Blog / Smart Circle International Explains How Direct Marketing Is
Tuesday, 27 March 2012 at 23:37
<b>Smart Circle International</b> say's success of one's direct mail campaign is eventually measured, maybe not by bounce-backs or quantity of responses, but by one simple number: your profits on return (ROI). As the master of your business, you need to know this number for each strategy you run.
You may believe every campaign number is important--list size, bounce-backs, leads generated, quantity of responses, quantity of appointments, and number of sales. By the end of the day, there is only one number that can tell you if your campaign was a success or a failure.
This might sound unrealistic; you might wonder when you can really judge a complete campaign based on one number. To illustrate this reality, we'll examine two real-world examples, and we'll look at ways to measure ROI on your own.
Let's start by looking at two completely different campaigns. Once we proceed through them, decide, in the event that 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. That he sells copies at a $2 profit. <b>Smart Circle International</b> recommends sending out 10, 000 postcards at a high price of about $3700. Because of that campaign, he sold 1500 books which is a 15% response rate. But because his profit on each book is $2, he actually lost $700 on the campaign.
* Few sales, big profit each. Peter offers home loan services. His average income per new home mortgage is $5000. He delivered 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.
In the event that you were Jon, you might have considered the campaign successful because of the high response rate. Knowing what you know now in regards to the actual dollar value of the campaign, though, do you think Jon should repeat the mailing?
Commonly, business owners make the error of judging a campaign based on the response rate, rather than the profit involved. And when Peter were to create that same mistake, he would miss out on repeating his $15, 200 success.
Since you realize the value of looking at your ROI in place of concentrating on another campaign numbers, let's walk through the means of the specific calculation. Do not worry, it's not nearly as complicated as it might sound.
1. Get out your numbers. Gather your numbers from your last postcard campaign. Because this is a new formula for you personally, you may not have every number you'll need and may need to estimate some of them.
2. Fill in the blanks. Using BOOM! Ink's online calculator or this formula, plug in the numbers from your 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 can make smart decisions about which campaigns are worth repeating and which are ready for retirement. Keep this formula in your mind and you'll watch future campaigns flourish. And of course, watch out for the <b>Smart Circle Scam</b> organizations looking to make you think they've the same services as <b>Smart Circle International</b>.