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Direct Mail Response Rates

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While considering any potential investment, one of the first questions you will ask yourself is, “What type of return can I expect?”

Unfortunately, with direct mail, like many other investments, it is impossible to know exactly what return you will get because there are simply too many variables and factors involved. Among these factors are location, product offering, quality of your product, competition, customer service, pricing, economics, and the list goes on.

As direct mail marketing experts, we know that when executed strategically, direct mail can yield a significant return and help catapult your business to the next level.

However, this is sometimes very difficult to convey to potential clients because there isn’t a truly transparent answer regarding the return that they will receive. This can be said about many methods of advertising, but most certainly applicable to direct mail.

Therefore, one of our goals at Mail Shark, and part of our consultative sales approach, is to truly educate our clients to give them a realistic expectation of what type of return they can expect and a deeper understanding of how the return on direct mail actually works.

In this blog article we are going to discuss the current methods that the vast majority of brick and mortar stores implement to track their return on direct mail.
Next, we will take a look at an additional method that should be considered.
Lastly, we will analyze a direct mail case study for an independently owned pizza shop owner.

The vast majority of brick and mortar businesses that have executed direct mail in the past, have primarily tracked their return by counting hard-copy coupon redemptions and comparing sales during the period they are executing direct mail to previous periods with no direct mail advertising. Unfortunately, neither of these methods alone, or in conjunction, give a complete and accurate picture of the ROI that can be attributed to the actual direct mail campaign itself.

The reason being is that coupons, for example, only show you how many coupons were actually redeemed and will not give complete insight regarding the actual sales that were made based on people that have placed an order, but hadn’t used a coupon. You could essentially be missing the vast majority of your return if your advertisement intrigued them enough to place an order, but they didn’t use a coupon solely because the coupon offer/s didn’t appeal to them. This essentially creates sales without any transparency as to where those sales came from.

Consequently, only looking at sales doesn’t speak to the actual results or ROI of the direct mail piece either. For example, if you are an existing business that already has sales, how do you know how much of these sales can be attributed solely to the direct mail campaign compared to sales based on normal business, or even to other advertisements you’ll be executing? Another concept that is extremely difficult for many business owners to understand is that even if your sales aren’t going up, that doesn’t mean your advertising isn’t working, and ironically, your advertising may actually be extremely effective.

Although conventional wisdom may tell you that you should see an increase in sales based on your advertising, it doesn’t always work that way.  This is true for all forms of advertising, not just direct mail.

For example, your advertisement might get them to call or come in to your location/s, however, if you cannot close the sale because of poor customer service, or you don’t have the inventory, you will not only lose a sale, but you may also lose the potential future business. So essentially, the direct mail could be working, but operationally you cannot close the sale for a multitude of reasons.

All that said, one of the most effective ways to achieve transparency for these brick and mortar businesses, in conjunction with other tracking methods, (such as coupon redemption and sales) is to purchase a call tracking phone number that is only used on that one specific advertisement only.

The call tracking phone number seamlessly forwards the calls made by customers to your actual phone number without the customers being aware. This adds transparency because it gives you the ability to isolate 100% of the phone calls attributed to that specific advertisement. It also allows you to identify how many calls you are receiving day-to-day and week-to-week. In addition, you are able to isolate how many new calls you are receiving vs. repeat calls.

Once you can isolate the volume of calls you are receiving from your advertisement, you can begin to compare them to the other methods of tracking such as counting coupons redeemed, tracking internet orders, etc. to better compile a far more comprehensive analysis of your ROI.

Now let’s take a look at a real world example of Vito’s New York Style Pizza & Deli

It’s important to note for this Case Study that the owner of Vito’s New York Style Pizza & Deli had taken it upon himself, unbeknownst to us, to procure his own unique call tracking phone number and had it added to their direct mail piece. 100% of the information below was provided directly from the owner himself. (Mail Shark does not provide call tracking services).

Let’s take a closer look at their campaign and results.

Campaign Details

Mailing Piece Specifications: 10.5”x21.5” Menus  printed on glossy 80# text paper.

Vitos XL Menu: side 1

Vitos XL Menu: side 2

Mailing Quantity: 15,000

Mailing Schedule: 15,000 menu mailers split over a 10 week period mailing approximately 1,500 pieces per week

Campaign Snapshot

Below is a chart showing a 17 week tracking period, including the 10 consecutive weeks the mailings were sent out, as well as the seven trailing weeks.

call tracking chart

Now let’s take a deeper look and analyze the data.

(1) After the 10 weeks of pieces were being mailed out, they have received a total of 717 calls yielding a 4.78% return on phone calls alone.

This is a slightly above average response rate. However, it is important to keep in mind that this is based on phone calls alone and does not capture any orders that were not placed over the phone by customers who stopped in for a purchase, or who had placed an order online. Therefore, we can deduce that their actual return is actually higher than this.

Now, what’s equally as important to look at is that their overall return continues to rise week over week even though there are no more pieces being mailed.  As a matter of fact, the following seven weeks after their mailers were all sent out, their return increased by 70%. This is because people that received their menu in any of the previous weeks may not have been ready to purchase until a later date. In addition, they are receiving repeat calls from people that have previously placed orders.

(2) Let’s take a deeper look at the actual calls

As you can see they received a total of 1,225 phone calls. Out of this 1,225 calls 634 of those calls were from unique phone numbers and 591 of those calls came from a number that had called previously.

New vs. Repeat Calls Chart

So in essence they received 634 new calls and 591 repeat calls. This is a nice ratio.

If we noticed a trend of a higher number of unique calls and very few repeat calls, this could lead us to deduce that the mailer got them to call once, but they did not have a good experience and did not call back a second time.

(3) Coupon Redemptions

Over the same 17 week period, they had a total coupon redemption of 526 coupons. 526 as percent of their total 15,000 quantity mailed, is only a 3.5% coupon redemption rate.

Coupon Chart

The most important thing to understand from this is that if you are only counting coupons as your primary method of analyzing your return, you are grossly under-calculating the true ROI from this direct mail piece.

Coupon redemption rates and direct mail response rates do not correlate 100%, and, as a matter of fact, for this specific case the correlation is way off. That said, counting coupons is still very important and will give you a deep insight as to what consumers are reacting to. You can then use this data to tweak your future coupons in an effort to increase redemption rates.

Take Aways

Track, Track, Track: You need multiple sophisticated methods to track the response from your direct mail. You shouldn’t rely on only one tracking method in most cases.

Return: Don’t be short sighted.  Your return will continue to increase after all of your mailers have been sent out.

Coupons Redemptions:  Coupon redemption rates do not always correlate to overall ROI. However, it is important to track coupon redemptions to use that data for future campaigns.

Josh DavisTo see how Mail Shark can help catapult your business to the next level, contact us today for a free consultation. In addition, we will be updating this case study with more of the call tracking results, so please check back for an update.

Josh Davis – VP of Sales