Direct Mail Response Rates: How to Analyze and Improve Performance Like a Pro?

“What is a good direct mail response rate?” is a question that is always on top of marketers’ minds.

It’s no surprise – everyone aims to create effective direct mail campaigns that bring results. What is surprising is our answer: Response rates don’t really tell you anything. Improving campaign performance requires more than getting high response rates; you also need to increase ROI. 

As a direct mail automation platform, we know a thing or two about delivering successful direct mail campaigns. In this guide, we’ll help you improve your direct mail response rates and performance. Let’s get started.

Direct Mail Response Rate: Quality Over Quantity

Direct Mail Response Rate_ Quality Over Quantity

It seems natural to conclude that a higher response rate always turns out better than a lower rate. In many cases, this is true.

But successful direct marketers know that other metrics are far more relevant to what matters most – how to make your direct mail marketing budget work harder so you earn more for every dollar you spend on direct mail.

So let’s explore how to:

  • Calculate and understand direct mail response rates
  • Evaluate direct mail response rates and other direct mail statistics
  • Estimate response quality in direct mail campaigns

How Do You Calculate Your Direct Mail Response Rate?

We often get asked, “what’s the best way to calculate the direct mail response rate”? Here’s a quick and easy method:

  • Add up all of your responses. Gather data from your online response tracking tools and/or offline response tracking
  • Add up the quantity of mail you sent. Your direct mail service provider should provide you with a real-time dashboard to make this information easy to access
  • Divide the total responses by the total mailpieces sent. Be sure to use the total responses, not sales, because that’s a different calculation 300 Responses/10,000 mailpieces sent = 3% Response Rate

That’s it. The calculation method is pretty straightforward. The magic comes from understanding the levers that drive response rate and how to use them to maximize your direct mail ROI.

Average Response Rates – According to the Numbers

The DMA (Data Marketing and Analytics) publishes an annual survey of marketing response rates that many marketers use for benchmarking. The respondents are typically marketers at large organizations that send a lot of direct mail.

The data shows that the average response rate is 9% for direct mail campaigns. It also says that as a result of receiving direct mail:

  • 92% are driven to online or digital activity
  • 87% have been influenced to make online purchases
  • 86% have connected to a business online
  • 54% have engaged on social media
  • 43% have downloaded something

What’s interesting is that direct mail response rates appear to be rising. 

Why? Various factors include lower overall mail volume (each piece stands out more), better mail tech and personalization techniques. Here’s why we built Postalytics to help accelerate this trend.

Getting a High Response Rate Is Easy… Seriously

It’s certainly true that higher response rates tend to correlate with better-performing campaigns. But the response is only the first step to making a sale or generating repeat business that makes using direct mail so effective.

As we saw above, direct mail response rates are easy to calculate. Unfortunately, that one number alone doesn’t provide enough context to determine whether it’s “good” or not.

Do You Want a 95% Response Rate? It Depends

Consider this. We can guarantee you’ll get a 95%+ response rate if you offer to send someone a $100 bill for doing absolutely nothing. Who wouldn’t want a free $100?

We can also guarantee you a 0% response rate if you’re sending a mailing with no offer, no compelling message, and no reason to respond.

Response rates differ between campaigns, with many factors at play.

Having a complete understanding of your campaign and the variables that impact the response rate will help you set expectations and better estimate the types of returns you can expect from your campaign.

The Top 5 Factors That Impact Direct Mail Response Rates

If your direct mail response rates aren’t where you want them to be, your first assumption would be that your campaign content or design is ineffective. 

But many other factors impact your response rates. Here are the top 5 factors that you need to consider.

The Top 5 Factors That Impact Direct Mail Response Rates

#1 Audience: How targeted is your list?

If you sent an offer for beauty supplies to a bunch of teenage boys, what kind of response rate would you expect to receive? Probably not very high. The makeup of your list is the most important factor in determining expected response rates.

Direct mail response rates are always higher when you send to a list of customers who’ve already expressed interest in your brand or product. That’s why the “house list” response rates described earlier are much higher.

“Cold mailing” or “Prospect Lists” will always generate lower response rates, just like cold calling or cold emailing.

But does that make them less valuable? Of course not! Every organization relies on new leads at the top of its funnel. Just because these campaigns will have a lower response rate doesn’t mean you should avoid them.

Want to learn more about how direct mailing lists are compiled and sold? Check out the Postalytics ultimate guide to direct mailing list selection and testing.

#2 Your offer makes a huge difference

Whether trying to make a sale or prospecting for leads, your offer makes a big difference. The sweeter the offer, the more likely you’ll get a response.

But be careful. If you make your offer too good, you’ll get responses from people who aren’t great prospects. That can be distracting and negatively impact overall results.

Your offer must be clear. It must be easily found when your mail piece is scanned. Your audience will first scan your mail piece, THEN read it only if interested.

The easier and less commitment involved in acting on your offer, the higher the direct mail response rate will be.

Free. Money back guarantee. No-Risk. All of these phrases remove fear from taking action.

#3 Why messaging matters

Your messaging strategy, copy, and creative execution will certainly boost your direct mail campaign. The more you can customize and personalize your message, the more likely it is that you’ll generate more responses of a higher quality. And at Postalytics, we make it easy to quickly set up templates for sending more targeted mail.

#4 Format selection makes a difference

Whether you’re sending postcards or letters, well-designed mailpieces with visual appeal make it more likely prospects will take a second look at your mailer, increasing response rates.

Of course, a higher quality piece will cost more to send, so there is a tradeoff there. If you’d like to learn more about the cost of direct mail, please refer to our recent blog post.

A study from DMA tested response rates for several different types of collateral:

A study from DMA tested response rates for several different types of collateral

#5 Multiple touches and/or channels for peak results

Multiple touches and_or channels for peak results

Multi-touch campaigns get a better response than single-touch campaigns. Multi-channel marketing works better than single-channel marketing.

Evaluating the success at each touchpoint is important for optimization, but multiple touch direct mail campaigns are typically more successful for a reason — because sometimes you need a second or third mailer to convince some prospects to respond.

Think about it. What would you think of a sales rep who makes a single call, leaves a message, and never calls back? That’s what sending a single mailer out is like, especially to a cold audience (or Prospect List).

So if you control your response rate, how should you adjust those controls? Let’s take a look at a couple of scenarios that show how to review response rates in context with other data to evaluate profitability.

Beyond the Response Rate: Key Metrics Carry Even More Importance

When you send direct mail, an initial response is only the first step to a sale – marking the beginning of what may be a very profitable customer relationship. Yet savvy direct mail marketers pay close attention to other metrics which impact bottom-line results.

To see how this works, let’s assume you’re in charge of marketing an online subscription service – for example, a personal finance tool that helps consumers review their investment assets, track tax-related expenses, etc. Perhaps your standard fee is $25 per month.

You likely already use a variety of online advertising tactics to get prospects to a landing page that offers an introductory free trial. But you could also send direct mail to lists of people you think are likely prospects, include a trackable link with an offer for that free trial, and set a deadline for responding.

That’s a reasonable offer because it relates to what you’re selling.

You might make that offer more appealing by adding a coupon for an unrelated product as a bonus. However, that could attract those who only want the coupon and would not consider renewing your service for the usual fee. On the other hand, merely offering the service in your mailing at full price wouldn’t be very compelling because there’s no reason to “act now.”

Here’s a hypothetical example of how a mailing might perform under these kinds of assumptions:

OfferFree trialFree trial and a giftSign up now
Quantity mailed1,0001,0001,000
Mailing cost(at 80 cents per piece)$800$800$800
Responses16325
Response rate1.6%3.2%0.5%
Cost per response$50.00$25.00$160.00

Note that you calculate the direct mail response rate by dividing the number of responses by the quantity of mail you send and that the cost per response is the total cost of the mailing divided by the number of people who respond.

Yes, you did sign up 5 subscribers using the “buy now” offer, but they cost you $160 each. The free gift offer got responses that only cost you $25 each, but you did not yet earn any revenue and you actually have to pay a gift. The free trial offer is kind of in the middle — no additional expense but no revenue either.

To compare the performance of these mailings, you’d have to track how each one generates revenue – or how many who respond convert to paying subscribers. That third offer already did convert five people, but how might those other two offers work?

To determine that, we need to calculate the “conversion rate.” This is the rate at which you turn responses into customers. Simply divide the number of those who sign up by the number of people who initially responded.

Here’s how the mailing above might look after evaluating performance on that basis:

OfferFree trialFree trial and a giftSign up now
Quantity mailed1,0001,0001,000
Mailing cost(at 80 cents per piece)$800$800$800
Responses16325
Response rate1.6%3.2%0.5%
Cost per response$50.00$25.00$160.00
Conversions to sales1285 (from above)
Conversion rate75%    25%    100%
Cost per sale  $66.68$100.00          $160.00

Here we see a cost per sale where you actually earned revenue. Only 25 percent of those you offered a gift decided to continue to become paying customers, but 75 percent of those who you didn’t “bribe” with such an offer did continue. Even though you got fewer initial responses, the cost per sale was a lot lower. Also, note that even though 100 percent of the respondents to your simple “buy now” are paying customers, those sales cost a lot more.

We could certainly continue this analysis to see which mailings and which offers not only converted from a response to a sale but how long those customer relationships can last. This “lifetime value of a customer” concept is important to analyze like this because if you get $25 per month from someone for a few years, that’s a lot more profitable than if the relationship lasts just a few months.

The point here is that a high direct mail response is only better if it’s a good response. Paying more for a high-quality response is a lot better than paying less for a poor-quality response. And you’re in control based on the offers and lists you use.

You don’t have to be a genius to figure all this out because continuing to test offers, lists, and other strategies is a lot easier with direct mail than with other media. And when you use Postalytics, these metrics are automatically tracked so you can review up-to-date performance at any time.

Business-To-Business Lead Generation: Following Up With the Best Leads

Business-To-Business Lead Generation_ Following Up With the Best Leads

Now let’s look at a second example – one based on lead generation for complex sales that require interacting with a salesperson.

If you’re a salesperson, you know full well that following up with poor leads is a frustrating way to spend the day. But when you have plenty of high-quality leads, you make a lot more sales a lot more easily. Generating sales leads through direct mail is an excellent way to get better leads because you can easily choose specific lists and target offers to specific groups.

Now let’s look at a second example – one based on lead generation for complex sales that require interacting with a salesperson.

If you’re a salesperson, you know full well that following up with poor leads is a frustrating way to spend the day. But when you have plenty of high-quality leads, you make a lot more sales a lot more easily. Generating sales leads through direct mail is an excellent way to get better leads because you can easily choose specific lists and target offers to specific groups.

OfferOnline insurance resourceOnline insurance resource and free gift
Quantity mailed1,0001,000
Mailing cost(at 80 cents per piece)$800$800
Responses1020
Response rate1.0%2.0%
Cost per response$80.00$40.00
Conversions to sales54
Conversion rate50%    20%    
Cost per sale  $160.00$200.00          

That mailing that generated the lower response rate actually resulted in a lower cost per sale. Not only that, sales time is spent far more efficiently because keeping track of fewer higher-quality leads is more manageable than tracking too many low-quality leads.

Sales lead generation gets a lot easier when you can control both the quality of the leads you get and generate the right number of leads. In the old days, you might have to send thousands of mailings to keep printing and mailing costs reasonable, but with Postalytics, you can design a program to send as many mailings out on whatever schedule you like. You pay about the same cost per piece sending out one or two a day as if you sent thousands at once.

Tracking is Key

Like any marketing activity, lifting direct mail response rates requires that you learn from previous campaigns.

To do that, you’ll need built-in tracking to evaluate true response rates and optimize future campaigns.

Postalytics can help. So, our solution integrates with popular marketing and sales platforms like HubSpot, Salesforce, ActiveCampaign, and InfusionSoft, allowing you to keep a close eye on multi-channel campaigns while optimizing your direct mail offers.

More Response – Or More Profitable Response? It’s Your Choice

It’s natural to think that high direct mail response rates are better than lower rates. 

But your real focus should be on the quality of the response you get. 

After all, an initial response is only the first step to acquiring a customer and nurturing that customer relationship. As a result, those follow-up activities can get expensive, so make sure you follow up with the best leads and prospects at all times.

To do that, you can control your response rate to open up a sales funnel and narrow it down when it seems fitting. That’s what makes direct mail such an exceptional form of communication – because you have all the flexibility you need to use the response to achieve your goal – a higher ROI on your marketing investment.