What Kind of Response Rate Can We Expect?

If you have been in the direct marketing business for long, then it is certain that your manager, client or colleague has asked you this question. Most direct marketers consider this an unanswerable question without knowing the results from previous tests for a specific offer to a specific mailing list.

If truth be known, DM pros think this unanswerable question about response rates comes only from inexperienced direct marketers. But is this true?

You would think that after looking at the results from hundreds of multi-channel campaigns in dozens of industries. a direct marketing veteran should be able to answer this question by stipulating certain caveats.

And let’s be real here. How can you judge whether a test of a certain offer to a certain audience should be implemented without first determining that you have a good chance of achieving the required response rate?

So let me share some response rate guidelines to get the conversation going.

Here’s what I use as benchmarks to evaluate the feasibility of testing a product, price or offer in acquisition efforts.

DMCG Results

 For other channels such as broadcast, the feasibility is determined mostly by the allowable Cost Per Lead (CPL). Most broadcast CPLs range between $25 to $35 per lead. As the allowable CPL decreases, DRTV circulation drops dramatically eliminating the channel as a marketing opportunity. The resulting sales volume is no longer worth the effort.

Please provide some of your thoughts and experiences with response rates. What other industry benchmarks do you use? How far off am I based on your experience?

Ted Grigg
What Ted does best is increase response by beating controls, applying multiple channels to target markets, profiling customer databases and generally improving sales results using deep direct marketing principles. Regard Ted as your personal “think-tank” for your direct marketing planning and strategy development. After analyzing several hundred million dollars of direct response testing in all channels, he brings with him the knowledge accumulated from seeing what tends to work and what does not. Having worked on both the agency and client side of direct marketing, Ted understands the unique challenges faced by agencies and their clients. Agencies need to sell themselves and deliver sales results. And clients not only require results, but need ideas they can implement while focusing on tracking response using a relational database. If Ted brings nothing else to the table, by profiling customer databases and creating response propensity models, he quickly becomes the clients’ expert on their own customers. His formal training includes a BA from Abilene Christian University and two years of graduate work at Texas Tech University. For a national direct-to-consumer insurance company, Ted developed a revolutionary direct mail format that beat most standing direct mail controls for this company. He also generated more profitable business for this firm by expanding compiled list circulation of less than 10% to more than 30% of total direct mail circulation within a year. (Insurance business generated by direct mail demonstrated higher persistency than customers coming from other media such as print and DRTV.) Ted’s plan and implementation of Medicare lead generation campaigns for over 60 regional and national HMO/PPO organizations combined multiple channels that surpassed some sales projections by as much as 60%. Additional industry experience over the last 30 years includes B2B or B2C for finance, securities, home security, healthcare, insurance, manufacturing, government, technology, nonprofit, retail, transportation, communications, and multiple categories in the services industry. As the founder of Wyse Direct (a division for Wyse Advertising in Cleveland, OH), he successfully launched and branded a new technology product for Seiko-Mead by supporting a nationwide sales team with a predictable flow of qualified sales leads. While a VP of new business development for the Grizzard Agency, Ted acted as the direct marketing strategist who refocused the agency’s culture to attract new commercial and fundraising accounts. At the time, Grizzard was essentially a direct mail fund raising production operation. His leadership and team building effectiveness prepared Grizzard for the eventual Omnicom acquisition and Grizzard’s successful integration into Omnicom’s large group of advertising agencies. An independent DM consultant, Ted continues to write numerous articles and conduct webinars on direct marketing techniques. He also wrote The HMO/PPO Marketing Plan — A Step-by-Step Guide publishing it through Executive Enterprises in New York City. During his youth, Ted was raised in Lille, France with his missionary family attending French schools becoming fluent in reading and writing French. Away from the job, Ted is a computer geek, blogger and science fiction buff!
http://www.dmcgresults.com
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