What Kind of Response Rate Can We Expect?

Written By Ted Grigg

If you have been in the direct marketing business for long, then it is certain that your manager, client or colleague has asked you this question. Most direct marketers consider this an unanswerable question without knowing the results from previous tests for a specific offer to a specific mailing list.

If truth be known, DM pros think this unanswerable question about response rates comes only from inexperienced direct marketers. But is this true?

You would think that after looking at the results from hundreds of multi-channel campaigns in dozens of industries. a direct marketing veteran should be able to answer this question by stipulating certain caveats.

And let’s be real here. How can you judge whether a test of a certain offer to a certain audience should be implemented without first determining that you have a good chance of achieving the required response rate?

So let me share some response rate guidelines to get the conversation going.

Here’s what I use as benchmarks to evaluate the feasibility of testing a product, price or offer in acquisition efforts.

DMCG Results

 For other channels such as broadcast, the feasibility is determined mostly by the allowable Cost Per Lead (CPL). Most broadcast CPLs range between $25 to $35 per lead. As the allowable CPL decreases, DRTV circulation drops dramatically eliminating the channel as a marketing opportunity. The resulting sales volume is no longer worth the effort.

Please provide some of your thoughts and experiences with response rates. What other industry benchmarks do you use? How far off am I based on your experience?

Ted Grigg

Ted Grigg is a direct response strategist who helps growth-focused companies reduce risk by identifying weak assumptions before they become costly mistakes.

Over the course of his career, Ted has evaluated several hundred million dollars in direct response testing across direct mail, digital, print, television, telephone, and other channels. His work combines direct response strategy, acquisition economics, customer analysis, creative evaluation, offer development, and disciplined testing.

Ted has worked on both the client and agency sides of the business. That experience gives him a practical understanding of the pressures facing executives, marketing teams, agencies, and service providers—and of the problems that arise when activity, media volume, or creative preference replaces a clear economic objective.

His consulting work helps organizations examine such questions as:

  • Are acquisition goals economically realistic?

  • Is the allowable Cost Per Sale supported by customer value?

  • Are targeting, offers, creative, media, and response paths working together?

  • Are tests structured to produce reliable business decisions?

  • Are unproven assumptions being treated as facts?

  • Is the organization measuring sales outcomes rather than convenient proxies?

Ted’s experience includes the development of direct mail and multichannel acquisition programs for insurance, healthcare, financial services, technology, nonprofit, manufacturing, retail, transportation, communications, government, and business-to-business organizations.

For a national direct-to-consumer insurance company, he developed a direct mail format that defeated established controls and helped expand the productive use of compiled prospect lists from less than 10 percent to more than 30 percent of total direct mail circulation within one year. He also planned Medicare lead-generation programs for more than 60 regional and national HMO and PPO organizations, with some programs exceeding sales projections by as much as 60 percent.

Ted founded Wyse Direct, a direct marketing division of Wyse Advertising in Cleveland, where he developed acquisition programs and helped launch a new technology product for Seiko Instruments by generating a predictable flow of qualified sales leads for its national sales organization. As vice president of new business development for the Grizzard Agency, he helped broaden the agency’s strategic capabilities and pursue new commercial and fundraising opportunities.

He is the author of The HMO/PPO Marketing Plan—A Step-by-Step Guide, published by Executive Enterprises, and has written numerous articles and conducted webinars on direct response strategy, testing, creative development, and marketing economics.

Ted earned a Bachelor of Arts degree from Abilene Christian University and completed two years of graduate study at Texas Tech University. He is the founder of DMCG, LLC.

http://www.dmcgresults.com
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