5 Most Important Direct Mail Measurements for Success

25th Mar 2022

Direct mail is an effective and low-cost form of marketing that every UK business should consider investing in. Tactile, more easily personalised and easily recognised, direct mail offers a good ROI and increases brand awareness. 

But how do you measure the success of your direct mail marketing campaign? In this post, we will outline the five most important measurements for success so that you can feel confident in your marketing strategy.

Tracking Direct Mail Response Rate

When creating a marketing campaign, it is critical to be able to measure your success so that you can ascertain whether you’ve reached your goals. Goals are important as they allow you to judge the performance of your campaign and to determine what success will look like for you, as success is different for every business.

Tracking your direct mail response rate is a great way to look at the data of your goals and outcomes side by side. Response rate would be the number of targets that took the next steps in the process you set up for them. Whether that was with coupon codes that were then used, or PURL tracking codes that allow you to see the engagement the user had with your site, a response that is set up according to your goals allows you to reach them quicker.

The formula for calculating response rate is: RR = quantity mailed / responses received.

Direct Mail Conversion Rate

Response rates alone do not fully measure direct mail results. Thankfully, it is only one metric out of five, and we still have plenty of tricks up our sleeve. You can use another metric, the conversion rate, to give you more perspective on direct mail performance.

A high response rate doesn’t reflect how many people converted into customers, so this next step is needed. You’ll first need to define what a “conversion” represents in your business. For example, if your direct marketing led to 20 people signing up to your newsletter, and then three of those people went ahead and ordered your subscription package, the response rate would reflect the signups, and the conversion would the three who took the next step.

The formula for this is: CR = conversions / responses x 100. Knowing this percentage also allows you to estimate whether your responses turn into conversions, or if the process tends to stop there.

Cost Per Acquisition

Cost per acquisition is a metric that allows you to measure the aggregate cost of acquiring one paying customer in a campaign. This is also known as cost per conversion, as it is a metric that determines the cost of converting someone into a customer or client.

The formula that you can use to calculate this metric is as follows: CPA = Total Advertising Cost / Total Number of Conversions. For example, if you spent £100 and had five conversions, you would have £20 = £100 / 5. This is a straightforward way to calculate how much your marketing campaign costs you for every new customer.

Of course, gaining conversions is not the only use of a direct mail campaign. Brand awareness, signups and data are all important gains too.

Calculating Direct Mail ROI

Calculating the return on investment of your entire direct mail campaign is a great way to express the data so that you can measure the effectiveness of your campaign. By dividing the total net profit by the total investment of the campaign, and multiplying that by one hundred, you can calculate the percentage of your ROI.

The formula for this is: ROI = Net Profit / Total Investment x 100. Knowing this percentage also allows you to determine the value of further campaigns, informing your marketing strategy for the future. This knowledge will also help you decide whether it would be worth investing more in other spheres, like digital marketing. After all, a well-rounded marketing strategy is the best way to approach the current consumer market.

Customer Lifetime Value

Client lifetime value is an estimate of the revenue generated from the average customer over their entire relationship with a company. Calculating CLV allows a business to determine the value that a retained customer can add to the business. 

The formula for this calculation is: CLV = Average Transaction Size x Number of Transactions x Retention Period. In simpler terms, this translates to: CLV = average sale x annual visits x years. This calculation gives you the ultimate value that the average customer adds to your business. 

The value will differ a lot depending on the type of business, as a coffee shop will have a lower average sale amount and higher annual visits than a motorbike repair garage. So, like the other metrics outlined above, success is dependent on your business model and goals.

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