“What’s the benchmark direct response rate for that?”.
Being direct marketing and digital specialists, this is a question frequently posed by people we meet and one we face every time we are working through a business case scenario.
At this time of year, it is particularly pertinent, with many in the midst of allocating budgets.
In truth, it is more difficult to answer than many realise.
Standard direct response industry reporting metrics
Part of the challenge is that, unlike media spend, there is very limited reported data on response rates. In fact in New Zealand, there is no single source of truth for response measurement in offline marketing channels.
So how do we go about setting realistic targets for direct response performance?
The best single source of reference is our own campaign reporting. As obvious as this may sound, many organisations lack suitable campaign tracking that allows like-with-like measurement.
Getting rigorous about cataloguing campaign performance over time is a very useful discipline that pays big dividends for planning future activity.
External benchmark response rate statistics
Of course, being competitive beasts, it is always good to compare and contrast to make sure we are achieving industry norms – and preferably knocking them out of the park.
To help get closer to the reality of what to expect in 2015, here’s some guidelines around standard benchmarks for response.
1) Direct Mail
- The average response rate for direct mail was 4.4% in the US according to the DMA (April 2013). However, as always averages are dangerous. The DMA report highlighted major differences sector to sector.
- In the UK for 2012, average response was reported as 3.4%.
Based on our experience, average response rates in New Zealand tend to exceed overseas results for this channel. Currently share of media spend here is far lower on direct mail than it is in either the US or the UK. Less competition in our mailboxes leads to greater impact and better results.
The following is a selection of results we have experienced with our work over 2013 and 2014:
- Charity sector: Range from 3% to over 20%.
- Banking and finance sector: Range from around 1.5% to over 12% sales conversion.
- Automotive sector: Sales conversion range from around 0.8% to 3.2%; test drive response rate up to 10%. Targeted event invitations can drive very high response.
- Retail sector: Up to 8% response rate.
There are more NZ specific statistics available for email, so these are easier to benchmark. The following are reported in Jericho’s latest 2014 report:
- 32% average open rate and 15% CTO rate (Click-To-Open Rate measures clicks as a percentage of opened emails).
- Retail Email – 27% average open rate and 4% average CTR.
- Triggered Email – 55% average open rate and 7% CTR (Click-Through-Rate measures opens as a percentage of total sends).
3) Digital – Banner ads and Adwords Pay Per Click
- Average click through rate – animated gif banner ads 0.22% and flash banner ads at 0.12%
- Google keyword PPC, including remarketing – average 2%, but varies massively and depends on keyword competition.
4) Unaddressed mail
Based on our own results, we would plan for around 0.5% response.
You will get very much lower results for a leaflet in with the bulk mail unaddressed delivery versus an unaddressed mailing delivered solus by the postie. Using the solus channel expect between 0.25 and 1%. We’ve had some real success with this, achieving sales rates of over 1.2% in some cases even in low involvement categories – but it does take good data work to refine the targeting. Invest wisely, target well and you’ll reap returns.
5) Other direct response channels
Other media, such as Responsive TV, radio, off-the-page press and inserts also have a role to play in the direct response media plan. All need to be viewed on cost per response and ROI metrics.
The general rule of thumb is the lower the cost per thousand for reach, the higher the likely cost per response and the lower the ROI – but as with all rules, there are always exceptions.
In priority order, for ROI it normally runs face-to-face, telephone, direct mail, email, solus letterbox, DRTV, inserts, followed by radio, with off-the-page and other channels supporting the rear guard.
Brand focused media above-the-line will have a positive impact on overall response rates, but give it time to build first before you go too hard with the direct response activity.
Plan, test, refine, rollout. Repeat.
As you would expect from any direct marketing agency worth its salt, we recommend a programme of ongoing testing to inform the ideal mix for your brand and products.
Look out for Part 2 of this article where we will look at the factors that influence response and how to take advantage of a technique that will exponentially lift response.