How to Measure the Success of Your Direct Mail Campaign

Direct mail campaigns are one of the most popular, and arguably the most successful, methods for business outreach in the modern financial climate.

It takes a fair amount of tweaking before you reach the point of maximum effectiveness, though. That's where monitoring direct mail marketing efforts comes in. With tracking, you can see exactly how effective each direct mail campaign is, and where you can improve on it.

But, which direct mail tracking methods are available to business owners, and how can you use them? Let's take a look at how to track direct mail campaigns, and use analytics to make the most of your marketing channels.

How Can You Track Direct Mail Campaigns?

Tracking your direct mail campaigns is an excellent idea, but you need to know which tracking methods are available to you. Below, we'll detail some of the most commonly used options.

Tracking QR Codes

Using QR codes in your direct mail campaigns is an excellent approach. You can use a different QR code for each of your digital campaigns, allowing you to completely track the efficiency and effectiveness of your direct marketing.

QR codes allow your clients to scan the code using their smartphones. The scanner then redirects the client to the unique landing page connected to that code. One of the advantages of this type of direct mail marketing campaign is that you get additional analytics like:

• The kind of phone your customer used
• Where the customer is located
• How many customer visits came from the same device
• How many unique scans of the code took place

While this may not be the correct approach for every type of target audience, it certainly has its place. It can provide a lot of detailed information about how effective your digital marketing is.

Tracking Coupon Codes

Coupon codes are perhaps one of the easiest trackers to use if you have an older target audience. Not only are they already familiar with how coupon codes work, but you can also gather a wealth of information using this system.

By attaching coupon codes to either a physical or digital mail piece, and creating a new coupon code for each of your direct mail campaigns, you can keep exact track of how effective each campaign is.

If you do it correctly, you should also be able to ascertain locality information, age demographics, and other useful metrics for future campaigns.

Tracking Phone Calls

One of the easiest ways to monitor direct mail campaigns is by tracking phone calls. All you need is a trackable phone number, like your business line.

However, if you want the best results and the most comprehensive analytics data, it's best to run call tracking using something other than your regular business line.

This enables you to track the calls you receive on that line while keeping your direct mail marketing campaigns separate from your other marketing channels.

You can also:

1. Set up a toll-free line that forwards to your business line. That way you only have to monitor the traffic that comes in via the toll-free number on your direct mail marketing campaign.
2. Use call tracking software to help you get full analytics on calls received as a result of your direct mail campaigns.

If you want to use the business line you typically use, you can ask your staff to keep careful track of which coupon codes get redeemed, as well as which of your direct mail campaigns the code originated from.

Tracking URLs

Another excellent way to track the results of direct mail campaigns is through URLs. By using a custom landing page for each of your marketing campaigns, complete with a personalized URL, you can get a lot of analytics data.

Not only can you gauge an accurate response rate, but also where your users are, what kind of device they're using, and their ages.

Adding personalized landing pages to each mail piece also allows you to keep this form of digital advertising separate from your other marketing efforts.

Which Metrics do you Need to Track when Using Direct Mail Marketing?

Knowing which metrics to monitor, and how to calculate them, is one of the primary components when tracking the effectiveness of your direct mail campaign. In the digital age of marketing automation, these metrics are known as Key Performance Indicators (KPIs).

The main KPIs to keep track of when analyzing how you use direct mail are:

• Average response rate
• Conversion rate
• Average order size and value
• Cost per acquisition
• Direct mail ROI
• Engagements
• Website visits

Below, we'll give you a quick overview of each indicator and how it works.

Response Rate

The response rate is easy to calculate, using the following formula:

• Response Rate = (number of responses ÷ number of emails or mail items sent) × 100

While this particular KPI is easy to calculate, the response rate doesn't always give you an accurate representation of how successful your direct mail endeavor has been.

It can still be a useful tool, however, when working with averages. The response rate says a lot about the initial success of your direct mail marketing campaign.

Conversion Rate

Conversion rate is probably one of the most essential metrics when you're using a direct mail marketing campaign to make sales. You can calculate this KPI by using the formula:

• Conversion Rate = (Number of Sales ÷ Number of Responses) × 100

While the number of conversions is important, they don't necessarily equate to a high value. That's where the next KPI comes in.

Average Order Size or Value

While knowing your conversion rate speaks volumes to the effectiveness of your direct mail campaigns, you also need to know the value of those conversions.

To calculate the average order value, you can use the following formula:

• Average Order Value = Total Revenue ÷ Total Number of Orders

If you want to know how many items each client is ordering, you can modify the equation to read:

• Average Order Size = Total Number of Items Ordered ÷ Total Number of Orders

If your main goal is to achieve optimal conversion for your direct mail piece, then you'll want to keep an eye on the conversion rate.

If your main intention is to make a large amount of profit from the conversions on your direct mail campaign, then you need to keep track of the average order value.

Cost Per Acquisition

Cost per acquisition is another of the main KPIs for determining the success of a direct mail campaign. This metric can help you understand how effective your campaign is on a financial level.

To calculate the cost per acquisition, you can use the following formula:

• Cost per Acquisition = Total Campaign Cost ÷ Total Number of Sales

This KPI gauges the effectiveness of your direct mail campaign by calculating how much you've invested to gain a single customer.

Let's look at an example. You've just completed a direct mail piece which cost you $1,000. You manage to gain five customers who each buy one item.

• Cost per Acquisition = $1,000 ÷ 5
• Cost per Acquisition = $200

At $200 per customer, it's safe to say that this direct mail campaign was fairly ineffective and unfortunately expensive.

Let's say you've paid $1,000 for a direct mail campaign, complete with a personalized landing page. It manages to attract 100 customers.

• Cost per Acquisition = $1,000 ÷ 100
• Cost per Acquisition = $10

In this case, at $10 a head, the direct mail campaign was highly successful and the cost wasn't excessive.

Return On Investment (ROI)

If you've spent any amount of time around business people, then you've heard the term Return On Investment (ROI) a lot. There's a reason for that, though. It's one of the most significant factors in any sort of investment or marketing campaign.

Your direct mail ROI tells you exactly how worthwhile your investment was. You can calculate it by using this formula:

• Direct Mail ROI = [(Campaign Costs - Revenue Generated) ÷ Campaign Cost] × 100

Let's say you pay $5,000 for a marketing campaign, and the direct mail efforts bring in $2,000. That means:

• Direct Mail ROI = [(5,000 - 2,000) ÷ 5,000] × 100
• Direct Mail ROI = [3,000 ÷ 5,000] × 100
• Direct Mail ROI = 0,6 × 100
• Direct Mail ROI = 60%

To break even on your campaign, you need an ROI of at least 100%. Accordingly, you can see that this direct mail campaign performed poorly. Anything beyond 100% is good and means your investment turned a profit.

Don't Discount Longer Sales Cycles

One of the downsides of most direct mail campaign tracking methods is that they concentrate on short-term metrics like conversion rate and ROI. While these things are undeniably useful, they have a single shortcoming. They don't take account of faithful long-term customers.

This metric is what we refer to as customer lifetime value. While it doesn't offer the same short-term information, it does point out the long-term ramifications of faithful clients.

Let's say you run a direct mail campaign, and you manage to funnel 50 new clients, each of which places a large once-off order, but then you don't get any more orders from them.

But, that same set of direct mail marketing reaches four people who place smaller orders, perhaps a third of the size of the once-off order. Instead of only placing one order, they place an order monthly, or every six months, of an equivalent value.

While these clients won't have the same short-term value to your company, they'll have a considerably higher customer lifetime value. Within the span of a few short years, they'll have injected more capital into your business than the once-off big-rollers.

In short, don't overlook the power of gaining long-term new customers through digital marketing strategies.

Tracking Direct Mail Campaign Metrics Successfully

We've already presented you with the key metrics and tools that you need to monitor the effectiveness of your direct mail marketing campaign. However, having the tools isn't the only thing you need to set yourself up for success.

Most of the tools for tracking direct mail performance give you raw data. While you need the raw data to keep track of direct mail response rates and other metrics, it can be difficult to interpret. Below, we'll give you our top tips for successfully monitoring your direct mail advertising.

1. Simplify Them

Raw data for your direct mail ad can be bewildering. The best way to turn it into useful information is to take advantage of the report function offered by almost every tracking software company.

You don't necessarily need to pay a fortune for software to track your direct mail marketing campaign. Most free software also offers the ability to create reports. It makes data more palatable by grouping data according to time frame, your direct mail ROI, and other useful factors.

Of course, if you have highly analytical staff members, you can also have them convert the data into grouped formats that are easier for the rest of the staff to understand.

2. Make Them Visual

While key performance indicators such as average response rate and campaign cost can be useful, they can also be difficult to follow in their raw state.

Even as grouped data, detailing the type of direct mail piece, and other significant factors, it can be confusing to try and follow all the individual aspects. When you track a direct mail campaign, we'd recommend converting the data into graphs, charts, and other visual formats.

65% of people are visual learners, meaning that they take in the most information by looking at visual cues. If you take that and apply it to the workplace environment, that means that nearly three-quarters of your employees are likely to take things in through visual cues.

That's why we'd recommend visualization tools like:

• Pie charts
• Line graphs
• Density maps
• Bubble charts
• Bar graphs

Not only are your employees more likely to take in the information, but you'll also be able to spot trends with relative ease.

3. Look For Trends

While the word trend has become a bit of a buzzword in many industries, it can be truly helpful when trying to measure the success of a direct mail campaign.

You may not always grasp their significance immediately. But, for example, if you find trends between certain emails, or email types, and an increase in the conversion rate, then you can leverage the format of that direct mail campaign to improve results.

Positive trends aren't the only useful trends, though. If you notice that certain direct mail efforts have a negative effect, you can study those direct mail pieces to find the reasoning for the negative trend. Once you have, you can avoid using the offending technique, or experiment with modifying it.

Final Thoughts

Direct mail campaigns are an excellent way to drum up business leads. However, you need to know you're getting value for your money. Tracking direct mail in campaigns is an ideal way to do that.

The metrics that we've shared above, as well as the tracking methods we shared, will help you to do just that. From ROI to cost per acquisition and response rates, by tracking your KPIs, you can use direct mail campaigns better!

Get in touch with Taradel today and see how we can help boost your direct mail campaign marketing efforts!