Direct mail:

1. Be true to your RFM. This stands for "recent purchase," "frequency" and "monetary profile." Before developing any campaign, you should know when each customer on the mailing list last purchased a product from you or a competitor; how often that customer buys your product or similar offerings; and what amount she tends to spend for the product or services."Small businesses need to look inward before they look outward," says W. Michael King, creative director at Grizzard Performance Group, an Atlanta direct-marketing agency. "Who are their best customers? Where do they live? What are their preferences? What has been their brand experience as it pertains to their business? They need to answer these and other questions before they lay out any acquisition strategy."Experts say consumers need to receive at least three pieces a month to notice marketing. The price tag is the same if you mail 5,000 pieces to 5,000 customers or send five pieces over five weeks to 1,000 targeted customers.

2. Provide real incentives. Direct mail works by getting your prospect to respond to an offer. That could mean a sale coupon, a free trial or sample, a guarantee of service or money refunded, a special deal for a certain time period, or some other reward for taking action. When you go cheap on your offer, you waste marketing dollars. Nevertheless, incentives don't always require a hefty expenditure of profit or inventory. Time truly is money nowadays. Offer time-savers or head-of-the-line luxuries or special shopping experiences as incentives.

3. Test before you get rolling. "Testing is everything," says Tim Booth, founder and creative director of "I Want One of Those," a multi-channel gadget and consumer electronics retailer based in the United Kingdom that launched in 2000. Within a few years, I Want One of Those had reeled in $10 million (US dollars). The company now produces glossy, four-color mail-order catalogs as well. "We depended on word of mouth in the beginning," says Booth, citing 45% of his first year's sales as coming from customer referrals. His advice:

4. Find partners, then track results. If you are a local merchant or franchisee, shared mailers can be effective. The cost for co-op mailers such as Valpak or Money Mailer runs roughly $35 per 1,000, though it depends on the ad and your area.Valpak, for instance, can develop a psychographics profile of any ZIP code area that interests you. So you can choose specific household qualifiers within a 10-mile radius. The company designs and prints the ad and inserts and mails it. But you owners must be prepared to follow up. The last thing you want if for customers to raise your hand and find no one to call on them.

5. Set appropriate response goals. Industry averages for direct-mail response rates are not particularly meaningful. Everything depends on your product and your price point. "The 1% response rate has long been dead," King says. "Suppose you get a 10% response, but your break-even is 20%?"Or, what if you sell $45,000 machines? One customer response in six months may be all you need to recoup your return on a direct mail investment. Make sure you've set goals that make sense for your business.