I have a pick-up and delivery business primarily associated with
laundry and dry cleaning.  I am considering using a direct mail
advertisement that is a card with a "Have you seen me" picture search
on the side with the potential customer's address, and my ad on the
other side.  While I realize that the ad itself will be the
determining factor for how many responses I get - what size response
should I expect from a well written ad?  I have heard estimates that
seem to cluster around 0.0025 to 0.005 percent.  In other words 250 to
500 from a 10,000 mailing.  Is there any information specifically
addressing a service business like mine?

loknudson,

Thank you for your question regarding direct marketing, specifically,
mail drops. Direct marketing, whether it be telemarketing, email, fax
or mail drops, is only as effective as the response it generates.
Obviously, there are several factors involved in developing a
successful direct mail campaign.  You have touched on a couple,
specifically, the design and content of the piece, the target market
in regards to demographics, and other factors.  Things as simple as
the time of year the piece is mailed can have an effect on the
response that is generated.

According the Direct Marketing Association, direct mail as a marketing
program has dropped dramatically in the last 5 years.  This can
probably be attributed to an increase in telemarketing and email
marketing.  In this same report, the DMA reports that companies are
showing a decrease in the overall response rate from direct mail over
the last 5 years.

Regarding the content of direct mail pieces, 60% of direct mail
marketing contains a special offer of some type.  This is further
broken down into special products or services, price incentives, and
shipping incentives.  While the report states responses are down, over
50% of those currently utilizing direct mail say they will continue at
the same level or increase their direct mail volume.

In regards to response rates, personal experience as well as research
has shown that because there are so many factors involved, it is
extremely tough to get hard and fast numbers.  I worked for in the
marketing department of a computer software company.  We took a list
of potential customers and sent out a mailing of about 5,000 pieces in
the Fall.  The follow up was to have people log onto a website, answer
a few questions, and the pay off was they would be in a drawing for a
Palm Pilot.  We received about a 3.5% return.  We did another mailing,
in the Spring, again 5,000 names (different from the previous).  This
time, the call to action was to call an 800 number.  No prizes,
nothing.  We got roughly 1.2% response.  Obviously, nowhere near
scientific, but it gives you an idea of the variances that can occur. 
The numbers you are quoting seem low.  I have seen numbers more along
the lines of 1% to 2% on direct mail response rates.  A study by
Gartner (http://www3.gartner.com/5_about/press_releases/2002_03/pr20020319b.jsp)
showed that the typical response rate to direct mail pieces was about
1%.  That same report said the average cost of a direct mail campaign
ranged from $500 to $700 per 1000 pieces.

So, with that in mind, how can you effectively create a direct mail
campaign that will generate the ROI (return on investment) that you
desire?  I feel, and this is based on over 10 years experience in
sales and marketing, that a hybrid marketing plan of direct mail,
email and telemarketing, is the most effective method for new customer
generation.  All three of those types of direct marketing have bad
reputations, however, they are all very effective and when combined in
a single campaign, are EXTREMELY effective.  A few steps that I can
provide to help on the direct mail side:

1) Target an specific demographic.  You know your business and your
existing customers. Who are they? Where do they live?  If you have
some that are in an existing neighborhood or sub-division, focus on
that area.  If I get a piece of mail about ABC Delivery Services and I
see an ABC Delivery Services truck pull up next door, I am going to
check with my neighbor.  You want to get your name in front of as many
of the right people as much as possible.

2) Hire a professional writer.  I can't tell you how many direct mail
pieces I have received, personally and professionally, that looked as
if they were written by a 3rd grader (no offense to any 3rd graders
out there).  They may have been promoting the greatest product or
service in the world, but a sloppily done piece will do more harm than
good.  I recommend a place like Elance (http://www.elance.com) to find
a freelance copywriter.

3) Provide an offer.  I see ads on TV.  I hear them on the radio. I
see them on banners.  I get them in the mail.  Give me a reason to
call you other than the fact that you think I should.

These are only a few tips that I can provide.  I have listed below
several places you can find information on direct mail as effective
marketing approach.  Thanks for your question and if I can provide any
further clarification, please let me know.

Regards,

-THV

Search Strategy:
Personal knowledge
direct mail response rate

References:

Direct Marketing Association
http://www.the-dma.org
For access to their research studies, you need to register
http://www.the-dma.org/research/

Direct Mail Tips
http://www.directmailtips.com/
This is a commercial site, however, he does provide some good tips on
creating direct mail campaigns

The Entrepreneur's Help Page
http://www.tannedfeet.com/mkt_dmtips.htm

---

Request for Answer Clarification by loknudson-ga on 02 Nov 2002 14:09 PST

Thanks for the info.  Let me give you some more facts and see if you
can respond with additional information on expected response rates. 
The media will be a large postcard-type mailing (about 3.5" X 8"). 
The graphics and verbiage have been developed by professionals.  We
will be mailing 90,000+ pieces to the area codes having the highest
incomes in the Albuquerque metropolitan area.  We are offering a 50%
discount off a customer's first order, plus free pick-up and delivery
of all orders.  The offer of 50% off will be good for just one month.

When looking at your referenced sites I din't see much concerning
expected response rates.  Perhaps that's because there are so many
variables.  But I really would like to find something similar to your
own information relating to your software company.  By the way, did
most of those respondants convert to customers?  I would be most happy
if I could get 1% of our mailing to result in new customers.

Once again, thank for your help.

---

Clarification of Answer by tar_heel_v-ga on 02 Nov 2002 21:52 PST

loknudson,

Thanks for the additional information and I am glad the information I
provided has helped.  As I said in my intial response, determining the
response rate in a direct mailing campaign is far from an exact
science.  That being said, from the information you have provided
about your mailing piece, I would think your response rate should be
above the norm for a couple of reasons:

1)  Your selected list.  You have narrowed your focus down to those
who #1 can afford a "luxury" service and #2 would, more than likely,
socialize within the same group of people you are targeting.

2) A 90K drop is a major undertaking, however, it appears you
understand that by having a professional do the graphics and copywrite
work.

Only question would be the competition in your field in your area.  If
there are 30 other companies offering the same service to the same
demographic, that will also have an effect.

As for responses turning into customers.  Please remember that
response rate has nothing to do with conversion rate outside of the
fact that the leads are warm.  It will still be up to you (or your
sales people) to convert these prospects to customers.  If the message
you get across in your mail piece is convincing, the conversion rate
should be very high

As for the references I provided, outside of the DMA site, they were
more along the lines of assistance in producing a direct mail
campaign.  The information I have found regarding response rates has
never shown anything above an average of 2%. The link to the Gartner
report shows the average response rate of about 1%.  Here are some
more sites you can look at regarding direct mail and response rates
and conversion rates:

http://www.entrepreneur.com/Your_Business/YB_SegArticle/0,4621,298155,00.html

http://www.clickz.com/em_mkt/case_studies/article.php/1465331

http://www.studiob.com/content.asp?cID=106

I hope the above information helps and I wish you well in your
endeavor!

-THV

A really good answer to a very dificult question.