Aug 02, 2010
12 Steps to Direct Mail Success - Step 11: Test, Measure, Repeat
"I know that half of my advertising is wasted," said entrepreneur John Wanamaker. "I just don t know which half." The beauty of direct mail compared to other types of marketing and advertising is that measuring your results is incredibly easy. That easy measurability allows you to perfect your direct mail campaigns - by testing, measuring, tweaking, and then testing again.
The ability to test, measure, and perfect your direct mail marketing is hugely important today - in a tight economy where every last penny counts, you can't afford to be "wasting" half of your marketing dollars (or, at least, not knowing the return they're generating).
Measuring and testing is a can't-lose - even in the worst case, if you realize that your direct mail isn't working as well as it could, you'll be able to create mailers that do generate the results you expect. In the best case, you'll realize that your direct mail is fabulously successful - that'll be a fun conversation to have with the boss!
How to set up a test
"In direct mail," said marketing great David Ogilvy, "testing is the name of the game." How you can test your direct mail depends in large part on how many mail pieces you send. If you're sending small volumes - say, a few hundred pieces - you probably won't be able to test two versions of your mailer at the same time and get reliable results.
In that case, do your best (using the first 10 Steps to Direct Mail Success) to set up a great direct mail campaign. Send it out and measure the results. Then wait a month or so, tweak your strategy (see Elements to test and tweak below) and send out another round of mail. Measure the results, compare them to your first mailing, then pick the mailer that generates the best response (or, better yet, tweak and test again).
If you're running a sequential test like that to the same list, bear in mind that your response rate on the second mailer will almost surely be higher simply because you're mailing to that recipient for the second time (repetition works). Remember, too, that a number of other factors not related to your mailer can affect its response (what's going on in the world at the time, for example). Still, running a sequential test is well worth your while - it will give you an idea of what you can change in your mail piece to increase results.
If you have, or can get, a larger group of addresses, you can run what's called a split or A/B test, which is far more "scientific" and will give you a better idea about what part of your strategy is working and what isn't. In a split test you can perfect your direct mail campaign through the process of elimination. To start, choose one element in your mailer to test (see Elements to test and tweak below).
Create two versions of your mailer that are the same in every way except for that one element. Randomly split your list in two and mail one version of the mailer to one half and the other version to the other half. Whichever version pulls the best response, that element wins - you should use it on all of your subsequent mailings. If you want, you can keep running split tests to perfect other elements of your mailer.
How to measure your results
Increasing results . . . what does that mean? The first step in determining how well your direct mail is working is to measure response - how many people do what you've asked them to do in the mailer?
You should think about how you're going to measure your response as you create your mail piece. The easiest way to do that, whether you're asking people to call, click, or visit, is to tie a special code in with your offer. If your offer is a coupon for 10% off, include a coupon code unique to that mail campaign. If your offer is a free phone consultation, again, include a special code the caller will need to give to the consultant. If you want to get really fancy, you can include personalized URLs (which are unique to each mail recipient) to see exactly who is visiting your website in response to the mailer.
If you're running a split test, make sure that you can measure responses from each version of your mailer separately (so even if you're not testing the coupon, for example, you should have two coupon codes).
As long as you have a system in place to measure the number of people responding to your mail campaign, calculating your response rate is simple - take the total number of responses you got divided by the total number of mailers you sent and multiply by 100.
But you shouldn't stop there. Your response rate will tell you how well your mail piece worked to generate recipients' action. It won't tell you how much that response will add to your bottom line. To do that, you'll need to measure the return on your investment, or ROI, which articulates the relationship between what the direct mail campaign cost you and how much you earned as a result.
Calculate your ROI by taking the dollar amount of sales attributed to the campaign, dividing by the total cost of the direct mail campaign (including the list, the design and copy, the printing, the mailing),and multiplying by 100. For example, a home renovations company spent $6,000 on a direct mail postcard campaign. They got $100,000 in new contracts from people who had received the postcards. So their return was 1667%.
Elements to test and tweak
The point of measuring the results of your direct mail is not to make yourself feel great if the results are good and bad if they're not. The point is to enable you to tweak, improve - perfect - your mail campaign. Whatever kind of test you're running (sequential to the same list or at the same time to a split list), test only one element of your mailer at a time (otherwise, you won't know what's responsible for different response rates).
"Experienced practitioners always test some variables, but seldom those which experience has taught them make little difference in results," wrote David Ogilvy, who was truly a direct response genius. The most likely candidates for testing and tweaking (in order) are:
Which half of your marketing dollars are put to good use? Or are you maximizing the return on every penny you spend? David Ogilvy put it best: "Only testing will tell. The more you test, the more profitable your direct mail will become." Remember, Click2Mail can help.