Average Direct Mail Response Rates and Other Marketing Stats

So you've decided to launch a direct mail marketing campaign to generate more leads or sales for your business. Or maybe you've been "tasked" with this project from a supervisory type.

Either way, you're now wondering what you stand to gain from such a marketing strategy. How much of a response should you expect? What are the average direct mail response rates for different types of mailers? What kind of ROI should you be aiming for? These are some of the questions we will address in this article.

We maintain some anecdotal data on direct mail response rates. But it doesn't hold a candle to the data collected by the Direct Market Association (DMA). So I'll defer to their expertise on this subject -- for the numbers, at least.

Response Rates and Trends

The following information comes from the DMA's "Response Rate Trend Report" for 2010. It was the most current information available, at the time of publication:

• Overall, the average response rates for direct-mail marketing pieces have remained consistent over the last few years.
• Letter-sized envelopes are one of the most common formats for both business-to-business (B2B) and business-to-consumer (B2C) direct mail. In this category, the average response rate was 3.42 percent for an in-house database, and 1.38 percent for a prospecting database.
• Note the dramatic difference between the two types of mailing lists above. Response rates are usually much higher for a "house list," when compared to a prospecting list. An in-house database includes contacts you've acquired through your own efforts (current customers, website inquiries, etc.). A prospecting database, on the other hand, includes people with whom you've had no previous contact -- i.e., cold-calling or cold-mailing.
• Keep in mind that some businesses generate response rates that are much higher than the average. Others will post lower numbers. It depends on the audience you are targeting, the strength of your offer, and the goal of your campaign. For example, a postcard that offers some kind of freebie (for lead-generation purposes) is going to produce a much higher response than a postcard used for direct sales.
• In general, the average response rates for B2B direct mail campaigns are higher than consumer-targeted campaigns.
• Statistically speaking, you will generate more responses with a lead-generation campaign than a direct-sales campaign. The reason is fairly obvious. When going for direct sales, you are asking more from the recipient. Lead generation requires less of the recipient.

So there you have it, average direct mail response rates in a nutshell. But how useful is this information to you, as a marketing planner? That's the question we will address next...

Averages Aren't Very Useful for Decision-Makers

Don't get too wrapped up in the average direct mail responses. It's not actionable data, because it encompasses too many business models and too many marketing goals. There are plenty of variables in this marketing strategy, so the general trends may or may not apply to your business model. Instead of concerning yourself with the average response rates from across the board, you should focus on your own success rate. We will talk more about this later.

What kind of variables are there within direct mail? A lot. The response you get will depend on the following things:

• The product or service you are selling
• The design and content of your marketing piece
• The offer you are making
• The timing of the campaign (seasonal, time-sensitive, etc.)
• The type of action you expect from the recipient (e.g., direct sales vs. leads)
• The mailing list you are using (in-house list vs. outside prospecting list)
• The state of the economy at the time you conduct your mailing
• And so forth ... it's a long list!

Now you can see why average direct mail response rates aren't very useful. The National Mail Order Association offers a good analogy to support this idea. A one-percent response rate might be great for someone who is selling expensive machinery to farmers. But for a hotel or resort that is trying to book rooms, a one-percent response might be considered terrible. Across-the-board averages just aren't very useful for the individual marketer. So don't obsess over them.

A Better Way to Measure Direct Mail Success

You might want to start with your break-even point and work backward from there. This is the point when your direct mail campaign pays for itself. If you spend $10,000 on a campaign, you want your return on investment (ROI) to be at least $10,000. Your ROI might be measurable immediately after the campaign, as is the case with direct sales. Or it might be measured in terms of new customers, as is the case with lead generation. Either way, it needs to be measured.

Make an initial attempt with your direct-mail marketing pieces. Track the responses to this mailing. This is your "control" -- your baseline response from the first mailing. Next, you would try to improve upon the control by implementing the best practices of direct marketing. This is much more useful than comparing yourself to other marketers. Find your own path. Track the results. And then try to improve upon those results going forward.