Estimating response to business-to-business direct mail
What kind of respond can I expect from my lead-generating mailing and what percentage is considered good for business-to-business direct mail?"
This is one of the most frequently asked questions in business-to-business marketing. Let's see if we can shed some light on the topic.
The. number of inquiries produced per thousand pieces mailed varies dramatically depending on a number of factors, some of which we'll discuss shortly. However, based on recent results, we can make the following generalizations:
If your .mailing has a hard offer, you can expect a response rate in the range of 1 percent to 1.5 percent. I define a hard offer as any response choice that forces the prospect to try the product or have direct contact with a salesperson. These include meetings, demonstrations, presentations, so-called "free consultations" (sales meetings in disguise), demo diskettes selling for nominal fees, and 30-day trial offers,
On the other hand, if you have a soft offer - such as the offer of a booklet, gift, or special report --- you can expect a response from 1 percent to 4 percent; some mailers with good offers and highly targeted lists even getting 5 percent or more.
Some practitioners object that percentages are irrelevant and that sales results are the only true measure of direct mail success.
The problem is, sales are more difficult to tally in lead-generating programs than in mail order. One reason is that he direct mail piece does not do the whole job of selling; many other factors contribute. What's more, many companies do not have an adequate system for tracking leads through to sales and reporting on the results.
Still, if you am able to track sales, then percentage response may not be as important to you. One client, for example, sells a product so highly specialized that his percent response is miniscule -- a small fraction of 1 percent. Yet the large dollar amount of each sale more than pays for the cost of mailing large quantities to get those few hot leads.
Establishing a Baseline
I often tell new clients that I don't know what a good response is until we do our first mailing.
The first mailing gives us A "baseline" which we can measure future efforts against. If we are pleased with the level of response generated by mailing #1, then we consider that a good response for our product in our marketplace. If mailing #2 equals or exceeds that level of response, we consider it a winner; if not, it's a loser.
This baseline concept is especially important if your product is one not widely promoted through the mail. Magazine publishers and fund raisers can cite "typical" response rates of 2 percent and 1 percent because millions of such solicitations are mailed every month so the response rates are pretty well-known. But if you we the pioneer in your field …the first to use direct mail promotion to sell your type of product…then there is no known "typical" response rate you can anticipate and you will be setting the standards. Good luck!
The nature of the product itself has a dramatic; effect on response rates. If your product is used by a large number of the prospects you mail to, response will be higher (an example might be a mailing selling bandages to hospital purchasing agents). On the other hand, if your product is highly specialized and of interest to only a small portion of the market, the response will be significantly lower (an example might be a specialized type of heart monitor of interest to only one hospital in 100).
Format can make a big difference in how well your mailing pulls. As a rule, sales letters mailed in business envelopes pull better than self-mailers. But sometimes this is not the case.
I lake to use letters when I have to make an appeal to the prospect's rational mind or emotional side in order to build his interest in the. product.
But, if he is already predisposed to buy the product...if it's something he's familiar with, and he doesn't have to be sold on its merits.. then a self-mailer, featuring a photograph that readily identifies the product being sold, may do as well or better.
As stated earlier, the specific offer being made in the mailing can make a big difference in response rates.
One area of indecision among mailers is whether to use the popular "free booklet strategy." In this type of mailing, the reader is offered an incentive -- a free booklet, report, or other helpful information he will receive by return mail for responding.
Usually the booklet or report offers helpful how-to or technical information the reader can use on the job. For example.: "How to Improve Direct Mail Results" --- from a firm offering direct mail services.
These offers can boost response and are especially effective in markets when prospect are flooded with direct mail offers or are not excited about services and products and need an extra incentive to take action.
The key is to know how to introduce the booklet offer without overstressing it. If the whole mailing is based around the booklet offer, you will get a high volume of low quality leads - people who just want a free booklet but do not want to hear about your product.
A better approach is to talk about the reader's problems and how your company, service, or product can solve these problems. Then bring in the booklet offer its an extra sales incentive, without putting total emphasis on it. Experiment with copy approaches until you achieve the right balance between quality and quantity in your response.