What’s a “good” direct mail response? The one that reaches your stated objectives.
As Steve Cuno writes at Deliver magazine, “I have seen companies launch costly campaigns without regard for such details, only to flounder about in an attempt to measure success afterward. That’s like throwing a dart nowhere in particular and then trying to evaluate your aim.”
Of course, tracking your direct mail results helps you make future decisions. What lists perform best? Which offers? Which mailing formats?
A “typical” response rate is somewhere between 1% and 2% for a purchased list (people who don’t know you or your brand), according to the Direct Marketing Association. A response rate between 5% and 10% can be achieved with an internally compiled list of people who already know your brand, also known as a “house list.” However, these numbers tell only part of the story.
To begin, a “response” does not necessarily mean a purchase. It can also refer to the action someone took in response to the direct mail piece. For instance, did the mailer instruct the prospect to send in a pre-addressed postcard, go to a specific website, call a toll-free number, or visit a showroom? Each of these has different methodology.
A straightforward approach to calculating results involves some math — before you send the first piece of mail.
First, project the total of your campaign costs. At minimum, this includes all creative costs (design, writing), print production costs, and postage. Next, calculate the potential profit you’ll clear with each sale stemming from your campaign. Then, divide costs by actual profits.
Do your research — has this, or a similar product been sold via mail before? If so, you may be able to find response rates for certain kinds of products. You may also discover data on the responsiveness of demographically targeted lists, too.
Then, test your direct mail piece by sending it to a smaller mail sample. This can give you some idea of response rate before sending to a larger list. Testing may offer insights to tweak offers or your call-to-action. Results depend heavily on both.
Once you launch your campaign in full, it’s time to start tracking the response. Tracking methods will largely depend on the action you request of the prospect. For instance, tracking Web clicks versus tracking showroom attendance.
For small mailings, have a member of the staff track inquiries related to the promotion in a simple spreadsheet, including what the inquiry was about and the date. This isn’t perfect but it is a start. It can track responses that trickle in later, too.
Evaluate two kinds of response data. The first, the “front-end” data, looks at how many people took the exact path as requested by the call-to-action (even if it did not result in a sale). Second, measure the “back-end” response and direct sales conversion. (How many people ended up purchasing?) Then, evaluate the numbers and look for a narrative to explain the results.
For example, if 400 people followed the call-to-action and requested additional information from a website, 200 abandoned a Web shopping cart, and 100 people purchased the product, why the gaps? Was the response constrained by a confusing online shopping cart? Were the prospects provided with the timely followup to their questions? Did the mailing list include too many people who were not qualified (hopefully this would be revealed in your test mailing)? The numbers will shake out an explanation.
Remember, direct mail is most successful when the prospect experiences repeated exposure to the brand. It is also paramount that the list be especially targeted to the best prospects, and speak to them directly. There are many factors to test. Consider the response rate the first feedback in an ongoing series of connection with the prospect.