Direct Mail ROI Calculator

Direct marketing ROI calculator; estimates return on investment for direct mail campaigns. Includes support for advanced options like buyer incentives, upsell / repeat sales, and downsell / save offers. Select one of the examples below to see the calculator in action!

Program Type Examples

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Basic Program Assumptions

Advanced Options: Upsell / Downsell Offers

Direct Mail Campaign Profitability

Sales $2480
Gross Profit $1240
Direct Mail Budget Used $1000
Incentives / Processing $110
Net Profit $130
Direct Mail ROI (ex. Incentive) 13%
Marketing ROI (with Incentives) 12%

Direct Mail Campaign Results

Prospects Mailed 2222
Responders 22
Buyers 22
Initial Sales $880
Upsell/Repeat Buyers 8
Upsell/Repeat Sales $1600
Cost Per Piece $0.45
Response Rate 1.00%
Conversion Rate 100.00%
Cost Per Sale $45.45
Payout Per Sale $56.36

Using the Direct Mail ROI Calculator

This Direct Mail ROI calculator analyzes the expected return on investment from a direct mail campaign. It is designed to be flexible in terms of the campaign features - our demo examples include a local restaurant, a timeshare promoter, and a fundraising program. If you are also looking at digital marketing efforts, check out our digital marketing roi calculator.

We determine the size of the mailing based on the number of available names and the direct marketing budget available for the mailing. We set the size of the mailing at the lesser of the list size or the available budget.

We assume all responses are sent to a processing center or retail location. If there is a cost associated with each response, use the $/Response field - this is intended for incentives, administrative costs, and inbound call center expenses. In the case of the restaurant, they're offering a $5 coupon for lunch. (I'm getting hungry!). A certain percentage of the responders will buy something, which we call the conversion rate. We include an initial sales field to use to estimate how much they will buy.

The direct mail ROI calculator also supports upsell and repeat purchases. You can use this field (repeat/upsell) for either purpose. You also have the option of entering a third (and final) offer for responders who reject your initial sale - we call this a downsell offer. We're going to walk through a couple of scenarios to show how to use the various features of the calculator.

The first scenario is a restaurant coupon offer. The restaurant is sending out a postcard offering a $5 discount on your next lunch. We enter the $5 in the incentive field. The real goal of the campaign, however, is to build repeat traffic. We assume that 40% of the diners will return, with an average of $200 in sales per repeat guest (multiple lunches). We enter this in the upsell / repeat field, as a 40% conversion rate and $200 sale.

For the arts fundraiser example, we send a list of prior patrons a letter asking for their support. We offer a $25 incentive for donating (free ticket? mug? rhinestone tutu?). We assume most responders will donate $50 (yes, we have low aim). However, there are a small number of generous donors (20%) who can be coaxed into making a larger contribution: $500 (entered as $450 - don't forget to net out the original $50). As you can see, these folks generate most of our donations. In this case, we don't have a downsell offer so we set this field at 0 (and it disappears from the reports).

To calculate your direct mail profits, we include a gross margin percentage. This should be the percentage of the sale that the marketing team is allowed to take credit for. If you are the retailer / merchant, this is your variable contribution margin (sale - direct cost of product - direct cost of service). If you are a broker or affiliate marketer, use your commission percentage. This is compared with your direct mail budget to calculate direct mail ROI.

Our final example, a Timeshare Marketing campaign, demonstrates the tool's flexibility. As a timeshare marketer, we have a multi-stage conversion funnel:

We're going to mail the prospects a fancy brochure (costs $1 - we're using the glossy paper!). If they respond, they get to go on a free weekend at the resort ($250 incentive cost for us). At the sales presentation, we present them with two offers. 5% of them accept the first offer, buying a timeshare week for $50,000. Of the buyers, 20% accept our upsell offer of a bonus week for another $40,000. For the 95% of buyers who decline to purchase the timeshare week, we present the "last chance" offer of a $2000 vacation package. 10% accept. Incidently, this sales funnel is similar to the one that appears to be currently in use for Marriot Vacations time share marketing program.

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