Response rate for media surveyed by the Direct Marketing Association

In a recent post, Web Is Customers’ Preferred Way to Give Business Feedback, I highlighted a  Maritz Research April 2012 survey of US internet users which found that consumers preferred using email to phone when looking to provide businesses with direct feedback. Social Media lagged considerably, although  preferences closely correlate to age, with younger customers increasingly likely to embrace a social network for public feedback, while older consumers preferred older methods of direct contact with a company.

However, with direct marketing response rates, the opposite is true.

Direct Marketing Response Rates Favor Traditional Media

However, according to Ad Age Media News, the Direct Marketing Association’s 2012 Response Rate Trends Report indicates that snail mail and phone beats digital in direct response rates, and, in many cases, are more effective than much buzzed-about digital channels.

The online survey of 481 respondents, as well as transactional data on internet display ads run through Bizo and email data from Epsilon found that although direct-mail response rates have dipped, they remain well above those for digital channels.

Findings

Direct mail is 10 to 30 times more effective than email, and other digital channels have similar low rates. Direct Marketing Association (DMA) survey shows that

  • Direct-mail’s average response rate is 3.40% – stable since 2010, when the DMA’s last survey showed average rates of 3.42%.
  • Email’s average response rate is only 0.12%
  • Nearly 13% of customers on a house list respond to an offer over the phone.

Another way to look at is is that for every 1,000 existing customers receiving a direct-mail piece, 34 will respond on average. For email, the average response, as measured by taking the click-through rate and multiplying the conversion per click, of only 0.12% means that only 1 out of 1,000 email solicitations result in a sale.

Paid search campaigns also lags, averaging a 3.88% click rate, but the conversion-per-click rate, which indicates that someone took action after clicking on an ad, is only 5.8% of those 3.88% that clicked.

For internet display, Bizo’s data showed average click rates of 0.024% and ultimate conversion rate of 0.010%.

Why is Direct Mail So Effective?

While this result may sound counter-intuitive given the minuscule cost per impression for web-delivered direct marketing as compared to direct mail, mail is competitive because – even with the mail’s higher costs – mail results in as much as 40 times more sales per impression than web delivered ads. For example:

  • Catalogs are 4.2 times more effective than paid search at generating a sale from new customers and are 42 times more effective at generating sales from new customers than display ads.
  • Catalogs are also 35 times more effective at generating sales from existing customers than e-mails to customers.

The continued effectiveness of direct mail has a lot to do with the quality of data and the ability to target mail more effectively. According to Yory Wurmser, director-marketing and media insights at the DMA:

The future of direct mail lies in [data], but the quality of the response for direct mail also indicates that direct mail is not disappearing. It’s not the situation you had with newspaper advertising where it just fell off a cliff. It’s probably stabilizing instead of continuing a steep decline.

But ROI Is A Different Story

While traditional tactics like direct mail and telephone marketing show the highest response rates email and digital channels produce the better return on investment by far.  Cost per order or lead for acquisition campaigns were roughly equivalent for direct mail ($51.40), post card ($54.10), email ($55.24), and paid search ($52.58). However, the ROIs are different.

  • ROI for email was $28.50 in sales generated for every $1 dollar of email spending.
  • Telephone ROI was at break-even: Median ROI was $1 in sales generated for $1 spent.

Email is generally better for soliciting existing customers. Comparing direct mail with email:

  • Getting new customers: the cost is equivalent.
  • Response from an existing customer: email is more efficient, with an ROI four times higher than direct mail.

The ROI factor is contributing to widespread use of email marketing:

  • 83% of the DMA respondents use email in their promotional campaigns – the highest usage level for the measured media.
  • Direct mail followed with 79%.
  • Paid search, internet display and telephone were lowest in usage.

Snap! principle of direct mail media:

Email for existing customers. Traditional channels for new.

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