Direct Mail - Conversion Rates from Response %

Couple things here:

1. Response rate doesn't matter; only ROI.

2. Nothing is impossible, but if you expect to get a 20% response on a cold mailing, I've got a sinkhole on a golf course in Illinois to sell you.

You're not coming off as dumb, just misinformed.

20% Direct mail response rate is not going to happen unless these people are super targetted, AKA begging to get info from you.

According to the Direct Mail Association:
DMA Releases 2010 Response Rate Trend Report

Here is a suggestion that would/should bump your response significantly.

Every day get the crime report from the local PD website or newspaper or wherever it is posted for your area.

Then do a mailing to a 1/2 to 1 mile radius of where there was recently a fire or burglary. Attach the report of the fire/burglary to your sales letter.

Much better than a random mailing to a list that currently does not have any fear.

Thanks for your responses guys! this is a little rough to hear though, I wont lie.

I'm having trouble finding how to profit from this now.

here are the costs:
100 9x12 evelopes=$110
copywriting $250
stamps and EDDM= $.70/piece

total cost for 100 houses= $430

lets say I receive a 3% response I will probably have ADT close one of those responses at $300 sale for me. I will end up with a negative ROI with a loss at $130.

I thought EDDM was just standard flats? I haven't check the website in about a week so are envelopes new? I'm not 100% sure you can mail those with EDDM. I could be wrong.

Also, couldn't you do the same thing, minus the lumpy mail, using EDDM postcards?

Jerry

You could also do just postcards and it would look like this:

100 9x12 postcards = $131
copywriting $250
EDDM= $.16/piece = $16

total cost for 100 houses= $397 rather than $430

Just a suggestion. I was going to do the same with green coffee bean extract affiliate program and target high income homes.

Just a few things:

1) You're copywriting expense of $250 is a one time expense. Since you'll be able to use that same letter/flyer over and over again, I'm not going to calculate it in the ROI. You can, but with the micro example you gave based on 100 letters. Each letter has a fixed cost of $2.50 in copywriting expense. Mail out 1,000 that cost is now 0.25 cents. 4,000 sent, it's about 6cents. You see how that can effect your results?

2) You're assuming* that ADT will close 33% (1 out of 3) of the leads you send them. That's pretty high. I'd me more comfortable with expectation of 20%. You can always ask their account managers what their typical close rate it is.. heck it can be 50%.. but I like to be conservative when forecasting.

3) I think you're better off basing your analysis on at least a minimum of 1,000 mailers not 100.

4) At the end of the year, you'll be able to write off the amount you spend on copywriting, as well as your postage, supplies, etc..This will reduce your taxable income. However if you build a business that you want to sell one day, you'll want to pull back in these parts during the valuation process to get your discretionary income higher.. (this is a little more advanced and likely does not apply here)

1,000 mailers:
Postage: .70ea (based on your above calc)
Letter w/ treat inside: .90 each (based on your above calc)

Response Rate (this is assuming you can get a 3% response rate): 3% (30 leads) Cost per Lead is $27 (Total expenses / Total Responses)

Close Rate: We'll assume 20% not 30%. = (6 closes)

Commission: $300

Total Revenue: 6sales * 300commission = $1,800 (it will actually be a little less, I'm just using round numbers)

Expenses: Letter + Postage: $810

Profit: $990

If you have expierience with this and these #'s are very accurate to what you typically see in terms of a ROI, you'll be comfortable in saying that for each letter you mail out you'll make about $1 (profit divided by total mailers)

Mail 1,000 you make $1000... Mail 10,000 you'll make $10,000


edit: fixed the calculation.

I recently saw a case study of a guy who mailed and got a 10% response because his mailing was rto people that purchased financial related products in the past. he wasnt the one to sell them those products before. How do you find a list to purchase like this?

Wow thanks so much ewen! Always quality info from you!

Our friend Ewin Mach is a boss so take him seriously.

Why rely on ADTs ability to close when YOU can close. Having said that, I'd run a LEAD GEN campaign offering a FREE REPORT for a lead.

I'd maybe send a post card like.....

WARNING:

Your Neighbor Was The VICTIM of a Terrifying Home INVASION Just 3 Days Ago

Get the leads with that then work on closing them.

I guess I took care of your copy too.

Steel and use.

ADT is putting there offer into the marketplace in so many different ways that I believe your message would be diluted to the point where you would see a tiny response, if any. ADT is already putting into bulk mailers (Valpak/Money Mailer), TV ads, Radio, newspaper ads, CPA (pay per call, etc.) and much more.

For you to put a lumpy mailer in the mail and expect that by virtue of it being lumpy it's going to stand out and pull a 3-20% response rate is erroneous, in my opinion. The idea behind a lumpy mailer is to get someone to open up the mail. If they do, however, and find the same offer that they are getting from various other channels it doesn't make it more likely for them to buy.

Your lumpy mailers are going to do better with lists that you've cultivated for products that are proprietary with good dollar amounts and good margins. I don't see them doing well for mass advertised/mass appeal consumer products.

There are models you can follow, though, if you want to do well with ADT. I've got family members who go door-to-door every summer selling security systems. They pull 6 figures doing that in 4 months.

Ty Brown and Bob Ross bring to light some important suggestions. With regard to Ty's point, I want to mention that's one reason I opted to use a "blind" lead gen campaign such as the one I posted earlier.

Oh yeah and though I failed to post it, I actually use a phone number AND lander when I can.

Good suggestions.

Just get the suspect curious enough to raise their hand and offer you their contact information for you to get an appointment.

IE: I bet you'd be more profitable going door-to-door ice cold. Margins suck for a one-time $300 commission while supporting lead gen investment.

I agree that the list of recipients need to be targeted. Just as suggested above, look for areas that are a bit higher in crime rate, especially burglaries, car break-ins, etc. BUT I think the key is to target the areas just outside of that central location and more affluent neighborhoods. ADT requires a monthly fee - which you won't easily find in a more urban setting. Might also look into small businesses in those areas as well. Not big box stores.

For planning purposes try 1% to 2% and see if the numbers stack up. 20% is not going to happen unless you use a windowed envelope with a naked woman on the front, a holographic stamp and with a $20 bill inside

Basically, everything boils down to the proper execution and the alignment of the right factors at just the right time.

It is very well possible to get a 20% response rate and more and after that convert those responses into sales, but you have to get a lot of things right. Something as small as print design and quality can have a big impact on your response rates so for starters, you should make sure that the right printer handles your direct mail prints.

I been doing direct mail but the conversion doesn't seem that high especially selling or promo products unless giving something free trial 1st only convert which the conversion will be higher.
Direct mail usually costly so you need to calculate the conversion with the ROI .
I prefer to use online email marketing to direct mail because i can see the conversion 20% might be hard unless you are a wellknown brand all the while or direct mail only to your existing customer and wish them to add on purchase and repeat purchase.

TA,

This is just MY opinion, so don't take it personally...

With 40 years of Direct Response marketing experience under my fat old belt, I think you are receiving some good advice, and some terrible advice.

Fact is, you know nothing about direct response, which you freely admit. You don't understand the MATH involved, but you can get a complete education for about 5 bux.

My opinion is you are doing way too much work and thinking to pick up some small dollar amounts, probably less than a minimum wage job.

To educate yourself, you only need to get one book, maybe your library has it or go to Amazon and searc for 7 Steps to Freedom by Benjamin Suarez...today I saw onw for .83 cents, with 4 bucks postage, you have a textbook on Direct Response...the MATH you'll find inside has been tested and proven over the last 40 years by a 100 million dollar a year company.

Don't do anything until you understand the costs of direct response.

That being said, here is my best advice for you.

Contact Bob Ross about doing a postcard campaign, get some quotes and figure out a minimum mailing...

OK, ideas for the postcard. I'd create a newspaper looking front, with headlines and pictures of criminals, most wanted type thing, HAVE YOU SEEN THIS CRIMINAL?

Make it a story about a most wanted criminal, maybe two column format, with an adjoining story about a local break in.

On the back, upper left quarter, put a map of the area you are sending to, put red stars where the known sex offenders live, get from your county web site...and maybe blue stars where home break ins or burglaries have recently happened. Tell them for less than a dollar a day, or whatever it comes out to, they can get serious protection from the thugs.

I'd use both a phone and website. Have a script ready for the call, if you are going to answer it, or if you use a service, which I doubt, then read the script or automate it to get them to visit the web site or to leave their phone numbers.

You could offer a FREE crime report specifically for their neighborhoods, or some such thing.

IF you choose to send an envelope, the teaser copy (no matter the size) has to get them to open it, a lumpy will work, but if it isn't a relevant lump, then it will immediately get trashed. Choose your lump carefully.

The more you know about crime in your area, the more expertise you have, the better you will do. It sounds like you just wanna get leads to give to ADT, is this correct?

I'm of the opinion you should try both a little footwork, door-to-door and direct response if you insist on doing this.

Direct response CAN make you large sums of money in short periods of time, I don't see it happening with what you are trying to do, but, please feel free to show me how wrong I am, I'd love that.

But, please, get some education about what numbers are REAL in the world of direct response and once you do, you might want to try a different money making way.

Good luck.

gjabiz

PS. I think Bob Ross is your man to consult with, even if he charges for the consult, it would be worth your time.