You’re aware direct mail is a valuable way to generate leads. You know it works, but how can you determine HOW well it’s working (or not working)? With all kinds of marketing investments, business owners want to be sure they are getting the most bang for their buck, and that goes for direct mail as well. The ideal way to define the success of your campaign is to measure your direct mail marketing ROI and use that as a benchmark for future campaigns. Here, we’ll take you through each step on how to measure direct mail success and how to ensure your direct mail campaigns are performing well.
Understanding Direct Mail Campaign Costs
To get the most accurate direct mail marketing ROI rate, you’ll need to start with the most accurate total cost for your campaign. A good place to begin is determining what you’re paying for, in-house labor as well as outsourcing; this includes labor, paper, printing, mailing, and tracking costs. Keep in mind any hidden costs, such as campaign production time (time is money!), mailing lists and any internal labor costs associated with tracking calls or web traffic.
Most campaigns are measured in thousands, which ends up as a cost per thousand (CPM). For example, for a mail campaign of 100,000 pieces with a total cost of $5,000, the cost per thousand is $50.
Average Response Rates in the Industry
As a general rule for most direct mail campaigns, a rate of one-half to 2 percent is well within the average rate of response. However, recent research indicates that direct mail produces up to a whopping 9% for house lists! The response rate is the first variable in determining ROI, and knowing exact figures will ultimately get you the most accurate number. Simply take the number of sales and divide it by the number of mailers sent. For example, if you send 2,000 pieces of direct mail and get 57 sales from it, your response rate is 2.8%.
Businesses can benefit from setting a goal response rate. In setting that goal, you can better determine if the investment is worth the price tag. With those results, you can then adjust or change the campaign to yield better response rates and push your ROI even higher.
Testing campaigns against one another is a sure-fire way to measure direct mail success. A change within the messaging, an alternate offer, or a tracking URL, can give you an accurate account of how well a mailing did compared to another. With these quantifiable ways to track conversions, you can pinpoint your ROI down to the penny and provide more insight into how to invest into direct mail campaigns in the future.
Tracking Your Direct Mail
The beauty of direct mail in the digital age is how technology has made it even easier to know more about where, how, and when direct mail pieces arrive. With QR codes, promotional codes, intelligent mail barcodes, and personalized URL links (pURLs), it’s possible to know more than ever about how well your direct mail campaign is performing, and detailed reporting can bring the most accurate direct mail marketing ROI within reach.
Mail tracking services can make all the difference in getting the numbers right. SnailWorks delivers mail tracking and reporting in an easy-to-use system with the ability to deploy coordinated emails, telemarketing, and insight into what can make your campaign even more efficient.
The USPS provides Informed Delivery, a service that allows users a digital preview of their mail, providing another way to track mail as well as a way to increase leads. Because of the relationship SnailWorks shares with the USPS, we’ve been able to create Informed Delivery Advertising, a powerful way to increase response rates. Prospects view their incoming mail digitally and receive an additional digital ad with a targeted link, providing an additional touchpoint with your audience. This service can deliver an extra impression to more than 40 million prospects, boosting response rates exponentially.
The ABCs of ROI
The formula for determining your direct mail marketing ROI can include enough variables to make your eyes cross, but simple online calculators to make it pain-free. For a deeper and more accurate figure, add in product margins and close ratios and use the USPS direct mail marketing ROI calculator.
You’ll find that for in-house lists, your ROI can be significantly higher, so a quality mailing list is worth the expense. When you begin to understand the importance of tracking your direct mail ROI, you’ll determine which strategies work best for your audience and budget, resulting in the ultimate goal - more sales.
Time and technology have shown that a simple direct mail piece may not be enough anymore. An integrated direct marketing platform, SnailWorks offers a wide spectrum of marketing channels in one, user-friendly system. Designed to increase the effectiveness of your direct mail campaign, SnailWorks makes snail mail work harder – and smarter – for you. Contact us to find out how we can make your next direct mail campaign more successful with our world-class multi-channel tools.