Direct Mail: If You Can’t Measure It, You Can’t Manage It

by James Colvin - 11/14/14

We recently discussed the benefits of a targeted mail list. Now, let’s talk about how you can measure the effectiveness of direct mail.

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Whenever an ROI measure is needed for a campaign, marketers should start by defining the target audience and identifying a second group of households that are similar to the target households receiving the marketing. This group is called a control group, and it should be identical to the target group except this group doesn’t receive the marketing. The purpose of identifying this group is to compare them with the marketing group to see if the marketing group’s behavior is demonstrably different due to the marketing.

There are two major components that can be used to determine ROI. First is the response rate lift—when you deliver a higher response rate, you deliver more encounters and presumably more revenue. The second component to consider is the amount of revenue generated by responders. The revenue generated per responder can vary across the marketing and control groups, and this can have a large impact on the final ROI.

Once a direct mail campaign has launched, the next step is to monitor for patient encounters coming from the marketing and control groups. By comparing the response rates and revenues, you can determine if the marketing is truly making an impact to the organization.

To get a final ROI number, take the difference between the revenues of the marketing group and the revenues of the control group. This is the revenue you can attribute to the marketing campaign itself. By comparing the revenue due to marketing to the cost of the campaign, you can determine the campaign’s return on investment—and deliver the final report to your CEO.

Need to measure ROI for your marketing and not sure where to start? Turn to True North! We help clients target, execute, and measure marketing campaigns with precision through our predictive modeling solutions. To learn more and schedule a brief demo, contact Chief Marketing Officer Jason Skinner at 423.305.7692 or jskinner@truenorthcustom.com

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