I would suggest most businesses can use direct mail. Without a specific instance, here are some general rules of thumb.
When a company refuses to allow a direct response appeal. This sounds counterintuitive, but many companies insist upon weakening ("fixing") copy to the point it doesn't work. This can cross over to the ludicrous, as when a company -- actually a faction within the company -- hid a mailing to prevent it from going out.
It usually happens due to 1) Vindictive politics, people trying to sabotage other people 2) Extreme image consciousness and disdain for what I'll call "base commerce" or "crass commercialism." It's never about the direct mailing, which can be written to just about any style and be highly informative, just the attitude within the company.
Another case is companies with poor products and services. This is usually coupled with the first issue. Check out
Gunfire Erupts Over "9 Most Important Words in Marketing History"
Usually, these two issues work together. For example, the refusal to change the offer or retarget prospects to improve the perceived value of a product. I've done things like rebundle a single product as a multiple, put in a report, and reposition it for sale to business when it was being sold to consumers.
This was a product with thin margins and low price point that "...just can't be sold by direct mail these days." And sure, the way it was being sold, they were right. I found a highly targeted, sizable list of people who were willing to pay for multiple units at four to eight times the price. Had they insisted I do it their way -- I would probably have fallen flat on my face.
I was told in one company you couldn't do a two step mailing to "our customers." People were requesting things with response cards, and the company had brought down response time to ten days. And people were getting the package they requested and throwing it away ...they didn't remember having requested it.
So I asked the lady who processed the response cards what the company does with the cards, once entered into the database. She told me they threw the response cards away. Now these cards have the requester's handwriting or recognizable address label right on it.
I had the people staple the self-addressed card to the letter -- response doubled instantly.
Really it's very, very, rarely an occasion where "direct mail doesn't work for our company." It's not that direct mail doesn't work, direct mail fails when people refuse to let it work. The remainder is when there is no marketing imagination or support for the direct mail project or direct mail in general. None of which has anything to do with direct mail, but has everything to do with the company culture.
Related:
Write Better White Papers With Irresistible "Pass Around Factor" Advertorials, white papers with infographics, direct mail can fit just about any situation or internal company style guidelines. But there are some fundamentals you can't violate without suffering the consequences.
The Gary Halbert Letter "The few times my ads have failed to work, it was almost always because the client was trying to sell something the public didn't want to buy."