With a tendency among marketers to consider direct mail a cost rather than an investment, far too many marketers try to do it on the cheap. That means using items such as self-mailers and postcards, when in fact you should be sending out a campaign with a classic, direct mail package accompanied by a letter. Why? Because tests usually show it delivers a much greater ROI than the cheaper options do.
Rate of Return
Determining the investment value for a direct mail campaign depends on identifying your average rate of return. According to a 2012 study by the Direct Marketing Association (DMA), the average response rate that year was 3.4%. This compares quite favorably with email at 0.12% rate of return, and the survey found the majority of marketers believed direct mail to deliver a higher ROI.
What it Means to You
So what does that rate of return actually mean for your business, when you invest in a direct mail campaign? It means that for every 100 mailers you send, 3.4 people are likely to respond. That number increases when:
- You target specific market segments more narrowly, based on customer personas
- Customers get more exposure to your brand through various marketing efforts
- You add a special offer or coupon to the mailer that encourages a response in a particular period of time.
The rate of return differs for each type of direct mail campaign you send. To get the result you want, it’s important to pre-test each campaign for effectiveness in your target market, before you incur the cost of a full-scale production job.
Planning an Effective Campaign
Once you know whether your campaign is likely to be effective, you can calculate your potential returns based on a projection. Then identify what you need to do to make it work. This could include incorporating the use of digital direct marketing channels to boost the campaign and provide you with reliable stats. To be successful, the campaign needs to speak to your target market in language and materials that appeal to it.
Calculating the Value
Measuring your ROI depends on the objective of your direct mail campaign. It’s easy enough if the purpose is to generate sales, and the campaign targets potential buyers with a special offer that’s time-sensitive. Then all you need to do is subtract your campaign cost from your sales cost, then divide the total by the cost. This should give you the rate of return as a percentage. If your purpose was to generate leads, however, you’ll need to employ different methods to determine your ROI. These could be based on the value of potential sales, a comparison with the cost of other forms of direct marketing and/or the value of staff time to realize the same result. You’ll be able to calculate whether the returns will be worth the effort of the campaign.