John Wanamaker, a 19th century entrepreneur, once famously made the
statement, I know that half of my advertising is wasted, I just don t know
which half. Fortunately for today s marketers, there are scientific ways to
determine which half is wasted, and which half is not, through the use of
common direct marketing measurements.
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Advertising is, and has always been, part art and part science. With
direct marketing, the science part takes center stage as there are common
direct marketing measurements that can be utilized to verify the results of
the advertising.
With the increased popularity of direct marketing, the success of
advertising can be measured through a variety of common direct marketing
methods such as cost per acquisition, cost per piece, and response rate.
Before continuing in describing these common direct marketing
measurements in detail, it is beneficial to review one of the direct
marketing tools needed to determine the success of the mailing. The most
important direct marketing tool is the response mechanism. This is how you
can gauge the success, or lack of success, of a direct mail campaign. This
is the mechanism by which the prospect will use to respond - it may be a
postcard to request more information, an 800 number to call, or a website
address to place an order. You can than utilize this response to determine
the success of the direct mailing.
The first of the most common direct marketing measurements is the cost
per acquisition .
The cost per acquisition can be determined by taking the
total cost of the mailing and dividing it by the number of responses. For
example, let s say the total cost of a mailing is $2,000 and 20 people
respond. The cost per acquisition is $100. This is an important tool to find
out if the cost to obtain a new customer is in line with the profits that
you will receive.
The second of the most common direct marketing measurements is the cost
per piece.
To find the cost per piece, you would take the total cost of the
mailing and divide it by the total number of pieces sent. For example, if
the total cost of the mailing was $4,500 and you sent 2000 direct mail
pieces, the cost per piece would be $2.25. This is an important figure to
keep in mind, because by lowering the cost per piece (as long as the number
of responses stays the same), you can lower the cost per acquisition.
The third of the most common direct marketing measurements is the
response rate.
The response rate can be calculated by taking the number of
people that responded and dividing it by the number of people that were sent
the direct mail package. For example, if 2000 people were mailed a direct
mail package and 20 people responded, the response rate would be 1%. This is
an important tool that you can utilize to forecast the success of future
mailings.
By using all three of these common direct marketing measurements, you can
finally determine which half of your marketing is working, and which half is
not.
About the Author:
Daegan Smith is the Ex-NCAA Wrestler Turned Webmaster of
http://www.perfect-home-based-business-opportunities.com
Perfect Home Based Business Opportunities - The Internet's Top Home Based
Business Opportunities Free Information Resource!
February 12, 2005
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