direct mail roi

How To Calculate Direct Mail ROI For Marketing

Use our online Direct Mail ROI Calculator

Direct mail marketing can become expensive if you do not track direct mail ROI costs and results completely.

Direct mail is a form of advertising that communicates straight to the consumer.

Marketers use a database of names with relevant information such as contact numbers and addresses, demographics and purchase history.

Direct mail marketing targets a particular niche and uses brochures, flyers, postcard marketing, promotional letters, every door direct mail {eddm} and targeted advertising.

The definition of direct mail marketing emphasizes measurable responses, results, and costs. Expenses and profits are trackable.

This type of marketing is a call to action.

Consumers are asked to call toll free phone numbers, fill out surveys, landing pages or mail-in responses {Business Reply Mail or BRM}.

ROI is the Life Blood of Direct Mail Marketing

You need to know how much revenue the campaign brought in to determine if it was worth the investment and should you run your campaign once more.

To calculate ROI and get your direct mail ROI for your marketing campaigns, set up a system to track responses.

Determine the number of mailing pieces you sent out, use a unique phone number or landing page for this campaign.

Count how many people called the toll-free number.

Direct your targets to an online landing page that is specific to your marketing campaign.

Apply promo codes that only appear on a specific direct mail piece.

Be exclusive and ensure consumers can only access your advertised goods and services through your mailing piece.

Decide your tracking method, send out your direct marketing campaign and pay attention to Cost Per Response or CPR and Cost Per Sale or CPS.

Employ a simple formula: Total cost of the campaign divided by the number of sales that resulted from your direct marketing efforts.

As an example, if your marketing campaign costs $500 and you received two sales, your CPS or cost per sales is $250.

Next, determine the cost-effectiveness.

Two sales might be all you wanted; then you are successful.

However, falling short of the goal equals failure.

Using the Cost Per Response in conjunction with the Cost Per Sale will give you a very good idea of how you might change your campaign.

If you find that your CPR is $20, and the CPS is $500 you can reduce that if there are people clicking on your offer or calling the hotline, but not many are buying.

There might be a problem with the online landing page, the sales pitch on the flyer, or customer service when potential clients call the toll free number.

Calculate your ROI by entering your total number of sent out pieces, the response rate (percentage of people who received your mailing and clicked or called through), and the average amount of the sales.

Minus the costs of the marketing campaign and divide that number by the same marketing campaign costs.

This formula is your return on investment.

Finding out if you had a return on investment (ROI) will present a better idea of what to do with your next campaign.

If your results are negative, you may want to optimize your campaign with different calls to action, graphics or coupons.

Try a test for your first direct mail marketing campaign.

Then if all works out to send the rest of the campaign if not optimize tweak your message and test again.

Here’s How To Calculate Your ROI

  1. The total costs of the campaign
  2. The total number of direct mail pieces (postcards, flyers, letters, brochures, etc.)
  3. The response rate from the direct mail material (percentage of people who got your direct mail, for example, landing page, responded by phone, etc).
  4. The conversion rate (people who actually bought something)
  5. The average amount of sales per person who bought something based on direct mail.