Strategic Communications: The ROI on Direct Mail

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By Owen Eagan, The Saint Consulting Group

Despite the popularity of social media and email, direct mail still remains an extremely effective form of communication.  In fact, a strong case can be made that direct mail may even be more effective as a result of these media.  That is, there is so much information online that it is becoming increasingly difficult to break through to your targeted audiences.

Direct mail is also effective because it can convey more information than the typical email, blog post or tweet.  However, there is a delicate balance here as well.  For instance, though meant facetiously, the rule of thumb for direct mail has always been that you need to provide as much information as possible but only as much as someone can read between opening the mail and throwing it in the trash.  But direct mail can also grab your attention and generate buzz on its own.  The challenge is in estimating the impact and assessing the value of your mailer ahead of time.

The best metric to consider when deciding whether to use this medium and evaluate your return on investment (ROI) is the response rate.  The response rate can be measured when utilizing direct mail that includes a specific call-to-action such as a reply card or a reference to a website that can be used to track emails submitted to public officials.

The typical response rate for direct mail is 1-3%.  Though this holds true for both political mail and commercial mail, it can vary widely depending on the issue involved.  In rare instances, this number can be less than 1% and we’ve even seen it as high as 19%, though that was an exceptionally rare case.  So, for a 10,000-piece mailer, let’s assume a cost of $.65 per mailer and a return rate of 3%.  At $.65 per mailer, this would mean a cost of $6,500.  With an investment of $6,500 and a response rate of 3%, this would mean an ROI of 300 people identified as supporters.

Direct mail is particularly effective when targeting and identifying supporters among large voter universes.  That is, if you are targeting a universe of 10,000 households, it is typically cost-prohibitive to canvass this many households unless you have an army of volunteers.  Therefore, estimating the ROI for direct mail can help you develop your strategy and manage your resources by giving you a better understanding of the relationship between your outputs and outcomes.

Owen Eagan is a Senior Consultant for The Saint Consulting Group, email eagan@tscg.biz, phone 781.831.2494