The average tenure of a chief marketing officer (CMO) used to be 18 months. That was a scary number for many marketers. Fortunately, this is changing. According to executive recruitment firm Spencer Stuart, the average tenure for a CMO is now 43 months. This speaks in part to better monitoring, tracking, and quantifying of campaign result success. This is great news. With the U.S. seemingly on the other side of the recession, marketing budgets are opening up to include all channels of communication. New technologies in digital printing enable customization, segmentation, and cross-media campaigns of any size. With toner-based digital printing, volumes can be in the hundreds—or smaller. With inkjet web, volumes can go into the millions. As production capabilities have become more robust, so have strategies for measuring success. Quantifiable metrics help marketers justify their budgets and evaluate the effectiveness of their choice of channels (or mix of channels) and focus on the ones producing the highest returns. Evaluating campaign success is not always as simple as looking at a basic response rate, however. Let’s review the “must-haves” that help measure any integrated marketing campaign. How do you spell success? One of the reasons marketers balk at variable and cross-media campaigns is that on a per-piece basis they can cost more than static print campaigns. But “more costly” is a relative term. These campaigns might cost more, but what if they generate greater returns? When evaluating the success of their marketing campaigns, marketers must look beyond cost per piece or simple response rate. They need to look at deeper metrics like cost per lead, conversion rate, and dollars generated per sale. Let’s look at some of the metrics commonly used for evaluating success and the differences between them. Response rate. Most of the case studies for variable printing discuss response rates. This is an important first gauge of success since it reflects how favorably recipients viewed the initial marketing message by taking some kind of action. This might be making a phone call, scanning a QR Code, or logging into a personalized landing page. It is not an entirely sufficient measure, however, because not every lead will convert to a sale or trigger the desired response. Still, response rate is a good first leading indicator. Cost per Call. Many marketers and business owners look at cost per call. Certain products require interaction and a personal sales process, so knowing your cost per call can be important for marketers who want to give their salespeople “a chance” to make the sale. Copy needs to direct the recipient to “Call today!” or use another call to action that generates phone activity.
Copy needs to direct the recipient to “Call today!” or use another call to action that generates phone activity.
Another reason to track your calls is help locate the source of any problems in the sales funnel. If you have a high percentage of calls but a low conversion rate, this points to a problem in your sales process. Conversion rate. This is the percentage of people who not only respond to the marketing communication but who follow through and take the desired action. This might be filling out a survey, making a purchase, or signing up for a loyalty program. You can have a 38% response rate, but if only 6% of those responses convert, that’s 2.3% of your original list. If, on the other hand, you get a 12% response rate but 60% of those responses convert, that’s 7.2% of the list, nearly four times as many people. When one marketer achieved an overall 2.38% response rate, for example, this didn’t look like much on the surface. The campaign was so well targeted and the leads so well pre-qualified, however, this “low” response rate achieved a 73.9% conversion rate. That’s a great return. Cost per lead. When evaluating costs, marketers are used to thinking in terms of cost per piece, but a more impactful measure is cost per lead, or how much it costs to get each person to respond. For example, if you print 100,000 mailers and get a 1% response rate (or 1,000 leads), at $.36 per mailer, each lead costs you $36. If, on the other hand, you print 10,000 mailers and get a 12% response rate, at $1.26 per mailer, each lead costs you $10.50. If you are measuring by cost per piece, variable printing may cost more depending quantity and type of production. If you are measuring by cost per lead, it might cost one-third less. This is why measuring cost per lead is so important.
If you are measuring by cost per lead, it might cost one-third less. This is why measuring cost per lead is so important.
Guardian, a home health-care agency with 45 agencies throughout the Southern states, found this out first hand. The agency was expanding rapidly and its traditional recruitment methods were generating poor results. Its cost per lead had also risen to well above $3,000 for print ads and more than $15,000 for traditional recruiter placements. To address the challenge, it turned to a variable print marketing solution designed for the health-care market. Recipients were segmented by race and gender, then the mailers were personalized based on specialty or discipline, availability to work, interests, salary level, and years of experience. By using personalized landing pages, Guardian also allowed recipients to respond anonymously. Over a 16-month period, the agency generated 12 campaigns and attracted more than 5,500 qualified candidates in 45 markets. Cost per lead went from well over $3,000 (print ads) to less than $90. Its job fill rate soared, as well. Cost per sale. Not every lead converts to a sale, so if the increased relevance created by variable printing creates a more effective campaign, your conversion rate will often be higher. At 30% conversion, a 1% response rate for static direct mail might end up being .3%. At 50% conversion, a 12% response rate for variable printing might end up being 6.5%. When you take into account not just the inquiries but the percentage of respondents who actually convert to sales, the numbers and cost equation can change yet again. Revenues per sale. Better-matched products and services and more engaged respondents are more likely to generate higher revenues. If the average sale from a static campaign is $100, it would not be unusual for a variable campaign to average $140 or more. In side-by-side tests, this is born out repeatedly. Backroads, an “active travel” company, wanted to encourage existing customers to book additional high-value “active travel” vacations. It knew that recurring customers spend two to three times more on vacation packages than they do on their first trips, so its target was past customers. To test the effectiveness of variable printing, it split the mailing between personalized and non-personalized catalogs. Recipients of the personalized mailing received a postcard featuring an image of a special trip that the customer might find of interest based on the previous trip. The personalized mailer resulted in twice as many responses as the standard catalog. Recipients of the personalized mailer also spent twice as much. Return on Investment. Once you take into consideration all of the relevant costs and revenues, you can calculate the overall ROI. When you take into consideration the relevant metrics, including conversion rates, sales per visit or purchase, and lifetime customer value, even a small lift in your response or conversion rates can translate into huge gains in ROI. Let’s take the hypothetical example of a company selling recumbent bicycles and accessories. Let’s look at how even moderate increases in response and conversion rate from a variable campaign, combined with a higher “dollars per sale,” affects ROI even when the cost per unit is higher. ROI Comparison of Hypothetical Mailing Vs. Variable Campaign
|Typical Mailing Campaign||Variable Print Campaign|
|Cost per unit||$1.00||$1.50|
|Total program cost (incl. design & mailing)||$25,000||$45,000|
|Revenue per sale||$1,400||$2,200|
|Total revenue generated||$53,200||$462,000|
|Est. ROI based on converting 5% of captures||213%||1026%|
This is a hypothetical scenario, and the numbers for any given real campaign will vary based on the particulars of that campaign. The point is simply how relatively small increases in these three metrics can work symbiotically to create an exponential increase in ROI. By Heidi Tolliver-Walker Heidi Tolliver-Walker has been a commercial and digital printing industry analyst, feature writer, columnist, editor, and author for more than 20 years. Her industry commentary can be found in today’s national printing publications, top industry blogs, and behind the scenes in well-respected industry and private newsletters and marketing publications. For a complete copy of the free white paper, click here to sign up and download.