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Direct Mail ROI

Direct marketing is the most cost-effective form of marketing. It produces a measurable return on your marketing investment. Most other traditional forms of marketing or advertising do not have a measurable return on investment (ROI). Here are a few examples, taken from the Direct Marketing Association's most recent report.

 

ROI on various forms of direct marketing

Direct Marketing Method Revenue Produced
Commercial outbound email $43.62 returned for every $1 spent
Internet search advertising including buying keywords $21.85 returned for every $1 spent
Non-catalog direct mail, including flyers $15.22 returned for every $1 spent
Overall average return on direct marketing $11.65 returned for every $1 spent

Source: Direct Marketing AssociationThe Power of Direct Marketing Report. Prepared August 2009 using the economic model of all US direct marketing activity. This report is updated each year. It aims to help marketers plan expenditures, sales, ROI, and employment by incorporating the most recent data available on developments in all sectors of the US economy. EnthusiastsDirect is not affiliated with the Direct Marketing Association or the Report. The facts are reported here to show the ROI of various direct marketing efforts.

 

ROI in Direct Mail

There are many variable that affect response rate. An average response rate can vary between 0.5% and 1.5%. Although many things can make that response rate higher or lower, generally it comes down to three main things: the offer, the timing of the offer, and the list or recipients.

The "offer" includes the entire package including the envelope, the copy (words), the photography, the design, and the price. For example, a postcard promoting an oil change for $24.95 would be the "offer." Factors that make the offer more or less appealing could be the price (if all competitors have an oil change for $29.95 and your price is $24.95 you have a competitive advantage), or the call to action (if you don't have an address, phone number or store hours on your postcard your prospects can't respond to your oil change offer).

The timing usually refers to time of year, or where it falls during a season. For example, a year-end clearance sale in December. Timing can increase or decrease the response rate (if your oil change offer expires at the end of the month and the postcard is mailed on the 28th there isn't enough time to respond).

The list refers to the recipients of the offer, and that can be a big factor that influences response rate. For an obvious example, a mailing selling off-road tires to 4x4 enthusiasts would have a better response than sending the same offer to owners of Volkswagens.

Test, Test, Test

Most direct mail professionals...even the most experienced pros...will test and re-test various offers. That's the only way to really know if something is working or not. Realistically there isn't always time, but the most successful direct mail campaigns will factor in ways of testing price, or timing, or the list.