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You want to start a direct mail campaign, but you're not certain what your response rate will be or how much money you can expect to earn. Every campaign for every company is different, but here are seven ways to estimate what your response rate will be.
1) Whether you're trying to generate leads or actual sales.
The response rate for a mailing with a free guide or consultation will be higher than one asking for a sale because there's less of a commitment.
2) The relationship between the appeal of your offer and the investment required.
A chance to win a free Ferrari will get a high response rate because it has a high appeal, and a low commitment.
On the other hand, a mailing offering a prospectus to buy vacation homes in
3) Generally, response rates go up as prices go down and vice versa.
For instance, if you sell $5 ink cartridges, you may need a 2% or 3% response rate to make money on your mailings. On the other hand, if you sell Ferraris and a letter mailed to 2,000 people nets you three sales (a response rate of only .15%), you'll be very happy.
The important thing to keep in mind is how many sales you need to make a profit on your mailing.
4) Whether the names are current buyers or prospects.
The response from people who have already bought something from you can be double that of those who haven't.
5) Whether you're using an in-house list or a rented list.
The house list will perform better than an outside one, because your own customers already have a relationship with you.
6) How well the names on the list match your target audience.
The more closely the names you select match your ideal buyer (business size, industry, job title, etc.), the more likely it is that they will respond to your offer.
It is better to reach 5,000 of the right people than 50,000 of the wrong people.
Again, in-house lists will perform better than one you buy or rent from someone else. Even when mailing to your own list, it’s important to make the right selection of people from that list. Choosing the wrong people can be disastrous. Someone at Ebiza (an online catalog company) mistakenly send a big holiday mailing to customers who were "least likely to buy again." The results were so bad the company went out of business!
7) The creative.
This includes the words you use, the design, the colors, the paper, the size of the mailing, whether it's a postcard or a letter, and how many components it has.
If you don't have results from previous mailings to use as a guide, you can split your list and test one version against each other find out which one gets more responses.