C-Suites Ask: “What are we getting for our direct mail efforts?”

Four direct mail metrics that will answer all their questions

Did you know that 75% of CEOs don’t think marketers understand the meaning of “ROI”. What’s more, 80% of C-suites feel that marketers are too disconnected from the financial realities of the company.*

Is it any wonder that more and more C-suites are asking a simple question: “What are we getting for our direct mail efforts?” To answer that question, you have to be able to speak the C-suites’ language. And what they understand is revenue. 91% of companies use revenue growth as the only metric for measuring marketing success.

To justify your direct mail efforts, you need to be able to speak to them in terms that they understand:

  • Start with response rates (but don’t end there).
    Response rates are the building blocks for direct mail measurement. Direct response is all about motivating people to take action now. Phone calls…website visits…coupons redemption…it’s vitally important that you have these results in hand when you begin to analyze the success of your direct mail effort. With them, you can begin to talk to C-suites in a language that they can understand.
  • Cost per Acquisition satisfies the C-suite, but doesn’t give a complete picture.
    What did it cost to convert a prospect into a customer? That’s really what the C-suites want to know. Cost per Acquisition (CPA) is a valuable metric, but it takes into account factors beyond the control of the direct mail – most notably the effectiveness of your sales team at closing the sale.
  • Customer Lifetime Value tells the rest of the story – sort of.
    Customer Lifetime Value (CLV) tells you how much a customer can be expected to spend over the course of their association with your company. Knowing this can help your direct mail efforts target high-value customers, and determine how long it takes for a new customer to become profitable. But like CPA, CLV takes into account factors beyond the control of direct mail – and shouldn’t be the primary metric for measuring the effectiveness of a particular direct mail effort.
  • Cost per Lead is the true measure of direct mail performance.
    We’ve always advocated Cost-Per-Lead (CPL) as the most critical direct mail measurement metric. CPL allows you to calculate your DM program’s return on investment. Dividing the total cost of the program by the number of leads generated gives you a true measure of the campaign’s effectiveness – and may surprise you. We’ve often seen that the direct mail with the lowest CPU will have the highest CPL. And conversely, the mailer with the highest CPU may get great response rates, but give you a poor CPL.

Seventy-three percent of corporation CEOs think that marketers lack business credibility and are not the business growth generators they should be.* By setting clear goals, tracking every marketing tactic and utilizing ROI-based metrics, you can show them how wrong they are. Do that, and no one will question the value of your direct mail programs again.

*Based on a survey of more than 600 large corporations in U.S., Europe, Asia and Australia conducted by the Fournaise Group, a firm specializing in Marketing Performance Measurement & Management.

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