Direct mail is one of the most traditional marketing mediums to advertise your company, service or product. In order to know if a direct mail campaign is successful there should be some statistical measures in place before starting so that you know if it’s successful.
You need to understand the efficiency and effectiveness of your direct mail campaign for mainly 2 reasons:
- Measure results and understand (ROI) return on investment.
- Evaluate if it makes sense for your business to continue doing these kinds of marketing campaigns in the future.
You can measure the success of your direct sales campaign by looking at the following factors:
Determine the response rate, which is the number of sales made or leads generated compared to how many mailing pieces you sent out.
Response Rate = LEADS(Sales) / #mailing pieces sent
If you do not know how many people reacted to your campaign you will not know how effective your direct sales campaign was. You need to understand how many sales or leads were generated by the campaign. It’s all about tracking! There are different ways to do this:
- Add a promo code to the mailer; you will then know how many people responded to your mailing by the promo code.
- You can direct people to an online form. People who fill out the form can be tracked as responders.
- You can set up a special phone number. Those who call that number are responders.
- You can add a coupon. Those who use the coupon are responders.
You can measure whether your campaign was successful by:
- Did your sales increase during the time that the campaign was running? You can analyze and project your sales for a certain period of time based on historic data and determine what your projected sales would be with and without running the direct sales campaign.
- Make sure that you give enough time for the results of a direct mail campaign to show before doing any incremental volume analysis. Usually, you can still see results of a campaign, two to three weeks after it is executed.
- Another way to measure the results is to compare the projected sales for a given time period with the actual sales or leads after a direct advertising campaign. Compile the total sales during the campaign’s life cycle and subtract that base volume that you calculated from the historical sales data to determine incremental volume, or sales that your direct mail campaign most likely generated.
Incremental Volume = Actual Sales during promo period – Projected Sales during promo period
Return on Investment (ROI)
Return on Investment (ROI) is typically one of the most important measures of your direct mail marketing campaign. To calculate this measure you need to gather data on two main components
- The total cost of the campaign including design, mailing materials, postage, etc. This is your investment.
- The total revenue (incremental) generated by your campaign. This is your return.
ROI = (Return – Investment) / Investment
There are other marketing tools used to measure the success of a direct mail campaign.
You can use a control group which is defined as the group in an experiment or study that does not receive treatment by the researchers and is then used as a benchmark to measure how the other tested subjects do. Break your direct mail list into one small group (control group) and a larger test group. Ensure that both groups are demographically similar for more accurate results. You can also send your direct mail piece to the test group, but do not send or any other marketing materials to the control group. The difference between the two groups can be attributed to the direct mail campaign.
You can also use geographic offer codes to determine who responded to your campaign, and who made purchases. Measuring geographic location can help you identify hot spots and niches that you should target when developing your next campaign. It’s well-known that marketing to loyal customers achieves a much higher rate of response than marketing to new prospects.
“Cost per” Analysis (Cost per response, cost per qualified response, and cost per order) is measuring the cost per response. It helps take into account the different costs of two direct mail campaigns. Also a cost per response analysis is useful when comparing a direct mail campaign with an advertising campaign or other marketing activity.
Customer Acquisition Cost
This provides a summary of all your costs that lead up to acquiring a new customer. It may include the direct mail campaign, the fulfillment and all the follow-up (including both telephone and in-person sales time).
Revenue per Order
This provides a snapshot of how much money your campaign produced on a per-order basis. (This may not apply to a lead generation campaign.) This is important when compared to your customer Acquisition Cost.
RPO = Total Incremental Revenue / # Incremental Orders
If you need help with your direct mail marketing needs, why not source it out the experts. Dare Marketing has the resources and experience to make your direct mail campaign efficient and effective.
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