How to properly measure the success of your direct mail campaign
Measuring the success of a direct mail campaign lays the foundation for future performance improvement. However, the performance measurement often does not take place to the desired extent because many fail to digitally map the offline channel.
Have you ever been in a situation where you couldn’t prove the success of a direct mail campaign?
How many customers responded to your direct mail? How many of them took up your offer? Did you achieve a return on investment?
These are questions that need to be answered using key performance indicators (KPIs). Before we get into the details, here’s a brief overview of the topics covered in the article:
These are the KPIs you should measure to determine the success of your campaign
Campaign planning starts with defining your goals. After that, you can set targeted KPIs that reflect your goals.
We recommend focusing on the following 3 KPIs:
How many customers followed my call-to-action? This expresses the conversion rate and thus shows the effectiveness of your call-to-action. The focus is on the actions from which you gain revenue.
In direct mail, a conversion might be redeeming a coupon code or referring a friend.
Our customers have an average conversion rate between 4 and 8 percent. However, if you segment or personalize your direct mail campaign, you can expect even significantly higher conversion rates.
Since the conversion rate does not accurately assess profitability, you should measure the cost-turnover ratio. The lower the value, the more effective your campaign was.
You can track over time whether an expensive campaign leads to more sales and at what point this is no longer the case.
Return on Investment
Don’t make the mistake of looking only at costs or only at profit; these numbers alone tell you little about the success of your campaign. Measure ROI to find out whether the investment in your direct mail campaign was profitable.
DMA found in their study that the average ROI for direct mail is 29 percent. However, we see a significantly higher ROI for customers who communicate in a customer-centric way.
The relevance of other KPIs depends on your campaign and its goals
You don’t offer a discount promotion? Then measure the response rate. This indicates the responses to all direct mails sent out, so you can assess the effectiveness of your campaign.
A response triggered as a result of your campaign may be scanning a QR code for a download or a landing page visit.
Note: If your customers might get to the landing page or download via other sources, this will skew the response rate.
According to a study by DMA, you can expect a response rate of 9 percent on average with an in-house list.
To prove an increase in your customers’ purchase volume, you should compare the usual average order value (AOV) to that from your campaign.
Do your customers buy more or more expensively when you offer a discount? Is the order value higher in campaigns where you make personalized product recommendations? Measure the AOV to answer these questions.
A direct mail campaign can also indirectly affect customer lifetime value (CLV). The CLV incorporates the AOV and the purchase frequency and duration of the customer relationship.
To keep track of the cost of each purchase that resulted from your campaign, consider the costs per order. Don’t forget that you should never measure only the costs, these alone do not reflect the success of your campaign.
For a new customer acquisition campaign, such as recommendation campaigns, you should use the costs per acquisition to assess the success of the campaign. Again, you should compare how much revenue you gain from a new customer to determine whether the campaign was successful.
How to track the relevant KPIs
In addition to the technical requirements, you need to prepare the elements that enable tracking and include them in your direct mail.
Coupon code & discount barcode
Coupon codes or barcodes are tracking elements that should be campaign- or segment-specific. To get detailed information on each customer, each should get a personalized coupon code.
Campaign- or segment-specific discount barcodes can be scanned in the store and track the conversion rate. By combining the two elements, the preferences of individual customers or segments can be determined. Does a segment prefer to buy in stores or online?
URL & QR code
In case you don’t offer discount promotions, you can lead your customers to a landing page or download with a URL. The landing page views will reflect the responses to your direct mail.
A more user-friendly alternative to a URL would be a QR code, which is easily captured with a smartphone and leads to the desired page.
You have to keep in mind that some customers might visit your homepage as a result of your direct mail campaign instead of your campaign-specific landing page. Thus, this is not a 100% reliable tracking element.
At a minimum, your landing page should be campaign-specific. However, if you want to evaluate the behavior of a customer segment or even each customer in detail, the URL or QR code must be segment-specific or personalized.
You can also measure the success of a campaign with elements that are not integrated into your direct mail.
Divide your target customers into 2 equal groups with similar characteristics and send the print mailing to only one of them. You can now compare the relevant KPIs such as conversion rate, ROI, and AOV of the two groups.
Can you see an uplift within the experimental group? If so, you can use this to estimate the success of your campaign.
In attribution, you observe whether there is an uplift in sales and revenue during the direct mail campaign and 6 to 8 weeks after the mailing.
Since the advertising effect of direct mail is much more sustainable than that of digital channels because print products are retained, it is important not to carry out any further marketing actions after the campaign has been sent out. This is the only way to assign the uplift to your direct mail campaign.
Nevertheless, influences from other channels cannot be ruled out, so attribution does not allow a 100 percent accurate determination of success.
The tracking elements mentioned above enable an automated transfer of the data into your tracking tool or marketing cloud and you have an overview of your campaign’s performance.
However, even the most creative tracking element is useless if the customer doesn’t respond to it. Find out how to engage your customers, what they like, and which call-to-action converts best through testing.
July 28, 2021