Measuring the effectiveness of direct mail is a frequent topic of conversations with clients, prospects and those generally interested in better understanding how direct mail benefits their marketing campaigns and impacts their business. It has been said, accurately I believe, that you can’t improve what you can’t measure. Of course, this implies that serious thought has been given to where you are and where you want to go. In the case of direct mail measurement, how and what you measure will determine the actions you take.
Historically, the primary measure of direct mail impact has been last touch, such as a phone call or landing page hit. Today, many businesses focus on both last touch metrics and modeled metrics that show how a tactic like direct mail contributes to overall gross sales. It’s important to be consistent in the way you measure direct mail along with how you measure all other marketing efforts.
Response Channel and Attribution are Focuses of Direct Mail Measurement
When meeting with clients to develop an approach to direct mail measurement, our recommendations are based on the audience they are targeting. Measurement is related to response channel and attribution. If we expect our audience to respond only by phone and our client has no substantive web presence, Search Engine Marketing (SEM) or Pay Per Click (PPC) budget and no landing page strategy, then we may recommend reviewing only responses driven to a phone number. In addition, we will have to consider the percentage of responses that convert into sales. Over time, we will want to know if changing direct mail creative or targets effects response rates, conversion rates or both.
Internal and External Factors Impact Conversion Rates
However, for most clients the primary measurement is cost per acquisition (CPA), which can also be referred to as cost per funded loan or cost per order, depending on the industry. At the end of the day, most clients care about what they had to pay to acquire a customer. The challenge with a CPA-only approach to measuring a campaign is that many times the conversion rate is not a direct ratio to response. For instance, if a campaign has two mail cells using different creatives and both receive a 1% response rate but the conversion rate for one package is 50% and the other has a conversion rate of 30%, you will have radically different CPAs. It will then be up to the client to determine if the change in conversion is due to call center processes or other issues.
At IWCO Direct, we typically develop tactics designed to impact response rates first and conversion rates second. Looking at all internal and external factors that contribute to both is key to a successful campaign. With that in mind, each client measures campaigns differently, so we ensure measurement aligns with the client’s preferred metrics.
If you have any questions about direct mail measurement, please leave a comment or send me a note. We’re always happy to talk about measuring results.
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