Thinking of diving into direct mail marketing, but unsure of what to expect in terms of response rates response rates?
You aren’t alone. It’s a common concern that we run into with new customers here at Postalytics.
If you’ve never launched a full direct mail campaign it’s only natural that you wouldn’t know what to expect and for anyone that is in charge of a marketing budget knows — trying new channels can be a bit of a scary prospect.
Measuring Direct Mail Response
Calculating the response rate for direct mail is pretty straightforward.
Simply divide the total responses to your mailing (not the sales – that’s a separate calculation) by the number of mailpieces sent.
300 Responses/10,000 pieces = 3% Response Rate
Average Response Rates – According To The Numbers
The DMA (Data Marketing & Analytics) does 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. As you can see, they break down their responses by list type.
A “House List” is a list of current customers or leads that have expressed interest in your products or services. As you can see, they’ll respond at high rates. The DMA survey had the average at a bit over 5% in 2016.
A “Prospect List” is a cold list, with no association or stated desire to hear from you or your brand. These cold campaigns are a common use of direct mail, as it is an efficient way to drum up new leads. You can see that the 2016 survey had the average response rate at 2.9%.
What’s interesting is that direct mail response rates appear to be rising. Both House and Prospect List figures represent dramatic jumps from the 2010 survey results.
Why? We think there are a variety of factors, including lower overall mail volume (each piece stands out more), better mail tech & personalization techniques. Here’s why we built Postalytics to help accelerate this trend.
Response Rate Factors & Considerations
Response rates differ between campaign. There are many factors that ultimately have an effect on the overall response rate. Having a complete understanding of your campaign and the limitations that could lower the response rate will help you to set expectations and better estimate the types of returns you can expect from your campaign.
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 when it comes to determining expected response rates.
A more targeted list will be more interested in your offer and therefore respond to the offer more often. If your list isn’t targeted, you’re going to fall below the average response rates that we outline in this article.
While your goal should always be to send your offers to as targeted of a list as possible, campaigns that are able to generate a reliable return from less-targeted lists are still viable campaigns and have a lot of room for optimization and improvement.
How Aware is Your List?
How aware of your company and products is the list? Have they interacted with your company before? Have they received marketing materials from you in the past? If it’s a fresh list that has never had any exposure to your company or products, you can expect a lower response rate than you would from campaigns where the person is already dialed into your offering or has expressed some interest in the past.
What Kind of Offer are You Sending?
Not all direct mail offers are created equally. A more expensive offer will (generally) receive lower response rates than an inexpensive one and require more stringent targeting. An offer that requires very little commitment in terms of a call to action will convert at a higher rate than those that require more from the recipient.
What Type of Collateral Are You Sending?
The package that your offer arrives in matters. Collateral that appears to be more official is on thicker stock, or gives the air of importance will cause your prospects to 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:
Will There Be Multiple Touch Points?
For some campaigns, evaluating the response rate on the first send is less important than evaluating the response rate at the end of the campaign. This is true for cross-channel campaigns as well. Ultimately, evaluating the success at each touchpoint is important for optimization, but longer campaigns are typically long for a reason — because the prospect will need more convincing than a single mailer could facilitate.
What Industry Are You In?
Different industries convert at different rates. The demographics of most direct mail audiences tend to skew a bit older than digital channels, and with that see higher response rates that better align with the audience.
What Response Rate Can I Get?
If you’re just starting out with direct mail, as with any other channel, you probably won’t meet or beat the response rates of the pros that participate in the DMA survey. You can get there with some time, testing and learning.
Because of all of the reasons that are listed above, there really is no “average response rate” without factoring in those issues. A general guideline for a cold or prospect list that we give our customers is a response rate of 2%. This assumes that:
- Your creative is well designed, written and has a clear and strong call to action, and
- Your offer does not require a lot on the part of the recipient. In other words — it should be easy for them to respond. This also means that the action that you are asking them to take should be free.
Free offers play a huge role in any lead generation campaign. If you are directly asking for a sale, you can expect response rates much lower than 2%. Of course, these campaigns can still generate a substantial ROI even with response rates lower than 2%, but it is important that you are able to identify a response rate that you need to hit for the campaign to remain profitable.
Response Rate is Useless Without Gauging Response Quality
Having a high response rate isn’t all that useful if you are generating low-quality responses. The response rate only tells you how many people responded, not what they responded with. You have to look at your back end conversions that come from the responses to determine the quality of those responses. Your entire list could respond, but if none of them are turning into paying customers than your response rate isn’t telling you much about the success of your campaign.
Tracking is Key
Like any marketing activity, lifting response rates requires that you learn from previous campaigns. To do that, you’ll need cross channel tracking to evaluate true response rates and optimize future campaigns. Postalytics can help. 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.