Get Direct Mail ROI From Your Direct Mail Campaign.When measuring the success of a direct mail campaign you need to factor in the response rate but also your return on investment, and believe it or not, but your direct mail ROI is more important than your direct mail response rate. Direct mail is an advertising medium. Studies have shown that direct mail is one of the most effective ways of bringing in new customers, and studies by Pitney Bowes and other such companies show that direct mail sales in average $10 per $1 that is invested. It is said that direct mail produces more sales than internet advertising, TV or radio.
The question though, that most small businesses have, is if the direct mail ROI or return on investment is really worth it. The best way to measure your direct mail ROI is to keep track of your direct mail campaign and see what kind of response you get to certain ad campaigns. Measure the cost against the incoming sales. One thing you do need to remember also, is that you may be creating public awareness about your company too. So even if you are at break even between your direct mail ROI and your sales, many of those new customers will become returning customers. By performing a direct mail ROI you will not only factor in the cost of the promotional material as you would in a cost per article or piece, but you also factor in the new customers value, and the sales that that customer has accounted for. The average response rate to a direct marketing campaign is between .5% and 3% and a direct mail ROI test will also take this into account. If your response rate is low there are tactics you can take which will increase your response rate. Some of these tactics will involve more of a cost per promotional piece than others. Some tactics are only organizational tactics. Here are some basic methods of studying your direct mail roi. If you are a small business and you mail 500 prospects and you get 10 customers then you have a 5% response rate, and that is good, but what if these customers only buy $10 worth of product, which means you made $100 in sales, which is about what it cost you for postage, and supplies. Is it worth it? It really depends on how often that customer comes back. But if you are a customer that mails ou 1,000 mail outs and get 1 customer but end up selling $10,000 to that customer, then is it worth it? In both situations you might find that it is worth it. In the first situation you are creating customer awareness. In other words, the customer now knows where you are and what you have and will recommend you to others. And in the second example well the direct mail roi speaks for itself here. You should also ask yourself the following questions when trying to determing if direct mail roi will work for you: * Can you sell enough to a few customers if only a small percentage of people respond? Will these people be eligible for repeat business? * Do you believe enough in your product that you think it will produce a high response and sales? If the answer to these questions is yes, you will probably have a high direct mail roi. |