Business to Business KPIs

B2B Direct Mail Campaigns – KPIs and Calculating ROI

In News by Alan Horton

As with any marketing campaign across any medium, you’ll have a set of goals and targets in mind. This is no different when it comes to B2B direct mail campaigns either. Here you’ll find everything you need when it comes to setting goals and KPIs and calculating your ROI.

What are KPIs?

KPI stands for ‘key performance indicator’. This will be a goal that is set, usually in a numerical format, which can be easily measured for success. A KPI doesn’t only have to be an end-result and could also be something that is measured half-way through a campaign. It’s also not generally an end-goal, but a minimum target to aim at, ultimately how do you know if your campaign was successful if you never set original targets in the first place?

How to calculate ROI

ROI, which stands for ‘return on investment’, is perhaps the ultimate way to measure the success of a campaign. Quite simply, it is how great is the B2B direct mail campaign’s return on the amount that you invested?

To calculate this, you’ll want to follow these steps. First, it’s a good idea to have some way of tracking the responses in your campaign. Using something like a PURL (personalised URL) is one example.

Return on investment when expressed financially will be the net profit / original investment. So, if a project had a net profit of £4,000 and an original investment of £10,000, the return will be 40%. It’s important to remember though that ROI isn’t always about financial return, other intangible factors will contribute a return too.

Cost per response and cost per sale

Next, you’ll want to look at two important pieces of information. This is the cost per response (CPR) and the cost per sale (CPS). The first figure relates to the number of people who responded to your campaign in some way; perhaps a phone call or email. To calculate this, divide the total cost of the B2B direct mail campaign by the number of people that responded. So, for a campaign costing £1,000 which had 100 respondents, the CPR is £10.

That’s one way to measure ROI. But if you’re aiming for revenue returns, which many campaigns are, then the CPS is the more important figure. To work this out, you simply take a similar formula to the above, and divide the total cost of the campaign by the number of sales. So, if your campaign cost £1,000, and you had five sales, then the CPS is £200.

Why is it useful to set these goals?

Using these figures, you can also work out a lot more about your campaign. In the above example, a lot of people are responding, but not a lot of people are converting. Calculating the ROI and measuring KPIs is a great way to track results, see what the success of your campaign was, and help plan for future campaigns. This will give you a great set of ideas, tips and strategies for the next set of marketing campaigns.

Other examples of direct mail KPIs

Here are some examples of some of the most popular direct mail KPIs:

  • Lifetime value – often abbreviated to (LTV), this is an estimate of the net profit attributable to a campaign based on the expected future profitability of trading with new customers obtained from the campaign
  • Pipeline value – this is the total value of potential future orders added to the sales pipeline from the campaign
  • Response rate – this is an important measure which compares actual number of recipients responding to the campaign / total number of mailings sent
  • Revenue – this is easy to understand but sometimes difficult to measure. It is ideal to know the amount of extra revenue generated by the direct mail campaign activity

You’ll have a minimum that you want to hit, but obviously the greater these figures the better!

Contact bakergoodchild to discuss B2B direct mail campaigns

Want to find out more about B2B direct marketing, how a mailing house can help, or for examples of past successful campaigns? Be sure to check out our extensive B2B direct marketing and mail article here.

Or, for any other queries and help with establishing direct mail campaign KPIs and calculating ROI (return on investment) contact us here or call us today on 0800 612 1972.