How to Track & Measure Direct Mail Campaigns
It’s easy to assume your direct mail campaign is a success when you see an obvious increase in sales or leads. But sometimes your campaigns can be more or less successful than they appear on the surface. The smartest marketers are the ones who take the time to set up detailed tracking methods so they can accurately measure their direct mail performance.
If you’re not sure how to accurately gauge response rates or you’re tired of wondering what the ROI on your direct mail is, this guide is for you. Follow the steps below to learn how to set up reliable tracking methods, determine your success metrics, record the results of your campaign, and compare your performance against your goals.
Choose Your Direct Mail Tracking Methods
The golden rule when setting up tracking on your direct mail campaign is to make sure any point of contact listed on your direct mail piece – phone number, URL (website address), coupon code, etc. – is unique and trackable. Otherwise, you’ll have no way of attributing sales or leads to the campaign.
Choose one – or several – of the following tracking methods to trace sales and leads back to your direct mail pieces.
Trackable Phone Number
You can easily measure the response rate from your direct mail campaign using call tracking. Just make sure you have a unique number for every direct mail piece you send out. Try tracking phone calls in one of the following ways:
- Set up a dedicated toll-free phone number that automatically forwards to your business line. You can track how many calls come through this line to determine your response rate.
- Enlist the services of a call tracking software company. Often, they’ll provide you with the ability to play back the calls you receive, in addition to reporting and analytics data.
- If you just want to use your regular business line on your direct mail piece, make sure your staff keeps track of each coupon redemption and the direct mail piece it appeared on.
Include a campaign-specific URL on your direct mail piece that leads to a custom landing page on your website. Something like www.landscaping.com/free-mowing, for example. By creating a URL that’s unique to your campaign, you’ll be able to use your site’s analytics tools to determine the number of people who visited the page. You can use Google’s Campaign URL Builder to create a URL that will be easy to track in your Analytics account.
For a more personal touch, set up a personalized URL (PURL) for each person on your mailing list, like www.landscaping.com/joe-smith. These personalized URLs should take the recipient to a landing page with content that’s been customized just for them.
The easiest way to use PURLs is to work with a marketing automation company. Or you can try using a service like EasyPurl. They’ll help you set up your personalized URLs, build landing pages, and launch and track your campaigns.
Include a coupon code on your mailer that recipients can redeem in your store, on your website, or over the phone. If you accept codes over the phone, just make sure your staff is asking for the code each time they take an order.
You can add a QR code to your mail piece that goes to a custom landing page on your website whenever someone scans it. You can then track how many people visited that unique landing page in your website analytics account to measure response.
Determine Your Direct Mail KPIs
Before you can evaluate the success of your mailer, you must identify the goals you want your campaign to achieve. Is the purpose of your campaign to increase sales? Uncover new business leads? Raise awareness?
Your answers to these questions will help you determine your Key Performance Indicators (KPIs). KPIs are simply metrics that show how well the campaign is reaching its goals.
There are plenty of metrics by which you can judge the success of your direct mail campaign, but many of them aren’t useful and can provide misleading information.
Below are six essential direct mail marketing KPIs to help you accurately measure the success of your campaigns.
The response rate is the percentage of people on your mailing list who responded to your mailer through any of the tracking methods mentioned above.
According to the Direct Marketing Association, the average response rate for direct mail house lists is 9% and 5% for prospect lists. However, if your direct mail piece is advertising an expensive or complicated product, a response rate that is less than one percent is not unusual.
Remember that if you’re not tracking every method of contact listed on your mailer, you’ll never have an accurate response rate.
Your conversion rate – also known as order rate – is the percentage of respondents that took advantage of the offer in your mailer.
Businesses that sell less expensive impulse products, like a pizza shop or clothing store, can probably ignore conversion rate since the response and conversion typically happen at the same time (someone ordered a pizza or used a coupon in the store).
Businesses with longer sales cycles, like dentist or law offices, should pay closer attention to their conversion rate rather than their response rate.
Cost per Acquisition (CPA)
Your CPA – also known as cost per order or lead – tells you how much each new customer cost to obtain.
You can compare your CPA for your direct mail campaigns with the CPA for your other marketing channels to determine which is most cost-effective.
Average Order Size
This figure shows you the average amount of income you earned for each sale your mailing generated. It’s important to note that average order size is a value you can calculate prior to sending out your direct mail campaign just by paying attention to the orders you’re already receiving.
However, if you don’t already have this metric, it’s a good idea to calculate it using the data from your direct mail campaign. You might also find differences between the average order for a direct mail lead and a walk-in or web lead.
Revenue per Order
Revenue per order subtracts the CPA from the average order size to show you how much profit you made from each order on average.
Return on Investment (ROI)
Perhaps the most sought after and useful KPI there is, ROI will give you a quick idea of how successful your campaign was overall.
A Word on Lifetime Value (LTV)
While the metrics above give you instant feedback on the success or failure of your campaign, it’s important not to discount the lifetime value of a customer. Customer LTV will give you the most accurate gauge of the success of your direct mail campaigns.
For example, say you sent an offer for a $25 discounted service to 1,000 people and it cost you $2,000. The mailing generates 35 new customers and you make $875 gross profit. At face value, this campaign doesn’t break even.
But if your average customer’s lifetime value is $400 over 12 months, then the gross profit would be $14,000 compared to $875. That’s a huge difference.
However, lifetime value can be a complicated number to come up with, and it’s guaranteed to be different for each business. If you don’t already know your customer’s LTV, we recommend using the formulas in this visual case study to calculate it for yourself.
Remember to nurture your relationships with the customers you acquire through loyalty programs and other rewards to encourage greater lifetime value.
Send Out Your Campaign and Measure the Results
With the proper tracking methods in place, it’s time to mail out your campaign and collect some data. Once the numbers stop flowing in, you can calculate your KPIs to see if you’ve reached your goals.
Let’s take a look at an example campaign so you can see what this ultimately looks like.
Pizza Shop Example
A pizza shop sends out a mailer with four irresistible coupons to boost their sales. They choose to track their responses via coupon redemptions. In this example, since the coupon redemption takes place at the same time as the order, the numbers for responses and orders will be the same.
- Number of Pieces Sent = 10,000
- Responses = 500
- Orders = 500
- Revenue = $11,000
- Cost of Campaign = $3,700
Now, using our equations above, let’s translate this raw data into our KPIs to see how the campaign went.
- Response Rate 500 Responses / 10,000 Pieces = 5%
- Conversion Rate 500 Orders / 500 Responses = 100%
- Avg. Order Size $11,000 Revenue / 500 Sales = $22
- CPA $3,700 Campaign Cost / 500 Sales = $7.40
- Revenue per Order $22 Avg. Order – $7.40 CPA = $14.60
- ROI ($11,000 Revenue – $3,700 Campaign Cost) / $3,700 Campaign Cost = 197%
Using the example above, calculate the KPIs for your own campaign. How’d your results measure up? Did sales increase? Did you drive new leads to your sales team? The data you gather from your campaign should unveil a lot of useful information you can use to improve your mailings in the future.
Direct mail can be a great marketing tool for any business. But you’ll never know how well it’s working unless you track your campaigns and measure your results.
By choosing tracking methods for every point of contact on your direct mail piece, you’ll be able to accurately measure the response to your direct mail marketing.
Next, you’ll need to figure out which key performance indicators you’ll use to evaluate your direct mail performance. Use your internal data and the data you collect from your campaigns to find out whether or not you hit your goals.
Once you’ve mastered the ability to track and measure your campaigns, you’ll be able to apply that data to improve your future direct mail efforts. To learn how to put all that data to use, check out our guide on how to analyze and test direct mail campaigns.