May 2005
Telemarketing response rates up
Special Report: The DMA 2004 Response Rate Report provides benchmarks for direct marketing response rates, media, costs and ROI
By Ruth P. Stevens
At last. An answer to the perennial questions pondered by show marketers everywhere: What response rate can I expect for my promotions? What media will generate the best response? What offers are the most powerful?
For show marketers, the highest response rates, by far, come via outbound telephone marketing, according to The DMA 2004 Response Rate Report, published by the Direct Marketing Association (DMA, www.the-dma.org). Telemarketing garnered a 7.18 percent response for show marketers. The second highest response rate came from direct mail to house files (1.23 percent, as opposed to prospecting lists), followed by e-mail to prospects (.85 percent).
Telemarketing held the top spot for direct marketers across all industries, generating a response rate of 5.78 percent overall among “direct order” campaigns, meaning those intended to drive an immediate result, such as a purchase or registration. In second place was the 2.3 percent reported for dimensional mail, which includes three-dimensional mailings, videotapes, audiotapes, diskettes and promotional items. A close third was catalog mailings, at 2.18 percent. Direct mail averaged 1.88 percent, coming in fourth across all industries.
It’s no surprise that telephone, a highly intrusive medium, would lead the pack in terms of response rates. But it’s interesting that the phone also proved to be the most efficient, despite its relatively high cost. Show marketers reported a cost per contact of $8.95 on telephone campaigns to house names, compared with only $.39 for house-file direct mail. But the phone ultimately netted a lower cost per order, at $128.32, compared with $151.43 for direct mail. The phone campaigns also delivered a healthy return of 19 times sales-to-expense ratio for show marketers.
Response rates and ROI
While telephone, dimensional mail, catalog and direct mail are the leaders in response rates across all industries, the worst performing media for direct order campaigns are direct-response television, newspaper advertising and radio, with response rates at .1 percent or less. These rates are very similar to those reported by medium in the 2003 study.
Considering the question of profitability, telephone is the highest responder and the most efficient medium for all direct marketers, delivering an ROI index of 42.4 in 2004 (see sidebar on page 39 for an ROI index formula). The power and productivity of the telephone is very likely influenced by the institution of the “Do Not Call” regulations, which have resulted in a smaller, more targeted universe of customers and prospects for this medium.
The next most profitable direct order medium is e-mail, which reported an ROI index of 16, and dimensional mail, which indexed at 15.3. For show marketers, e-mail also delivered an ROI index of 16.
In terms of revenue per contact for direct order marketers, telephone led the list, delivering $45.37. Next most productive was dimensional mail, at $14.16 and direct mail at $11.36.
Direct marketing trends
Most shows reported using multiple media — primarily direct mail, phone and e-mail. Surprisingly, no show marketers reported using dimensional mail, magazine advertising or coupons.
Across all industries, house file campaigns generally out-pulled prospecting efforts. But the gap between them narrowed from 2003 to 2004, probably due to an increase in the number of generic campaigns included in the 2004 numbers. Oddly, telephone campaigns reported nearly identical results between house and rental files, at 2.75 percent and 2.41 percent respectively, reflecting the intrinsic power of a voice-to-voice communication.
Consumer marketers reported response rates generally even with their colleagues in B-to-B, no doubt due to the relatively high proportion of lead generation campaigns used by business marketers. Lead generation campaigns tend to report higher response rates than direct order efforts. B-to-B marketers in the direct order category reported an overall response rate of 1.75 percent, compared with the B-to-B lead generation rate of 3.4 percent.
Comparing 2004 to 2003, the trend is positive. Trade show marketers reported vastly improved response rates in each of the three key media. Direct mail and e-mail improved by 211% and 150%, respectively. Telephone response rates increased by a factor of 6.3, from 1.13% to 7.18%, albeit on a very small sample size.
Across all industries, year on year, direct mail and e-mail improved slightly, but telemarketing held steady. Considering this overall trend, the strong improvement in telemarketing experienced by the trade show industry is a standout.
Increase response rates
Recognizing that offers have a major impact on campaign success, the DMA Response Rate Report also queried contributors about the relative lift provided by various types of offers. The offer most widely used across the entire study is a sale or discount. The second most popular offer is some kind of free gift.
In the education category, where trade shows appear, the same top offer is reported, but second in popularity is a free sample or free information offer. The most powerful offer, in terms of lift and the most widely used for this category, was the discount offer.
Finally, the DMA asked participants to name the communication channels used by customers and prospects for their replies. Across the entire study, the most popular campaign response channel is telephone, reporting usage in 28.7 percent of the cases. Second is mail, with 21.8 percent, and third is a Web site, with 20.8 percent of the activity. The popularity of the Web as a response vehicle has increased dramatically from 2003, when it represented only 15.8 percent.
Ruth P. Stevens is the author of Trade Show and Event Marketing, and teaches marketing to grad students at Columbia Business School.
Take more advantage of telemarketing. As the most productive communications medium for show marketers, in terms of both response rate and ROI, telemarketing was largely underutilized for audience acquisition. Marketers might do well not only to increase the use of telephone but also to combine it with direct mail and e-mail, in an integrated, multi-touch program.
Experiment with dimensional mail. An expensive medium, dimensional mail is easy to dismiss as too rich for a show campaign budget. But given its reported 15 times revenue-to-expense ratio for direct-order marketers, the medium holds considerable promise for trade shows. Proven to get past gatekeepers to the executive suite, dimensional mail may be best applied to shows targeting senior-level audiences.
Don’t put all of your eggs in the e-mail basket. E-mail continues to perform well overall for direct-order marketers in aggregate, with a response rate of 1.12 percent, a cost of $.10 per contact and an ROI index of 16. But for show marketers, the picture is mixed, with e-mail response rates hovering at a mere .14 percent.
Try more free-gift offers. While this offer category did perform well for show marketers, it’s relatively underutilized and deserves additional attention.
Make sure your Web site offers easy and convenient registration. As the Web increases in popularity as a response medium, show marketers should take advantage.
Response rates by medium for all industries (direct order)
| Media |
Average |
| 1. Telephone |
5.78% |
| 2. Dimensional mail |
2.30% |
| 3. Catalog |
2.18% |
| 4. Direct mail |
1.88% |
| 5. Coupons |
1.65% |
| 6. E-mail |
1.12% |
| 7. Inserts |
0.45% | For all industries, telephone marketing produced the highest response rate by far, as it did in 2003.
Trends in response rates across all industries
| Media |
2003 |
2004 |
| Direct mail |
1.61% |
1.88% |
| E-mail |
0.99% |
1.12% |
| Telephone |
5.73% |
5.78% | While direct mail response rates improved slightly, e-mail declined, and telemarketing held steady year over year.
How customers respond
(for the education sector, which includes trade shows)
| Channel |
% of total |
| 1. Telephone |
27.0% |
| 2. Mail |
22.1% |
| 3. Web site |
22.1% |
| 4. E-mail |
13.9% |
| 5. Fax |
9.8% |
| 6. Retail traffic |
1.6% |
| 7. Other |
3.3% | The increasing popularity of the Internet as a response channel indicates the opportunity to save time and money.
Response rates by medium for conferences, trade show and seminars, 2004
| Media |
List source |
Response rate % |
Cost per contact |
Cost per order |
| Direct mail |
House |
1.23 |
$0.39 |
$151.43 |
| |
Prospect |
0.72 |
$0.43 |
$352.35 |
| |
Total |
0.76 |
$0.40 |
$288.64 |
| E-mail |
House |
0.28 |
$0.23 |
$48.16 |
| |
Prospect |
0.85 |
$0.35 |
$542.60 |
| |
Total |
0.14 |
$0.21 |
$209.57 |
| Telephone |
House |
7.18 |
$8.95 |
$128.32 | Despite its relatively high price, telephone marketing is the most efficient communications medium for show marketers.
How trade show response rates stack up against other industries
| Media |
Trade shows, conferences and seminars |
Education sector |
All industries |
| Direct mail |
0.76% |
2.42% |
1.88% |
| E-mail |
0.14% |
1.14% |
1.12% |
| Telephone |
7.18% |
3.61% |
5.78% | Show marketers are generating excellent results using the telephone, but underperforming in direct mail and e-mail, their other key communications media.
Offers and impact (for education sector, which includes trade shows)
| Offer type |
% Using Offer |
% Lift in Response |
| Sales/discounts |
50.0% |
10.1% |
| Free information/sample |
37.5% |
4.3% |
| Free gifts |
22.2% |
7.8 |
| Financial terms |
20.8% |
6.3 |
| Free reduced shipping |
9.7% |
5.9 |
| Sweepstakes |
9.7% |
5.7 |
| Suggest contribution |
5.6% |
4.3 |
| Other |
4.2% |
13.3 |
| No special offer |
25.0% |
-- | Free gift offers work well for show marketers, but are not used as often as free information offers.
Response rate (%) = Number of orders (or leads, if applicable) ÷ promotion quantity
Revenue per contact ($) = Total revenue ÷ promotion quantity
Promotion cost per contact ($) = Promotion cost ÷ promotion quantity
Revenue per order ($) = Total revenue ÷ Number of orders
Cost per order ($) = Promotion cost ÷ Number of orders
Cost per lead ($) = Promotion cost ÷ Number of leads
ROI index (#) = Revenue per contact ÷ promo cost per contact
To compile the data, the Direct Marketing Association (DMA) collected input from 1,406 marketers across all industries about their 2004 campaign results: quantity, cost, response, and revenue generated. They then sorted the results by media and also broke them out by industry.
The study reports response-rate data on 12 communications media, both addressable media and those that communicate anonymously. Among the addressable media were direct mail, dimensional mail, catalogs, e-mail, telephone and inserts. Nonaddressable media included coupons, newspapers, FSIs (the free-standing inserts often found in Sunday newspapers), magazines, direct response television and radio.
Show marketing is reported under the general sector of education, which included 42 campaigns. Of these, nine campaigns were submitted from trade show, conference and seminar companies. Keep in mind that nine campaigns are insufficient to draw final conclusions about the entire picture for show marketers. A full copy of the report is available for $395. Contact The DMA at www.the-dma.org/bookstore/.
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