Whenever you consider investing in a marketing effort, the big question is – “Will I make a good return (ROI) on this?”

Direct Marketing (DM) projects make it easy to determine potential profit.  You KNOW when you mail or email an offer and any positive response to that offer goes directly into your revenue.  Then, you can easily evaluate whether or not the investment paid dividends – was profitable.

Here is a simple and easy way to evaluate your DM investment.  Just “plug in” your numbers to see how well your DM project should work.

ROI

Expense

Cost of mailing times the number of pieces mailed

Include cost of the list, printing and postage

Revenue

Figure out the number of leads you have to follow up

  1. Multiply number mailed times normal response (+/- 2%)
  2. Multiply result times normal close rate (10%)
  3. Multiply sales times average $ sale times number of sales

Result = Revenue (Revenue – cost = profit!)

  1. ROI = Revenue – Cost divided by Cost

Healthy Club

In the example above, even if only 5 sales were made (5 X $700 = $3,500) ROI would be over 100%.  Direct marketing can be quite profitable – IF you have a very good list.

Investment in a list that can be tailored by specific attributes to be as close to your existing “best customers” is worth every penny.  Characteristics like age, household income, children or not, location, and others should be used to provide the best chance for success.

Both visual and written content is CRITICAL.  The closer that images  and tone of the writing is to the audience’s preferences, the better the results.

It’s important to note that email lists need to have the same degree of detail.  While there is no postage cost for email, visual and written content, particularly in the subject line, are extremely important.

The better the list – and the content – the higher your ROI will be.  A slightly higher investment in the list and content can produce MUCH higher response and close rates.

Do your own math to see if your DM project is worth considering.  And, remember that Capital List is always available to provide advice as well as the best lists to get your offer to your best prospects!

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