The reading level for this article is Novice

This article explains why the return on investment a mailing campaign provides is far more important than the response rate.

Do you use direct mail for your business and want to know if it is working properly for you? Are you considering direct mail as a possible way to gain new customers or clients?

For those of you who do not know, direct mail is targeted offers sent to people or businesses you want as customers, sent by mail.

The Direct Marketing Association has found that the average response rate to direct mail is between ½ % and 2 %. There are techniques to use that will enhance your response rate. However, are you comfortable with figures like this?

Here’s what to consider: Is it profitable?

A business that mails to 100 prospects and gets 10 customers experiences a 10% response rate. If each sale produces $10, you only made $100 in sales. When you subtract the cost of postage, paper supplies, brochures, etc. is it still worth it?

A business that mails to 1,000 prospects and gets 1 customer has a 1/10 of 1% response rate. However, if that sale produces $50,000 in new business is it worth it? You bet it is!

Therefore, your business will be successful if your direct mail efforts produce a return that far outweighs the cost of the mailing.

Key points to consider if direct mail is right for your business:

1) Do we charge a fee for our services or products that would allow us to make a profit if only a small percentage respond?
2) Do we offer a service or product that we are confident will generate a high enough response rate so we can remain profitable.
3) In an ideal world, does our offer match both # 1 and # 2?

Bottom line: If the answer to these questions is NO, using direct mail as a primary way to generate new business may not be right for you.

This Marketing article was written by Chris Philippi on 2/11/2005

Chris Philippi is president of Philippi Marketing & Associates, a retail consulting firm specializing in helping independent retailers and small retail chains increase sales quickly, easily, and without expensive advertising. Chris is co-author of The Worlds Greatest Business Mentors and is available for speaking engagements and consulting around the world. Contact him at
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