What’s a Good Direct Mail Response Rate?
September 2nd, 2010 Filed under: Direct Mail Response — Direct Marketing Author
When you talk to new clients about writing an email or letter for them, they often say something like this: “What kind of response rate do you think we might get? 1%? 3%? All we need is a ballpark guess. And don’t worry. We won’t hold you to it.”
You certainly can’t blame them for asking. They’re spending their money, not just on the copywriter, but on the cost of list rental, production, postage, etc. I’ll bet you wish you could give them a number, but you can’t. You see, there are so many variables involved, guesstimates just aren’t very helpful.
Let me list just three of the many important factors that affect response rates and I think you’ll understand my reluctance to whip out my crystal ball and make predictions!
1. The List
Is it a house list that’s well cleaned? A compiled list? A brokered list you’ve never tried before? Without having experience with a specific list, you’re in the dark!
2. The Offer
Let me offer your prospects a free Rolls Royce and I’ll guarantee you a 100% response rate. What’s that? No Rolls Royce? You want to offer a White Paper on the history of Zero Bias Schottky Diodes? I think it will be a bit harder to estimate the response rate a priori!
3. The Creative Format
O.K. The assignment is to mail prospects a piece that drives them to your Web site. We can go with a post card, a multi-fold self-mailer, a letter, etc. It can be 4-color, 2-color, or straight black. We can use photography, illustration, cartooning, or go all type. It’s hard to make a guess about response rates until you know exactly what format you’re using!
And that’s just for starters. Other variables include your product price, the “positioning” of your product, the competitive situation, the time of year that you’re mailing, etc. So now that I’ve thoroughly discouraged you, let me suggest an alternative to guessing response rates . . . Do a break-even analysis.
In other words, figure out what your total costs will be. This is not a number you have to guess at. You can compute it very accurately indeed. If you want to mail to 50,000 prospects, you add up all your costs including printing, creative, postage, list rental, etc.
Next, you compute how many leads/sales you’ll need to break even based on your product’s selling price. When you have the response rate required to break even in front of you, you should have a good feel for whether this rate seems achievable. This makes a lot more sense than just guessing at response rates in the dark.
Also, let me reiterate how important testing is. If you want to get a handle on response rates, you have to be able to test lists, offers, creative, etc. Where should you start your testing efforts?
Edward Nast, the great direct response expert, said: “The greatest differences in results can be expected from changes that affect the way the product is positioned. Offer-changes run a close second, with very dramatic changes resulting from changes in price, premium, commitment, etc. . . . The big differences – 200 and 300 percent lift factors – almost always come from product positioning, offer changes, or the selection of different lists.”
The take-away message? It’s better to test than guess. Rigorous testing requires resources and commitment but, believe me, it’s the way to make money!
Ivan Levison is an award-winning, direct response freelance copywriter. Download a free copy of his new report, “101 Ways To Double Your Response Rates!” at http://www.levison.com/subscribe. Contact Ivan any time at ivan@levison.com
