Direct Mail Marketing and the Response Rate Question

Last month we published a post regarding 10 direct mail stats you probably didn’t know. Today, we will tackle that age old marketing question — “Which direct marketing channel yields the best response rate and/or ROI?”

In addition to highlighting some key findings from the 2012 DMA response rate report, we’ll also discuss what these mean and how they can apply to your business and its marketing efforts.

*(Some of the following data and statistics come from the DMA 2012 response rate report)

  • Direct mail response rates have dropped nearly 25% over the past nine years. Surprised? Well, you shouldn’t be as we all know direct mail is not the beast it once was in the direct marketing world. But, don’t discount how powerful direct mail marketing still is! Perhaps more notable – even with the steady decrease in response –direct mail campaigns still draw a much better overall response than digital channels. DMA offers this example: “response rates for direct mail to an existing customer average 3.40%, compared with 0.12% for email, which is roughly a 30-fold difference.”
  • Email offers the best ROI.  According to the report, email earned a 28.5 ROI, compared with 7.00 for direct mail. Even though the ROI is better, the response level is still nowhere near direct mail. The difference is that email has a much lower cost than direct mail. Because of the lower cost, email produces the best ROI, but not always the most effective method of communication.
  • The best response rate was actually…telemarketing. Telemarketing produced a response rate of nearly 13% on a house list. This shows the phone is still one of the best ways to connect with people on a one-to-one basis – something direct mail and email just can’t match. On the other hand, telemarketing also had the highest costs: nearly $78 per order or lead for a customer supplied list.
The most telling statistic from the report might be that all direct marketing channels were basically the same when it came down to cost per lead or cost per order, So….

Email = Lower Response/Lower Cost

Direct Mail = Higher Response/Higher Cost

Telemarketing = Highest Response/Highest Cost

So there is no magic formula, right?  Well – what the DMA report shows is that the real key lies in multi-channel marketing. It’s more important than ever (in the digital age) to keep your marketing mix fresh and to learn as much about your audience as you can. Segmentation and Data Analysis are a great aid to help you apply the right marketing mix for your business. Check out our previous post on that topic here