Smart Circle International say's success of one's direct mail campaign is eventually measured, perhaps not by bounce-backs or quantity of responses, but by one simple number: your profits on return (ROI). As the owner of your business, you must know this number for each advertising campaign you run.
You could believe every campaign number is important--list size, bounce-backs, leads generated, number of responses, number of appointments, and amount of sales. At the conclusion of the day, there's just one number that can let you know if your campaign was profitable or even a failure.
This could sound unrealistic; you could wonder when you can really judge a whole campaign predicated on one number. To illustrate this reality, we'll examine two real-world examples, and then we'll look at ways to measure ROI yourself.
Let us start with looking at two very different campaigns. Even as we undergo them, decide, if you were the business enterprise owner in each, could you consider the campaign profitable?
* A lot of sales, small profit each. In 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 high price of approximately $3700. Due to that campaign, he sold 1500 books which really is a 15% response rate. But because his profit on each book is $2, that he actually lost $700 on the campaign.
* Few sales, big profit each. Peter offers mortgage services. His average income per new mortgage is $5000. He sent 30, 000 postcards at a high price of $9800. Because 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, 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 understand that which you know now about the actual dollar value of the campaign, though, you think Jon should repeat the mailing?
Commonly, companies make the mistake of judging a campaign based on the response rate, as opposed to the profit involved. And if Peter were to create that same mistake, he'd overlook repeating his $15, 200 success.
Now that you understand the importance of looking at your ROI rather than emphasizing one other campaign numbers, let us walk through the means of the actual calculation. Don't worry, it's not nearly as complicated as it can sound.
1. Move out your numbers. Gather your numbers from your own last postcard campaign. Because this can be a new formula for you, you may not have every number you'll need and could need to estimate some of them.
2. Fill out the blanks. Using BOOM! Ink's online 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 together with your ROI from your newest 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 your mind and you should watch future campaigns flourish. And of course, watch out for the Smart Circle Scam businesses looking to make you think they will have the same services as Smart Circle International.
Post je objavljen 28.03.2012. u 00:37 sati.