What Is a Good Direct Mail Response Rate and How To Improve It
Direct mail campaigns have been implemented by businesses across most industries for decades. The technological advances only strengthen the position of this marketing tool as one of the most effective ways to reach and build a client base and get your information out there.
Of course, any marketing strategy can fail if it's not utilized right. The direct mail campaign has many potential advantages, the most crucial being reaching new customers with your offer, boosting your sales, and building brand recognition.
But it's valuable to base your strategies on data such as direct mail response rates in order to achieve the best results and return on investment.
How to recognize what a solid direct mail response rate looks like and how to improve it? You'll find the answers below.
Success Rate of Direct Mail Campaigns
To understand why the direct mail response rate is so important, it's beneficial first to explain what it is. The response rate is the measurement that tells us what percentage of people responded to a direct mail marketing campaign.
In other words, it's the measurement that tells you how effective your marketing is. As we said at the beginning, any successful campaign nowadays is based on data, meaningful analysis, and strategic planning, as more businesses want to invest in campaigns that can actually offer solid returns on investment.
Of course, the success rate itself is not aligned with some particular response rate. For every business, a successful direct mail campaign will mean something different. Why is that?
It's simple! It will depend on what goal you've set for the campaign, as well as the nature of the industry you're working in. For some companies, a low direct mail response rate doesn't equal an unsuccessful campaign, as even a few responses can make up for significant sales.
A good example is the real estate industry. Chances are your direct mail campaign will reach many people, even within your target audience, that are not interested in selling or buying a house right now.
But you can still profit just from a few clients (or even one!) that will take you up on your offer, making your direct mail campaign a success.
The Purpose of the Campaign
One of the most significant measurements to consider when evaluating the success rate of any campaign is to view the end results through the lens of the campaign's purpose. The number of responses you get should serve the objectives of the campaign.
You may view the response rate differently depending on whether the campaign was aiming to increase sales or generate leads and offer informational value for your potential customers.
In the first case, a high response rate is not always necessary to achieve the direct mail campaign's goal because, like in our example, it will depend on the industry's characteristics.
However, if your campaign is informational, the higher response rate is a welcomed sight, as this is how you will generate the most leads and engage with your potential clients.
What Is the Average Response Rate for Direct Mail?
Although one could think that direct mail marketing campaigns are a relic of the past, it couldn't be further from the truth. Direct mail holds a significant place when it comes to modern marketing strategies.
It makes sense, considering the fact that people have become very aware of how overstimulated with information we are online. And this is also reflected in research.
According to the Direct Marketing Association (DMA), the average direct mail response rate is 4.4%, which in comparison to 0.12% for email marketing campaigns, which illustrates a rather clear motivation to use direct mail.
The DMA actually discovered that direct mail's response rates are anywhere from 10 to 30 times higher than what can be observed with digital channels. This is a considerable difference and something to keep in mind when constructing a marketing strategy.
Direct mail offers customers something that not one email marketing campaign can offer - realness, the ability to handle real objects (in this case, the mail) in the three-dimensional world. And it is something deeply rooted in how humans operate; it's eye-catching because it's not just a construct.
As a result, 60% of respondents in the The Private Life of Mail study said that the traditional mail made a more lasting impression on them, and 95% of respondents in the age group 18 to 29 from Gallup's report had a positive response to receiving personal mail like letters and cards.
A direct mail marketing strategy may be one of the most favorable strategies to pursue by businesses that don't want to drown in the sea of email offers, newsletters, and pop-up ads, surrounding us in almost every online space.
Direct Mail Campaign Costs
We know a direct mail marketing campaign can be effective but is it profitable? What are the costs of such a campaign?
There are several variables to consider when calculating the costs. These would be
- costs of copywriting and design
- printing and mailing costs
- costs related to acquiring the customers' contact information (if you don't have the contact base already)
As you can probably tell, these expenses will vary between companies and different campaigns. In some cases, you might expect to pay less than $1 per person on your direct mail campaign; in others, the costs can amount to $200 per person and more.
To get the full picture, it might be helpful to consider ROI, meaning return on investment.
Direct Mail Marketing ROI
ROI is one of the best ways to calculate the profitability of your campaign. There's a simple formula to calculate it.
ROI = net return on investment (net return = profit – the cost of investment) ÷ cost of investment × 100%
We can see how this formula works by analyzing a hypothetical campaign. Let's say you have a medical practice and want to expand your patient base.
- The costs of your direct mail marketing campaign were $700.
- You've sent 1000 postcards to potential clients in your area.
- Your direct mail response rate was 4%. That means 40 responses, but let's assume these responses resulted in 30 new patients. Your profit amounts to $3000 (assuming every patient brings $100 of profit).
- Subtracting all the costs of operating your practice, you're left with $1000 of profit.
- Your net return on investment is $300.
- ROI equals 300 ÷ 700 × 100% = 43%
The 43% return on investment is a solid outcome that indicates this marketing investment makes sense.
How to Calculate Direct Mail Response Rate
We've discussed the ROI and its role in evaluating the success rates of marketing strategies. Next to ROI, the direct mail response rate is one of the campaign's key performance indicators, and it can help us understand if there are any opportunities to improve in future campaigns.
The direct mail response rate is the number of people that responded to our marketing campaign, and there is an easy way to calculate it.
Response rate = responses ÷ sends
Going back to the previous example, 40 clients that responded to the campaign from 1000 postcards equals a 4% response rate. This number fits well with the average response rate that many direct mail campaigns achieve.
Of course, it can be argued that 4% is a low response rate, and companies should always strive for the highest number possible.
It's valuable to keep in mind that engaging with modern customers is not at all an easy task. Only when we combine the 4% response rate with ROI and other performance indicators, like conversion rate and customer retention rate, can we judge whether our marketing campaign methods are effective or not.
How to Improve Your Direct Mail Response Rates
What if you wish to improve upon your marketing efforts and reach a higher response rate? There are several campaign areas you should take a closer look at. It might take some time and effort, but it will help you optimize future campaigns, so it's worth it!
How to build an effective campaign?
Collect the Data
It might seem obvious to many, but it's important to emphasize this point. Response rate, ROI, and other campaign success indicators can be calculated only when you track your campaign's performance.
Tracking how many people responded to your campaign is one of the most significant steps to building a foolproof campaign. How to do it then?
Unlike email marketing campaigns that usually use a trackable link to access this information, direct mail campaigns rely on other methods such as coupon codes, QR codes, and trackable URLs and phone numbers.
Especially interesting are trackable URLs and phone numbers that can help you understand which parts of your content generated the most interest and what groups of people are most influenced by your campaign.
Collecting and analyzing this data will help design better campaigns in the future.
Get to Know Your Audience
It's the basis of any content creation. To be noticed, you must understand who you're trying to reach. Different age groups will be more responsive to different kinds of messaging.
If you want to increase your response quality, analyze your target audience. Match the language, design, and call to action to what your clients want to see.
If you're targeting millennials, for example, attaching a trackable URL or QR code makes a lot of sense, as this group is far more likely to use a smartphone to get in touch with you than baby boomers are.
Check the Mailing List
Precision is vital when conducting a direct mail marketing campaign. When you've chosen the area for your campaign, be sure to remove any irrelevant addresses from the mailing list, like business addresses, PO boxes, or addresses of your regular customers, if the campaign is focused on generating new leads.
Remember that younger people are more likely to move more frequently, so checking their current addresses in the National Change of Address database is a good idea. You can cut some costs and avoid wasting your resources.
Mind the Design of the Content
The design you choose for your content should also be analyzed. You need to match it with the campaign's intent and your budget. Postcards might be great to remind the receivers about monthly check-ups or new promotions, and they are cheap to print and send.
More costly are catalogs or calendars, but they are a great tool to help build the brand's recognition, as less often they end up in the trash can. If your budget allows it, you can also customize the envelopes, which can help you stand out from other mail.
Response rates from your campaigns give you an excellent insight into how your operations are received, is what you're doing is working, and, last but not least, are your campaigns profitable. For these reasons, it's a smart business move to track this data and analyze it to best optimize your future campaigns.
In contrast to popular belief, there's still a lot of room for direct mail campaigns. By combining this marketing strategy with others (email campaigns, social media campaigns, etc.), you can generate new leads and increase your profits.
If you want to learn more about this topic, contact our specialists at Taradel. We are here to change the way you do your campaigns!