Direct Mail Tops Email For Response Rates; Costs Per Lead Similar

dma-response-rate-selected-media-june2012.pngDirect mail campaigns benefit from higher response rates than various other channels, finds the Direct Marketing Association (DMA) in a June 2012 study. Comparing rates over time, the report indicates that the response rate for direct mail to an existing customer averages 3.4%, compared to 0.12% for email. Interestingly, (letter-sized) direct mail’s relative superiority over email in terms of response rate comes despite the former’s 25% decline in response rate over the past 9 years.

The DMA report is based on a survey conducted in April 2012 with 481 usable responses, and this survey data is supplemented by transactional data from Epsilon and Bizo, which adds aggregated data on more than 29 billion emails and more than 2 billion online display ads.

Telephone Response Rates Highest

Looking at response rates across a variety of channels for existing customers, oversized mail (3.95%), postcards (2.47%), and catalog (4.26%) all show strong results, though they are all dwarfed by telephone’s 12.95% response rate.

Prospect response rates for these channels also outpace digital channels. Telephone (8.21%) once again ranks highest, ahead of oversized mail (1.44%), letter-sized direct mail (1.28%), postcard (1.12%) and catalog (0.94%). The median conversion rate for email is 0.03%, while the mean conversion rate is 0.21%. Conversion rates for paid search and display ads are 0.22% and 0.04%, respectively.

Direct Mail, Email Costs More Similar

dma-cost-per-order-or-lead-june2012.pngData from the DMA’s “2012 Response Rate Report” indicates that because costs for direct mail are higher, cost per lead and cost per sale across direct mail, email, and paid search are roughly equal. Cost per order or lead for acquisition campaigns stood at $51.40 for direct mail, slightly less than for paid search ($52.58), post card ($54.10), and email ($55.24).

Indeed, when examining return on investment, email ($28.50) far surpasses direct mail ($7.00). This mirrors survey findings from Target Marketing released in February 2012, in which a plurality of B2B marketers cited email as delivering the strongest ROI for both customer retention and customer acquisition, ahead of direct mail. Even so, that same survey found more B2C marketers saying that direct mail delivered the strongest ROI than email.

Other Findings:

  • According to the DMA report, telephone marketing may have the highest response rates, but it also has the highest costs, at nearly $78 per order or lead for a house list, and $190 for a prospect list.
  • The transactional data reveals that only 6% of the actions following an online display ad occur immediately following a click, suggesting that click-through rates drastically underestimate online display’s impact.
  • The transactional data also finds financial services emails to have email open rates of more than 30%, highest among the verticals studied. Retail (apparel) emails have open rates averaging 14.7%, slightly less than for publishing and media (14.9%). Publishing and media leads with the highest action rates per impression (0.13%).
  • CPG boasted the highest email click to open rate (46.5%).
  • B2B campaigns saw generally higher costs than B2C campaigns. For letter-sized mailings, B2C outperformed B2B in response rates, 4.01% to 3.12%. For all other formats, B2B had higher response.