Branding Blog

Rate of return direct mail calculator - free ROI tool.

Written by Dale Berkebile | Thu, Jun 25, 2009

Direct mail is great way to promote your company to a targeted demographic audience. This means instead of advertising in a medium that may have your target audience and several other audiences seeing your ad, you a trying to create a more targeted list that fits within your niche only. So not that you understand the benefits of direct mail how do you use it most effectively? Try our Direct Mail ROI Calculator to help you understand what it might take to break even and also start to profit with your Direct Mail (DM).

The first step is to Input your campaign info.

  1. Enter the number of pieces you intend on mailing.
    • Typically this number will be in the thousands for basic mailings
    • As an example we used 4000

  2. Enter the Total program cost.
    • This should include all expenses: strategy, development, design, printing, list, mailhouse, postage, follow up etc.
    • As an example we used $10,000

  3. Enter Expected mailer response rate.
    • Direct mailers typically expect a 1% response rate on their mailings - some mailings see higher and some see lower depending on the quality of your list, your message, the design, your offers & your call to action.
    • As an example we used 1%

  4. Enter your Expected sales conversion rate.
    • This number is the percentage ratio that your sales team can convert prospects into clients. Can your sale people close 10% of every deal or 20% or more? Obviously the higher the better, but be realistic with this and every number in order to get the best results from this calculator.
    • As an example we used 20%

  5. Enter your Expected average spending per buyer.
    • This number is what a typical client will spend on the product or service you are promoting in this mailing. If there is a range make sure you use the average sales price.
    • As an example we used $5000

Step 2: Calculate your ROI
  • Once you hit "Calculate" you should get the ROI for the program you entered.
Step 3: Get your Results
  • If you used our numbers and hit "Calculate" you will get these results:
  • Number of Responses: 40. This means 40 people responded to your mailer (through whatever form of contact you set up - email, phone, landing page form etc.)

  •  Cost per Response: $250. This means that for our numbers it cost $250 for each person that responded.


  •  Number of Buyers from Campaign: 8. Our numbers created 8 buyers from 40 responses (this is the 20% conversion rate that our sales team was projected to do).

  •  Cost per Buyer / New Customer: $1250. So for the numbers we used it cost this campaign $1250 per new customer this campaign landed.

  •  Total Campaign Revenue Generated: $40,000. This means that since this campaign landed 8 new clients and each client sent on average $5,000 that this campaign is expected to deliver $40k for its results.
  • Cost Per Piece: $2.50. This box shows how much each piece that was mailed cost.

  • Return on Investment: 300%. Lastly this calculator shows the final return on your investment. The campaign we proposed had a 300% return on the $10,000 original investment.

 

We hope this helps people understand and use this calculator. Brandwise recommends using this before every direct mail campaign starts. This should help you start understand how to get the best bang for your direct marketing budget.

Good luck and keep mailing!