"I Never Open Junk Mail!"
Invariably, this is the first thing I hear when I suggest a direct marketing campaign to one of our clients. But it's not quite the truth. They never open junk mail... except when they do.
To be sure, most people do not open their junk mail. For a good campaign, perhaps only 10%-20% will open it and only 1%-2% will act on it. That doesn't seem like a lot, does it? But then, why do we continue to get junk mail? Why does it seem, in fact, like we get more junk mail every year?
The short answer is: because it works. Here's how...
Let's take the example of mailing a promotion for a $250 item to 20,000 people. Here's the math based on a response rate of 1.25%:
To be sure, most people do not open their junk mail. For a good campaign, perhaps only 10%-20% will open it and only 1%-2% will act on it. That doesn't seem like a lot, does it? But then, why do we continue to get junk mail? Why does it seem, in fact, like we get more junk mail every year?
The short answer is: because it works. Here's how...
Let's take the example of mailing a promotion for a $250 item to 20,000 people. Here's the math based on a response rate of 1.25%:
In this example, we spend $14,500 in preparing and sending the mail piece. With a response rate of 1.25%, we get 250 orders giving us sales of $62,500. Assuming the product we sell is purchased from someone else, we may get to keep 40% of the sales with the remainder going to pay for the merchandise. That leaves us $10,500 after the costs of the mailing.
What this example illustrates is that -- even though 98.75% of the respondents do not open/act on their junk mail -- the campaign will earn $10,500! Imagine if the response rate were 2% instead of 1.25% ...then it would net more than $25,000!
With those kind of numbers, instead of asking why we get so much junk mail, we might want to ponder why we get so little!
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