So you’ve launched your first direct mail campaign–Congratulations! What’s next? Now comes the part where you wait and see if your campaign will turn into revenue for your business.
Here’s how you do that.
1. Track it
You can’t judge your postcard success without knowing which leads it generates. That’s why you should add tracking that makes it easy to determine which of your new customers came from this campaign.
This can be a discount code, a unique URL that they can visit, a QR code, or even something to show when they walk into your shop. Keep track of how many of these visits or codes you receive and how much those customers spend. This allows you to determine your ROI.
2. Calculate your break-even point
The break-even point of your campaign is the critical piece of information that will determine if your campaign was successful and worth running again. While making money and bringing in customers in any form is great, you want to know whether the next one brings in more than you spent on them, and that’s what this will show you.
First, let’s get cover some definitions that you’ll need to calculate this:
- Response-rate: How many leads typically respond? Ex. 5%
- Close-rate: How many of the leads that do you typically close? Ex. 50%
- Break-even close rate: The number of leads that need to close for you to break even
- Total cost: That’s postcards plus any labor. Ex. $200
- Gross margin: The amount that you make from each sale after costs. Ex. $100
- Pieces: The total number of mailings you’re sending. Ex. 1,000
Now, here’s how it works. Complete this equation:
Break-even close rate = (Total cost / gross margin)
If we use the example number from above, we get a break-even close rate = 2.
That is to say, if you get two 2 new leads that close, the campaign has paid for itself and you break even.
Now, if you want to know how many postcards to send to get there, use this equation:
Minimum number of pieces to send = ((break-even number of leads / close rate)/average response rate)
Again, by using the sample numbers above, we know that our break-even close rate is 2, our average close rate is 50%, and our response rate is 5%
Thus, we need only to send 80 postcards to get there. But that’s only if you’re shooting to break even – what if you wanted to double your money?
Double the number.
After a while you’ll see a diminishing return where you saturate your market, but according to Entrepreneur, that isn’t until you start sending millions of postcards.
Want more customers? Send more cards. It’s that simple.
Well, was it worth it?
If this is your first campaign, it’s advisable to run a few mailers at one time to see which draws the most customers back, using variable elements that can help you determine what’s working and what’s not.
These variables can be in design, regions you mail to, month, discount, or any other element that can be manipulated. Keep rigorous track of the success/failures of each variable to know what works well in the future.
It may take a few of these A/B tests to hit your break-even point or turn a profit—but don’t let that deter you. Spending money to make money is just part of business. Eventually you’ll lock down the best strategies for each campaign and can significantly exceed your B/E every time.
Do more than break-even – get ahead! Send your next postcard right now through the link.