With so many marketing advisors pointing companies toward the benefits of direct mail campaigns, you want to stay on top and not neglect combining your traditional, paper-based marketing methods with your digital efforts. But at the end of the day, you invest a lot in your marketing campaigns, and you need to see results and a satisfying ROI (Return on Investment). Is your direct mail strategy currently working for you, and how can you measure its success?

Your Baseline for Direct Mail Campaigns

To quantify the success of your direct mail campaigns, you first need to identify your close rate and your baseline — or B/E, “break even” — close rate for a campaign. The B/E close rate represents the ratio of sales to pieces of direct mail you need in order to stay out of the red.

How do you calculate this? Let’s say your company sends 1,000 letters to alert people of a new service you offer, and you gain twenty new sign-ups for that service. Your close rate for that campaign is 20/1,000 or 1/50. Working with this 1/50 ratio, your B/E close rate will be the rate at which the total cost of the direct mail campaign ((cost of each mailer + campaign production costs) x 50) breaks even with the revenue (gains from 1 sale minus any fulfillment costs) you will have gained as a result of the campaign.

In other words, at your B/E close rate, the revenue gained and total cost of the campaign are the same. Your “break even” close rate lives up to its name.

Considering where you are

But, of course, you don’t want to just break even, at least not in the long run. In the long run, you want your close rate to exceed your baseline, B/E close rate so that you’re making a profit. However, depending on where you are in a marketing strategy or in the life of your company, you can’t always accurately measure success by whether or not you exceed, or even meet, your B/E close rate. If you are renovating your marketing strategy, trying a new tactic, in the middle of a brand makeover, renewing your mailing list, or just starting out as a company, you will especially want to judge your successes, failures, and progress over time. One campaign may not tell you whether you’ve got a winning campaign strategy on your hands. But by comparing results, successive campaigns can tell you whether you’re getting your ROI, at whatever point in your company’s development.

Key factors to get right first

And you don’t want to count your proverbial chickens. Here are some basic elements of a direct mail campaign you’ll need to work out before you can accurately begin measuring the success of a particular kind of campaign, or the success of your overall strategy:

Honed mailing lists. Your mailing lists need to be clean, accurate, and highly targeted. And, make sure your source for names is dependable. A fabulous campaign can flop due to a mailing list that is too generalized or too narrow, an audience that is too large, wrong and incomplete addresses, and incorrectly spelled names.

Seed mail. This isn’t a must, but it’s a wise idea. Planting seed mail helps you check the condition of your mailer on arrival before you release your campaign. For local mail-outs, you can simply test your campaign first (“seed” it) to various people you know in the locality who are willing to report back to you on the following questions:

  • Is it arriving on time, and in one piece?
  • If it gets rained on, is it still intact and legible?
  • Do your mailers tend to fold or rip in any unattractive way?
  • Does it look exactly the way you ordered it from your printer?

For mailings with a wider geographic reach, you can also subscribe to US Monitor or similar service and they can also report back to you on arrival times for each locality.

Proper campaign frequency. How often does your constituency want to receive mail from you? If you have not yet calculated this, you need to. However, this is a base factor you will need to calculate and refine as you go along. You can seek advice on the front end to avoid any wild miscalculation, but the best way to know what works for your audience is to try a few different frequencies over time with small test groups, and see whether response rates fall or rise.  

Increasing campaign size slowly

Begin with a small campaign. A few hundred is a good place to start. As you find what brings success, and once you reach your B/E close rate, you’ll want to consider increasing your campaign size. But you’ll want to do this slowly. Increasing campaign size slowly, rather than going from 600 to 60,000 in one leap, can help you save money in case of an unsuccessful and overambitious campaign attempt. Even more importantly, a gradual increase means you will be receiving more accurate data to calculate success over time, and can factor small changes into your results more easily than large ones. Dramatic swings in sample groups when you’re trying to collect data does not always find you comparing apples to apples: dramatically different campaign sizes significantly change your cost of production, your B/E close rate formula, and perhaps even the ability to control and maintain accuracy in your mailing list.

Getting the right campaign matched with the right audience at the right time is the number one formula for a successful direct mail campaign. But it takes time, trial, and marketing wisdom to achieve successful reach and hit your ROI. Range, a Deluxe company, provides prime marketing communications services to businesses just like yours. If you’re ready to craft your ideal direct mail strategy tailored to your industry’s needs, call us today.