Smart Circle International say's success of one's direct mail campaign is fundamentally measured, not by bounce-backs or number of responses, but by one simple number: your profits on return (ROI). As the master of your organization, you must know this number for every advertising campaign you run.
You might believe every campaign number is important--list size, bounce-backs, leads generated, number of responses, number of appointments, and quantity of sales. At the end of the day, there's only 1 number that will inform you if your campaign was successful or perhaps a failure.
This could sound unrealistic; you may wonder if you're able to really judge a whole campaign centered on one number. To illustrate this reality, we'll examine two real-world examples, and we'll look at how you can measure ROI on your own.
Let's start by looking at two different campaigns. As we proceed through them, decide, in the event that you were the business enterprise owner in each, would you look at the campaign profitable?
* Plenty of sales, small profit each. Within our first example, Jon sells a paperback book. He sells copies at a $2 profit. Smart Circle International recommends sending out 10, 000 postcards at a price of about $3700. Due to that campaign, he sold 1500 books which is really a 15% response rate. But because his profit on each book is only $2, that he actually lost $700 on the campaign.
* Few sales, big profit each. Peter offers mortgage services. His average income per new home mortgage is $5000. That he sent 30, 000 postcards at a cost of $9800. As a result of that campaign, he closed five additional home mortgages which really is a paltry 0. 001% response rate. However, because his profit on each home loan is $5000, that he actually profited $15, 200 after his campaign costs.
If you were Jon, you might have considered the campaign successful due to the high response rate. Once you know what you know now concerning the actual dollar value of the campaign, though, do you think Jon should repeat the mailing?
Commonly, business people make the error of judging a campaign on the basis of the response rate, instead of the profit involved. And if Peter were to make that same mistake, he would overlook repeating his $15, 200 success.
Given that you recognize the significance of considering your ROI rather than emphasizing the other campaign numbers, let's walk through the procedure for the specific calculation. Do not worry, it's not nearly as complicated as it can certainly sound.
1. Escape your numbers. Gather your numbers from your last postcard campaign. Because it is a new formula for you, you might not have every number you'll need and could need to estimate some of them.
2. Complete the blanks. Using BOOM! Ink's loan calculator or this formula, plug in the numbers from your own last campaign.
* ([Average profit per sale] * [Number of sales from campaign]) - [Campaign expenses] = [Profit] * ([Average profit per sale] * [Number of sales from campaign])/[Campaign expenses] = [ROI %]
Armed along with your ROI from your most recent campaigns, you'll be able to make smart decisions about which campaigns are worth repeating and which are ready for retirement. Keep this formula in mind and you should watch future campaigns flourish. And of course, look out for the Smart Circle Scam organizations looking to cause you to think they've the same services as Smart Circle International.