The 2% myth

Is that the maximum you can get from a direct marketing exercise. Not in the real world…

Expect more.

Don’t expect a 2% response from your next direct mail communication. Expect 15%. Or better still, 40%!

As a witness to hundreds of mailings, many of which I’ve handled myself, I can tell you there’s no such thing as a 2% response. In fact, the highest response I’ve personally seen is 65%.

And I’ve seen some get nothing, absolutely nothing. But they’ve been worthwhile. While high response excites the body and soul, and sends me into exultation, low responses – beside the disappointment, firing, and tears – are invaluable teachers.

Well, if there is no such thing as average response, why does response vary so much? Is the response in our country more than in the US? Is there any way we can predict response rate? These and other questions of similar hue are asked of me more regularly than I do direct mailers. Here are some of the answers.

The first question: Which category?

There are broadly four reasons to do a personalised communication:

1. To give information or news: About new books, new music, new range, new timings, to invite to preview, about change in management or location, and so forth. The mailer doesn’t overtly seek to sell anything; instead it sells subtly, by giving information or news that can lead in a sale.

2. To seek information: These are generally referred to as survey mailings, and request the recipient to write and mail back information about himself, family members, asset ownership, his purchase behaviour, or feedback on a recent purchase or service experience. Again there’s no attempt to sell; just to know consumers better. So that one may have tailor – made offerings to their profiles.

3. To influence purchase or trial: There is a commercial transaction, but later. That is the mailer encourages you to go out and try, or buy something; it doesn’t require you to place an order via return mail.

4. To get an order: This is conventional mail order, seeking to make a sale via mail. Traditionally, payment was through cheque or VPP or Money Order. And the reply always came via mail. Today, a handful of marketers like Reader’s Digest continue to use this method.

Others have added new response media like email, fax, phone, and Web. Worldwide, the trend is to offer every possible response media, and results show that majority prefer to use non-traditional methods, especially phone. (In my opinion, Reader’s Digest will more than double it’s response if it offers its subscription through email, web or phone.)

Mail order is a very big business in the US, tough a lot of it has shifted to the Web. In India, however, with our archaic laws, expensive and slow postal system, the growth of mail order has been rather slow. First Mail Order Company is the only company I’ve heard of offering this in a big way, though direct response is growing by leaps and bounds on TV.

When you discuss response rates, the first thing you must consider is which of these four categories does your mailing fall in. In other words, what do you want the recipient to do?

Obviously, you can’t expect the response rate of, say, a survey mailer (typically in double digits, sometimes over 50%) to be comparable to that of a mail order effort (typically single digit, sometimes in decimals).

That apart, what else matters? Offer matters immensely. And list, or what you may call database. Surprisingly, creative matters least.

Offer: Why will they do it now?

The offer is so critical for getting response that I often recommend clients not to mail at all unless they can make an ‘unbelievable’ offer. Changing a bad offer to a good one can make response jump up 10 times

What distinguishes it is its perceived value to the consumer. No client should finalise the offer without researching on the target consumers.

For survey mailings, helpful information that’s difficult to get is a solid offer. Another tactic that works amazingly well, especially with customers, is to simply ask for feedback. You may offer a token gift, like a wallet or pen, but I believe it’s basic human helpfulness that triggers the double-digit response.

Be your offer a gift, a discount, a piece of information, a booklet, or a lucky draw, it must always be unique, exclusive, and upfront. I never let a mailer go without the word FREE on it somewhere it quadruples readership and doubles the response.

List: Whom do you want?

Once you’ve taken care of the offer, time to carefully examine the database. Customers will generally give better response than prospects. Properly qualified prospects will give far better response than cold prospects. In a B2B, executive high up on the corporate ladder will respond less often than those beneath them.

To illustrate, let me share some typical responses:

• A cold prospect list, with no offer, can give around 1-2%; with an offer this may go up to 5-6%. A great offer can take this up to 16-18%. Similar mailing to customers can yield up to 30% with an offer, and 12-15% without an offer.
• I’ve seen a survey mailing to a qualified prospect database bring back as high as 65% response. Offer? A fitness book.
• 42% response came from a customer base. Offer? A product accessory for free.
• 35% to a list of engineering students from premier institutes. Offer? A lucky draw where two Compaq computers were up for grabs, and a booklet containing information that will be useful to target group
• I’ve seen mail order redemptions range from zilch to 8-9%.

However, in the last case response rate may not be the best indicator of success. Because a ½% response for a high-value item (for example, an air conditioner) can be far more cost effective and successful than an 8% response to a low value item (for example, a newspaper subscription).

What are important are the cost and value of each order. For instance, for a mailing selling high-end computer servers to 2,500 companies, a 0.2% response – 5 orders of 5 servers each – can actually be more profitable than 0.8% response – 20 orders of 1 server each.

In the very special case of a matrimonial advertisement, you just need one right response!

Creative: How you ask?

Finally, we turn to creative. While creative execution does matter the least, I am not for a moment suggesting that it doesn’t matter. Creative execution alone can make a 3 to 4% difference in response.

The difference between an average and great creative execution is the simplicity and single-mindedness of the communication. Unlike mass media communication, one-to-one communication has to be ‘tell all’ and credible. Which means it can’t be clever, and must avoid the superlatives (like ‘best’, ‘fastest’, and ‘lowest’) that are standard lexicon in mass communication.

Let me assure you that there is no such thing as ‘only 2% response.’

And if someone were to still insist on it, could he please tell me what percentage of the people exposed to mass media communication actually read, watch or listen to it?

(Also published in Business Standard, 2000)