Calculating ROI for dummies

Send

Calculating the return on investment is essential practice for running and improving direct mail campaigns.

We’ve devised five straightforward steps on how to calculate ROI:

1) Create a control group

Create a control group within your data to identify background noise (perhaps from other marketing activity), and use this control group to measure the uplift against the target group.

2) Determine which sales are a direct result of the campaign

The easiest way to track the results of your campaign is by uniquely identifying each customer.

Promo codes can be forgotten about, skewing the accuracy of your results.

By uniquely identifying your customers in your database, rather than relying on a code, you can accurately track the buying habits of each customer.

3) Wait

Depending on the nature of your business, the type of product on offer and the expiry date of any promo codes or offers in your mailing, you’ll have to wait a few weeks or perhaps months to get an accurate figure.

4) Calculate your investment.

Add up all of the costs attributed to creating and sending the piece.

This may include production, graphic design, copywriting, printing and postage costs.

You may also wish to calculate your own time, though this won’t be much if you’re using a direct mail house.

5) Calculate the profit.

Sales – investment = profit. Of course, the benefit of a direct mail campaign does not only lie in the profit, but also in the connection made with your customers and the information you’ve received about your audience.

Success of the campaign could also be measured by data capture based on number of emails collected. The lessons learned from calculating your ROI are likely to make any subsequent direct mailing campaigns increasingly profitable.

Professional direct mail houses like Send can help with ROI calculation and maximise the results. All we require is prospect data, internal costs and sales data following the campaign.

Talk post to us.