Direct Mail Response Rates Mislead if You are Careless


I could tell you that the average temperature in the world is 60 degrees Fahrenheit. But that fact wouldn't keep you from getting sunstroke in Cairo. Or frostbite in Tuktoyaktuk. Averages tell you only so much.

Direct mail results only tell you part of what you need to know. They tell you the percentage of people on your list who responded. That's it. They don't tell you if you broke even. If you made a profit. Or if the sales people who followed up on the leads closed any sales.

Response rates are misleading if you read them incorrectly. For example, I recently wrote a fundraising package for a North American nonprofit. The letter, mailed to a list of 6,850 donors, generated 35 gifts (responses). Run the numbers and that's a response rate of half of one percent, a dismal result. But this number is misleading because my client (against my recommendation), mailed the letter to everyone donor in his database, including lapsed donors who had not made a donation for years.

So I asked my client how many active donors he had in his database. Two hundred, he replied. That's 200 active donors out of a list of 6,850 total donors. Run the numbers again, and you'll see that my letter generated a 17.5% response rate when mailed to active donors, or, to put it another way, when mailed to a good list.

Another problem with response rates, valid as they are, is that you cannot use them for every industry. Take the Olympic Games. When a nation applies to the International Olympic Committee, requesting that the Olympic Games be held in their capital city, they need a 100% response rate to succeed. They need one "client" to buy their proposal or their mailing has failed.

Take a magazine publisher. It mails to 500,000 names, generates only a 1% response rate, yet considers the mailing a success. But a stock. broker who targets wealthy doctors in Lower Manhattan has different expectations. His lead generation letter needs to generate a response rate of at least 25% because he only mails it to 100 doctors, and he only closes around one in every 25 doctors who responds. A one percent response rate, even if it is an average, is of no use to him.

Average response rates are useful when they are for your product or service and your target audience in particular. If you can discover the response rates that your competitors are generating by mailing sales letters to the same prospects that you are targeting, then, by all means, use those response rates as a yardstick against which you compare your results. You are talking specifics.

Some response rates for various industries.
The Direct Marketing Association (www. the-dma. org) calculated the average response rates for a number of industries:

Fundraising: 5.35%
Retail: 3.36%
Businesses selling services to businesses 3.34%
Manufacturing: 3.17%
Personal and repair services 3.07%
Travel 2.98%
Computer/electronics: 2%
Packaged goods: 2%

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