When you invest in any marketing effort, you want to know if it’s working. Who doesn't? You want to know if your money is being used effectively or not.
There are many approaches to results measurement, and the right choice for any marketing campaign will depend on your marketing goals. For numerous marketers, response rates are the first measurement they use. These are helpful, however, there are other measures that are more telling. Let’s look at three of them.
CPL (cost per lead). When you are developing a mail campaign, it’s easy to focus on the price per piece. It’s hard for personalized mailers to compete with high-volume static mail on a cost basis, but everything changes when you look at what your program costs per lead.
If you mail 100,000 postcards at $.25 each (including postage), that’s a project cost of $25,000. If that campaign achieves a 1% response rate, that’s 250 leads at the cost of $100 per lead. On the other hand, if you mail 25,000 personalized mailers at $1.00 each, that is still a project cost of $25,000. However, if you achieve a 12% response rate, that’s 3,000 leads. Now your cost per lead drops to $8.33!
CPS (cost per sale). Not all leads translate into sales. To find out what it costs you to actually close a sale, divide the number of people who make a purchase into your total costs. If only 33% of respondents to the above campaign make a purchase, for example, your cost per sale is $300 for the static campaign, while for the personalized campaign, it is $25.00.
LCV (lifetime customer value). The value of the sale often goes beyond the initial purchase. If personalized communications woo the buyer of one automaker to another, and if that customer becomes loyal to that brand, the return on investment from that mailing piece includes the value of every car purchased by that customer over his or her lifetime. Though this is not easy to measure in the short-run, this is an important metric for marketers of long-term purchases, such as automobiles, financial products, and insurance.
The bottom line? Understand what your goal is with any marketing effort, and then use the best way to measure your desired results. Responses are better than nothing, but leads and sales beat that, while a lifetime customer trumps all.