And you know, although right now you're getting Christmas cards, right? But mostly, you're not getting much personal mail. And so those things that do show up, actually have a much bigger impact. And so, contrast that with what has happened in the last 10 years in the digital space. The number of emails that the average American receives is about 120 per day. The average person is exposed to more than 5000 digital advertisements over the course of a day. And so, how do you stand out? How do you cut through that noise? You need to find, you need to well, everybody's going in one direction, you got to go find a place to go where you can reach people and connect with them, and so, you know, at a fundamental level. That's why you know, direct mail has still has a place right at the table. We'll see that the table in the modern marketing, the multichannel or omnichannel marketing world. And so, you know, what we're trying to do is make direct mail look and act and fee like a digital marketing channel, so that if you're a digital marketer, you can deploy direct mail with the speed, and the integration and the analytics that you're accustomed to seeing with email marketing, with digital marketing, all the things that have kind of traditionally been missing in direct mail. A lot of times, if you talk to a long time, direct mail people, you'll say, Well, why do you send direct mail? And they say, well, because when I stopped sending it, sales go down. And that's, you know, that's one level of analysis. But it's not really, it's not going to cut it for folks that are accustomed to seeing, you know, very clear attribution, very clear understanding of when this happens, this happens. And so Postalytics is designed to kind of bridge that gap.

Susan Sly 21:09
And so what about the business owner who's listening, and maybe they're a solopreneur who says, well, Dennis, it sounds really good, but maybe my business is too small for Postalytics. So who is, who is your, you mentioned, you're in 18 different verticals, right? So who is your ideal customer?

Dennis Kelly 21:27
Our ideal customer is what we call the tech enabled SMB. So you're a small to midsize business, could be between say, 20 and 1000 employees. And you have invested in marketing technology, you've invested in a CRM, you've invested in email marketing. And you want to either do direct mail a faster, smarter, better way, if you've already been doing direct mail, or in 70% of our customers, do not currently do direct mail. So 70% of our customers say, I want to try direct mail, I want to see how I can fit it in and do it in a modern way, in a smart way. And make it augment and add to my existing infrastructure. That's really the key. How can we make this marketing channel fit in and, and make a one plus one equals three type of equation from a marketing standpoint.

Susan Sly 22:39
Seriously, the conversion rate, I mean, obviously, COVID likely had some play in that because people were at home. But even still, let's say if it's, if it went down a little bit, or it's, you know, around the same, so let's call it 5% of 5% conversion rate. And just to give everyone some perspective, so if you have a Neil Patel, or Ryan Deiss, or even myself, in my past life, we would do a webinar. And it was a free webinar with eight tips to rock your marketing in 2020 or whatever. And we were selling to a course let's say the course was $297. Really, really good marketers are going to get about a 5% conversion. And the higher the dollar value, the lower the conversion, and that's what the live sell. And it really depends on how warmed up that market is. And what Dennis is talking about, to give everyone perspective is we're talking about cold market but targeted mailers. So for example, actually, why would I give you an example after being on your website? Why don't you give an example of a, of like, if someone says, Well, I want to be it. And boys and girls, I'm not a paid endorser for Postalytics, I'm just obsessed with the fact that Dennis and the team are breathing life into something that other people have overlooked. And I've been saying, for several years, that direct mail is going to be the thing because it's a red ocean, as I said earlier in social media. So could you give an example of, you don't have to name the customer, but a type of customer and the type of campaign they're doing because I'm super curious about that.

Dennis Kelly 24:23
Absolutely. Yeah. So So you know, on the cold lead side, you know, the prospect list. What's so critical, is that you define your audience, and you define your marketing narrative, your messaging, your offer, right? All of that, the call to action, needs to be directly appealing to the specific audience that you're focused on. And so, for example, you can go out and say, I'm gonna get a list. I'm a jeweler and I'm focused on Mother's Day, and, and so I want to find, I want to find men within a 20 mile radius with incomes between this and this that I know this type of offer for this type of jewelry will appeal to. Right? I want to, and I want to find homeowners within that subset, right? I want to find, I want to find families with children who are out of college. And so that the age range between, say 55 and 65. Right. So really refining that audience, which you can easily do. You can click, click, click and grab very specific audiences, and then target four, five touches to that audience. None of those numbers come about from sending one piece of mail to an audience. I like to tell people, if you had a sales rep who picked up the phone and call the customer one time and left a voicemail, and then never called back, how well do you think that sales rep would do?

Susan Sly 26:20
Not good.

Dennis Kelly 26:21
Not good. Not good, they'd be a fired sales rep. So direct mail, like every marketing channel, you'd have to touch an audience multiple times in order to gain those types of response rates. And so that's the key to that type of, of cold outreach. Now, you can do a lot more with warm customers, people you've already sold to. And so I'll get, I'll give a great example. One of our clients is a company that sells products, to gyms, to workout studios, and they have all sorts of, it's like an E commerce company that sells you know, tons of stuff to work out facilities, 30,000 customers around the US. And, you know, they were looking at the results of a Winback program. And they had a fully automated email marketing sequence going out to this audience. And the results of that winback campaign, were on a steady decline over the course of a couple of years. More and more people were ignoring their emails, just kept sending those emails, like, hey, come back, come back. But the open rate was dropping from 30%, 25%, to 20%. And so what they did was they plugged Postalytics into their HubSpot workflow that was sending those emails out when a previous customer did not purchase something for six months. And then if the customer didn't open three emails in a row, all of a sudden they get dropped into a direct mail sequence. So they're pushing out a postcard, a letter, another letter, a postcard with a QR code on it, trying to drive them back onto the website. Once that was put in place, that existing Winback campaign saw an ROI jump of 150%.

Susan Sly 28:39
Wow.

Dennis Kelly 28:41
So think about this, your email marketing rates, the open rates have been going down forever. How are you going to deal with that? How are you going to deal with that? You've already got this infrastructure in place, send them some mail, send them something, interrupt their day to day activity. They're not accustomed to getting a postcard from you. Right? I remember that company. Their emails will go to spam for the last six months, I haven't seen anything. And that's a great story and so the, what we're able to provide is, are these tools that allow you to plug into your existing tech stack, and drive direct mail out as if it were email or as if it were a digital campaign.

Susan Sly 29:25
It's beautiful. And it's that multi sensory approach. Because as the statistics show, you know, we're busier than ever, there's the, everyone is, you know, overloaded to a certain extent. And having that, oh, okay, I saw an email from that company, but I didn't open it. And now they're on my kitchen table. There's a piece of mail with some kind of interesting offer, and I'll give an example. So the Saucony don't mind sharing this. So Saucony is a company and I've been wearing their shoes for a very long time. And so they have me on their email list because I order online, and I don't open the emails and it's like, oh my gosh, they're, you know, emailing sometimes two or three times a day, which is way too much. So I'm delete, delete, unsubscribe, but then I get a piece of physical mail with a 30% off your next purchase. And there's a timestamp on it. And I'm like, actually, I think I will order some new shoes. Right? And so I've been on the receiving end of that, Dennis, and I think it is absolutely brilliant. And so switching gears, one of the things you and I were talking about before we started the show, was that there's a misperception, especially for people who've never founded a company that it's like, oh, they found the company, and then they grow the company, and they sell the company, and they make all these millions of dollars. And then you know, they just go do their next company. You said that Postalytics was a pivot for you. A pivot from what?

Dennis Kelly 30:55
Great question. And, you know when we initially formed the business, we thought, hey, we've got this great technology, we're going to sell it to the people that are doing all the direct mail today. Right? So, and when you look at the landscape of the legacy, direct mail industry, it's, it's very much driven by large printers. And they have, you know, marketing services that are part of that in large agencies. And so we built a product to sell to those people. And then, you know, we surrounded that product with some other tools that would augment direct mails, and make it easy to send marketing and text messaging and things to go well with direct mail campaigns. And we hired some people, we built some great software that worked phenomenal. And, but, you know, sales were, they're a slog, right? The sales cycle was long, it was requiring a lot of professional services to implement the product and to get the thing up and running. And the velocity of the sales process and the implementation process, were just not in line with what we wanted our business. And so after a period of time, you know, started to ramp the thing to make a go of it. And it, we just said, You know what, something is wrong. And you know, again, maybe from being old, right? And to have done this a bunch of times, you realize, you know, what, when you're in your startup and things going well, sales are, they're not that hard, right? Like they, you get, you get a lot of bluebirds that come in and say, This is awesome. One day sales cycles every now and then, right. Like, you just, you look for those signs, and we weren't getting that. So after a lot of thinking, we realized, hey, you know, what, we're trying to sell to the wrong people. It was the market that we chose, that the target market, the ideal customer profile that we're focusing on, was the wrong market. These are people that were the responsible for the lack of evolution of this whole process. These are the people that did not want to innovate, they did not want to invest in technology. And we thought, okay, well, we can take a lot of what we've built. Go after another market, rebrand this. And redefine the value proposition for this tech enables SMB, as I discussed, you know, the small business through kind of the, you know, mid tier type of company that wants to either do direct mail a smart way, or try direct mail out and plug it into their tech stack. And so it was that pivot to this different market that made all the difference. And we had to make tough decisions. We had to let really good people go. It was horrible. It was awful. And you know, there's nothing worse than selling people on a vision and in driving that every day with your head down. And then having to say, You know what, this just isn't working. We got to do something else. So it's a tough thing to do. And to your initial point on this question, startups are not straight lines. Right? They are, they're a roller coaster. They're up and down, they should be trending up all the time. But, but every day, you're gonna have a phenomenal day, the next day is going to, you know, kick you in the face, because something's happened that you got to deal with that is very hard. So there is not this, it's never this magical ride that maybe gets presented in the media sometimes in interviews, but more, more of a day to day grinding, and having to make some really tough decisions along the way.

Susan Sly 35:32
To your point, and this is what so many people, and thank you for being raw and real, so many people don't understand is, that often a startup's direction is driven by the paying customer. And as obvious as that sounds, and I know you have that as to I've seen founders who are so married to their technology, that they're not listening to the VOC- the voice of the customer. And that's the whole thing with pivoting, where it's like, okay, we've got this product, we've got an idea. Now let's go, let's go, let's go, let's go. And, you know, it's like every no leads you to a yes, and all these things we hear in sales. But at some point, I love that your team had the courage to say, wait a minute, where experience is a lot harder than it's supposed to be, so maybe we're going the wrong direction. And we're going to pivot. And that the, I'm working on a project called Pivot right now and that's, that whole piece around having the guts to pivot when you know you're going to lose face when you brought in investors who bought into whatever direction you were going, you were like, this is the direction we're going. And then coming back and going, Wait a minute, it isn't the right direction. And if you'll still trust me on this journey, in this ride, we're going to shift direction, but here's why. Because we've got three paying customers lined up in this direction and zero paying customers over here. So thank you for sharing that. Dennis, you're absolutely awesome. Thank you for spending this time in the middle of closing deals before Christmas.

Dennis Kelly 37:02
Well, thank you, Susan. It's been a real pleasure. It's been great to talk with you today. And I'm thrilled that I've been able to take part of this whole great podcast that you put on, I'm thrilled.

Susan Sly 37:15
Well thank you. And for everyone listening, you know, small business, medium sized business, maybe you don't have 20 employees, maybe you are very effective with a small group of employees and a bunch of VAs, go check out post Postalytics.com. and contemplate. If you're not getting the results you want with the traditional marketing you're doing, do something different. Again, I am not paid for that endorsement, but I'm a great fan of what Dennis and the team are doing. And I love direct mail. I just think it's so fun. And it's reviving something. It's putting a fresh spin on something that's been there for a while but the numbers don't lie. So anyway, thanks, Dennis for being here. I appreciate you coming.

Dennis Kelly 37:57
Thank you Susan.

Susan Sly 37:58
All right, my friends will this has been another episode of Raw and Real Entrepreneurship and we would love a five star review. So I if I read your review on air, I will give you a $50 amazon gift card. So drop a review. I read all the reviews on iTunes. We're everywhere. iheart Radio, Amazon, you name it. I am the person who reads the iTunes ones because I am a Mac girl and everyone knows it. But anyway, drop your review there. If I do read on the air then I will give you a $50 amazon gift card but you will also have to email info@Susan sly.com and say you dropped the review so we'll know it's you and we know how to reach you. So with that, God bless, go rock your day, and I will see you in the next episode.