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Response Rate vs. ROI in Direct Mail Marketing (video)


What is a good response rate? How can I maximize ROI? Before investing in marketing, many business owners struggle with these questions. I know, because I hear these questions constantly from our clients. There are no clean-cut answers to these questions. The truth is that when it comes to how many postcards to send out, quantity counts. When it comes to response rate though, quality counts.

Many factors are at play in marketing. We want our clients to learn about the marketing process, so they will know why their postcards are going to bring results they want. There isn’t a magic number for a successful response rate, and a good ROI is not dependent on getting a massive response. Marketing is a complex process, but direct mail is a time-tested and proven method of getting results. When you understand the process of postcard marketing, you will know that when you get responses, they will be the best quality and lead to more sales.

•Imagine a business owners invests in a marketing campaign that uses marketing gimmicks to attract responses. He gets 1,000 responses, but they are only semi-interested. Only a handful actually decide to give him their business.
•Now imagine the same business owner uses a well crafted postcard marketing campaign. He gets 50 responses that are calling because the postcards they received were designed to build trust in his company and told them how his company could benefit them. He closes 10 of these prospects, because the quality of the marketing produced a more organic response.

The point is it’s not all about the response rate. This concept directly relates to ROI. You could spend $1000 on a postcard marketing campaign and only gain two new clients, but those clients are bringing in $10,000 of revenue. Even a small response can make the investment more than worth it. I have witnessed these types of examples throughout my experience in the marketing industry.

Please, take a minute to watch this video clip of an interview where I discuss the issues of Response Rate vs. ROI. And don’t forget to leave comments and let us know what your think!

VIDEO TRANSCRIPTION:
One of the things I need are prospects and customers to understand and I do have articles about this on my website, is the difference between return on investment and response rate. Everybody says, “What is my response rate going to be?” It’s a question that my marketing consultants really feel like they want to answer that question. Think about it, it’s not really possible to answer that question. I have to understand who your competitors are, how much they’re marketing, what’s the density of the population where you are, how far out are you willing to go, how many pieces are you willing to mail. There’s so many variables to figure out what’s going to happen. These kinds of questions when they are asked of you will get the business owner thinking about it and it will put them in a position of feeling a bit more positive. When you understand what we’re going for, then you’re on board with us.

We want to make sure that they’re in the driver’s seat on the campaign so they don’t feel like “Oh goodness, if I spend this money then I’m leaving it all to these experts.” We need to make you somewhat of an expert so you understand what is going on as well. When you look at the design, you go, “‘I know this is going to get a good response because I understand what is going to happen.” When somebody comes on board with us and we do their full conceptual design, we actually send them the ten points that must be included in a design to be successful. They can look over what our designer did and see if we’ve met those requirements or not. If they don’t like the way we’ve done it, at least, they have the data and they can decide how they want to proceed and go forward. One of the most important things is an offer. Everybody wants something for nothing these days. Everything is free. Google is free, Facebook is free, Wi-Fi is free. If you’re not going to give someone something for free right at the beginning that’s of high perceived value for them and very low cost to you. You don’t want to spend a fortune on it. I’ll give you some examples. For instance, for someone in the financial services industry, there’s just a million of those guys out there. How are they going to differentiate themselves? We’ve all sick of doing seminars. We’ve all been to the free lunches and dinners to learn about finances, so those are not producing results anymore like they used to. What can they do? I always ask them, “If you get somebody in front of you, how likely will you close them?” Of course, they all say, “I’m the best closer, just get me a lead, get me an appointment.” They can give away a $100 gift card to a fine dining restaurant in their area for that appointment if they’re sure they’re going to close them. Then they can look at, “What am I giving away? $100. But what am I going to earn? $10,000”. Same thing in the building industry. Once you go out on an appointment and you do your system of a quote and bringing in a lead and what you do with that, how good is your close percent? It’s harder to get the leads than it is to get the closes once you have somebody that is qualified in front of you that you know wants to do the work. What are you willing to give away in order to get that opportunity? That’s something that you need to think about when you put it into your marketing because you are spending money on your marketing. You want to get the biggest possible bang for that marketing dollar. There’s a lot of points that have to be in and that’s one of them.

Best,
Joy

 

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