Direct mail marketing may be highly affordable, but you still want to be sure you’re getting the best return for your investment. That means you have to measure your results. Monitoring and analyzing the outcomes of each project enables you to continually refine your direct mail materials, so each new campaign can be even more productive than the last one.
It all comes down to choosing the most pertinent metrics, and that often depends on your campaign goals. But you’ll find these four metrics are fundamentally important for judging the success of virtually any direct mail marketing campaign.
1. Response rate is useful, but it shouldn’t be your focus.
Of course you want to know how many people are responding to your direct mail, to make sure your mailing list is properly tailored. You don’t want to spend money mailing to people who don’t care about your products or services. Typically, less expensive items with broader appeal will generate more response than niche-market or expensive items.
But here’s the thing: most of the time, your marketing goal is sales, not phone calls or website visits. That’s why your best success metric is return on investment. More on that in a minute.
If you give people a choice of how to respond – call, come into your store, go online, etc., you can track each of those response types separately. You can track the number of inquiries you receive, the number of coupons redeemed and so on. If your call to action sends people to a landing page on your website, you’ll also want to track how well that page is converting – in other words, how many people are taking the next step to engage with you.
2. Retention rate, also known as customer lifetime value.
The cost to acquire a first-time customer, client or patient can often be higher than their initial purchase, which is why retention and customer loyalty are so important. The less you have to spend to generate each sale, the more profit you make. Depending on your type of business, useful retention metrics might be repurchase rate or renewal rate, if you have members or offer subscriptions.
The ultimate retention metric is customer lifetime value – the dollar amount you might expect that customer to spend over the course of their buying experience with you. These numbers underscore the importance of building loyalty that generates repeat sales.
3. “Cost per” metrics.
Ultimately, conversions are what matters most. Did people make a purchase? There are numerous metrics you can use to “monetize” your direct mail responses. You might track cost per response, per qualified response, per order, etc. to know what your campaign earned and also what it cost you to make each sale or generate each response.
These metrics can be helpful in evaluating various offers, but remember point #2 above when evaluating the cost of acquisition for new customers.
4. Return on investment (ROI).
This is the net revenue earned from your direct mail marketing campaign, after you subtract all the associated costs — the amount that goes to your bottom line. How that plays out varies for every business.
For example, if you spend $1800 to mail out 5000 postcards and you’re selling a product with a $10 margin, you need to sell a lot of product to realize a strong return. On the other hand, if your product has a $500 margin, you need only a few sales to see a profitable return.
Ultimately, you want the greatest response for the lowest cost. Carefully choosing your metrics and tracking them consistently will tell you how you’re doing. You can be as informal or detailed as you want, but the more you study your results, the more you’ll learn. You’ll be a more successful direct mail marketer, and that means you’ll make more money.