Tracking response to individual direct mailings is crucial for evaluating direct mail performance and the effectiveness of the overall marketing strategy.
Accurate and detailed metrics program is a great benefit of direct mail marketing. While setting up systems to collect, analyze, and track the performance of the marketing mailing lists and mailings requires some initial effort, it will pay for itself rapidly in an increased ability to test and tailor campaigns in order to generate maximum return on investment.
It is essential for direct mail marketers to use these measurements properly and take a critical look at their direct mailings statistics as well as industry benchmarks prior to making key decisions affecting the overall marketing strategy.
Direct mail marketers usually collect marketing response data in order to compare the effectiveness of direct mail content and design, evaluate diverse creative approaches, templates, offers, etc. The future campaigns are based on the results and conclusions of this analysis.
Most direct mail marketing companies use "industry average" benchmarks to analyze the effectiveness of their marketing program. However, the benchmarking statistics is usually influenced by such factors as the type of direct mail (for instance, business cards, booklets, brochures, newsletters, and others), the advertised industry, the delivery method, the company profile as well as the nature of relationship between the company and its customers. Therefore "industry average" benchmarks are effective only for similar type of companies.
In order to use benchmarking data more effectively, the direct mail marketers may set their own goals based on industry average statistics. For instance, if direct mail generates a 2.5% response rate, while the industry average is 4.5%, it is wise to establish internal goals to achieve response rates of 3.5% and 4%.
Email marketing campaigns are generally considered more effective than traditional direct mail services. In postal direct mail, the response rate is calculated as the percentage of people who responded by calling, returning a business reply card, registering online, visiting a store, etc. In email marketing, the metric known as "conversion rate" is consistent with traditional direct mail response rate. Although email open rate and click-through rate typically range from 2% to 15%, the conversion rate (the actions taken by the customer as a percentage of unique click-throughs) is in most cases significantly lower. For instance, in ecommerce an email campaign should generate up to 0.5% conversion rate in order to be successful.
Therefore, in reality the email conversion rate is not much higher than the response rate of traditional direct mail. It should be noted though that the cost of email marketing program is usually lower which allows increasing the campaign return on investment.
However, according to the latest research, direct mail marketing remains one of the most cost-effective ways to bring in new customers. In many cases, a good direct mail marketing campaign generates a higher percentage of internet sales than internet advertising, and other media, such as TV and radio.
Direct mail allows the marketing company to control its direct mail campaign and marketing expenses against those targets that are most likely to purchase the company's product or service. However, the direct mail marketers should base their metrics and benchmarking activities on clear and accurate facts and not on assumptions.