Direct Mail KPIs: The Key Metrics To Analyze Direct Mail Results

As the leading direct mail automation platform, we analyze direct mail metrics and KPIs extensively to deliver a state-of-the-art experience for marketers.

We often get asked, “Can I just skip analyzing direct mail results? Isn’t it good enough to work from your gut feeling?”

It reminds us of the old joke that goes something like: “I know I’m wasting half of my marketing budget. The trouble is, I don’t know which half.”

Measuring the right KPIs is what separates struggling from best-in-class marketers.

With direct mail platforms, measuring results with KPIs becomes as easy as tracking digital campaigns. With that detailed level of data, you have access to information that can help you focus your marketing budget on your most likely prospects. Best of all, you eliminate the high cost of targeting prospects unlikely to become a customer.

Let’s understand the different direct mail KPIs associated with direct mail campaigns and the ones you should track regularly. With this insight, you’re sure to experience direct mail success. 

What We’ll Cover:

• How to Measure The Success of a Direct Mail Marketing Campaign
• Methods of Tracking Direct Mail Results
• Analyze Direct Mail Campaigns With Postalytics

How to Measure The Success of a Direct Mail Marketing Campaign

Postalytics Dashboard

Direct marketers use a variety of key performance indicators (KPIs) to track results, typically with the use of some trackable code in their mailings. For example, this postcard for an organic makeup online retailer includes a unique code for responding to a special offer — buy two get one free.

The incentive for using the code is that it’s required to take advantage of the offer, an essential component of any direct mail package in part because it helps you capture key data.

Once you gather your results, you can use a variety of metrics to help you analyze direct mail results.

Here are a few of the most common direct mail marketing metrics, how to calculate them, and how to use them to analyze results.

Response rate

The recent surge in direct mail marketing is being driven by the recognition that response rates are high, especially compared to standalone email campaigns.

Response rate is probably the most common way to measure direct mail results, most likely because it’s the easiest one to evaluate. Simply divide the quantity you mailed by the number of responses received. For example, if you sent 10,000 pieces and received 300 responses, your response rate is:

300 / 10,000 = .03 or 3.00%

A deeper view of specific response rates offers a lot more insight. Most direct marketers test a variety of attributes: lists, creative, format, and offer to name a few. And you can calculate response rates for each attribute you test.

Let’s say you run a grocery store that offers delivery service and you want to test two offers. One for a first delivery free and another offer that’s a bit more enticing, first delivery free and $10 off a first order. If your 10,000-piece mailing was split in half to test these two offers, you might find that response rates for each test were quite different:

Offer	First delivery free	First delivery free plus $10 discount	Total
Mailing quantity	5,000	5,000	10,000
Responses	100	200	300
Response rate	2.00% (100/5,000)	4.00% (200/5,000)	3.00% (300/10,000)

Here we can see that while the entire mailing delivered a 3% response rate, that was the average between one test cell that brought in twice the response (4%) as the other test cell (2%).

Conversion rate

While certainly relevant, response rates alone do not completely measure direct mail results. After all, a free trial offer won’t be successful in the long run if those who respond do not convert into customers. So you can use another metric, the conversion rate, to give you more perspective on direct mail performance.

Indeed, high response rates mean little if few convert into customers. A lower response rate might be more successful if a larger number actually become paying customers.

You’ll need to define what a “conversion” actually represents. In this example, let’s assume that a conversion is defined as a prospect who signed up for the service after receiving the initial offer and then agreed to pay the full price for a second order.

If in this example 150 prospects were so impressed with the service that they agreed to pay for at least a second delivery, that would mean that half of the respondents to your initial mailing converted. To calculate the conversion rate, you simply divide the number of prospects who converted by the responses you received to your initial mailing:

150 conversions / 300 responses = 0.50 or 50%

But you should definitely dig a bit deeper into your conversion rate because those rates may be higher or lower based on variables you might test. In this case, two offers were tested.  The conversion rate for each may have been quite different, perhaps as shown here – a 50% conversion rate overall but one group converting at a rate much higher than the other:

Offer	First delivery free	First delivery free plus $10 discount	Total
Mailing quantity	5,000	5,000	10,000
Responses	100	200	300
Response rate	2.00% (100/5,000)	4.00% (200/5,000)	3.00% (300/10,000)
Conversions	80	70	150
Conversion rate	80% (80/100)	35% (70/200)	50% (150/300)

You can see that while the most appealing offer got more responses, the conversion rate was only half that of the other offer. This demonstrates that sometimes sweetening your offer too much may actually negatively impact results, something you can tweak in future campaigns. It also reveals that reviewing response rates alone doesn’t give you the full picture of how to analyze your direct mail results.

Cost per response and cost per conversion

Ultimately, allocating your budget most effectively depends on your revenues (and profit, of course) – and what it actually costs you to deliver those direct mail results.

Let’s assume that in this example, the mailing costs totaled 80 cents per piece – or $8,000 for a 10,000-piece mailing. To calculate cost per response, divide that cost by the number of responses. Overall for this example, the cost per response was almost $27 each:

$8,000 mailing cost / 300 responses = $ 26.67

Yet given that the response rate to each offer was different, the cost per response varied as well:

Offer	First delivery free	First delivery free plus $10 discount	Total
Mailing quantity	5,000	5,000	10,000
Cost (at 80 cents each)	$4,000	$4,000	$8,000
Responses	100	200	300
Response rate	2.00% (100/5,000)	4.00% (200/5,000)	3.00% (300/10,000)
Cost per response	$40 ($4,000/100)	$20 ($4,000/200)	$26.67 ($8,000/300)

As you can see, the more appealing offer generated responses at half the cost as the other offer.

But remember, the conversion rate for that more enticing offer was not as high. You’ll see that when you calculate the cost per conversion, which is the cost of the mailing divided by the number of conversions. For the entire mailing, the cost per conversion was just over $53 each:

$8,000 mailing cost / 150 conversions = $ 53.33

Once again, however, response and conversions varied by offer so the cost per conversion outcome varied as well:

Offer	First delivery free	First delivery free plus $10 discount	Total
Mailing quantity	5,000	5,000	10,000
Cost (at 80 cents each)	$4,000	$4,000	$8,000
Responses	100	200	300
Response rate	2.00% (100/5,000)	4.00% (200/5,000)	3.00% (300/10,000)
Cost per response	$40 ($4,000/100)	$20 ($4,000/200)	$26.67 ($8,000/300)
Conversions	80	70	150
Conversion rate	80% (80/100)	35% (70/200)	50% (150/300)
Cost per conversion	$50.00 ($4,000/80)	$57.14 ($4,000/70)	$53.33

The difference in the cost per conversion between each offer doesn’t seem too wide, but in this example, the total cost of mailing and fulfilling the offer were different. That brings us to another key indicator we need to consider – cost per acquisition — what it costs to acquire a customer.

Cost per acquisition

So far, the direct mail outcomes in this example considered the costs of the direct mail, but not the cost of fulfilling the offer.

If it costs more to make a more appealing offer, the cost to acquire a customer may be higher. Once again, if a new customer is defined as a prospect who ordered again at least one more time, then it’s necessary to evaluate the total cost – marketing and fulfilling the offer – to decide if your direct mail program is meeting expectations.

In this example, we’ll assume that offering a free delivery costs $10 and, of course, the addition of a $10 discount for the second offer adds yet another $10 to the cost of fulfilling that offer.  For this example 100 respondents received a free delivery which cost $1000 ($10 x 100). Another 200 respondents received both a free delivery and a $10 discount, each costing $20 for a total of $4000 ($20 x 200). All of these expenses plus the cost of the mailing itself totals $13,000.

To calculate cost per acquisition, divide this total cost by the number of customers acquired (or conversions):

$13,000 total cost (mailing and offer fulfillment) / 150 customers acquired = $ 86.66

Count all the expenses

For the entire direct mail marketing campaign, accounting for mailing and fulfillment expenses, the cost per acquisition was about $87 each, but of course, each offer performed differently. Here’s a summary view of all of these key performance indicators – with the cost per acquisition in the last row of the table:

Offer	First delivery free	First delivery free plus $10 discount	Total
Mailing quantity	5,000	5,000	10,000
Responses	100	200	300
Response rate	2.00% (100/5,000)	4.00% (200/5,000)	3.00% (300/10,000)
Cost per response	$40 ($4,000/100)	$20 ($4,000/200)	$26.67 ($8,000/300)
Conversions	80	70	150
Conversion rate	80% (80/100)	35% (70/200)	50% (150/300)
Cost per conversion	$50.00 ($4,000/80)	$57.14 ($4,000/70)	$53.33 ($8,000/150)
Mailing cost (at 80 cents per mailing)	$4,000	$4,000	$8,000
Offer fulfillment cost ($10 per delivery and $10 per discount given)	$1,000 ($10 x 100)	$4,000 ($20 x 200)	$5,000
Total cost	$5,000	$8,000	$13,000
Cost per acquisition	$62.50 ($5,000/80)	$114.29 ($8,000/70)	$86.67 ($13,000 / 150)

Now the analysis can really begin: Is $114 or so worth acquiring a new customer? Is $62.50 too much? Ultimately that depends on your profit margin and additional repeat business you might expect from customers acquired through direct mail (i.e. total revenue generated). 

Lifetime value

An ongoing business that could last for years could spend $200 or more to acquire a customer. But to decide whether that’s profitable, there is another direct mail results metric to consider – the lifetime value of a customer. That depends on many variables and will be the subject of one of my future posts.

Meanwhile, you can see that however you measure direct mail performance, if you’re testing offers, lists, creative execution, and formats, a review of each test cell helps you decide which strategies and tactics actually work best – and provides information that’s far more valuable than overall response alone.

Methods of Tracking Direct Mail Results

Most businesses run a mix of different campaign types through a variety of marketing channels. For example, email campaigns tied with direct mail campaigns. In such a scenario, how do you ensure the results get attributed to the right campaigns?

Here are five ways you can track and attribute results to measure campaign performance.

QR codes

QR codes on direct mail campaigns make it easy to track results and measure engagement. By adding a QR code to a postcard or flyer, recipients can scan it using their smartphones to access a specific landing page, product offer, or survey. This scan triggers tracking metrics, such as the number of scans, time of scan, and user location, giving you real-time data on campaign effectiveness.

For example, a restaurant could include a QR code on a promotional postcard that leads to a customized landing page. The business can track how many people scanned the code, took action on the landing page, measuring ROI efficiently.

pURLs

PURLs (Personalized URLs) on direct mail campaigns allow you to track individual recipient engagement. Each recipient gets a unique URL printed on their mail piece, leading to a personalized landing page. When they visit the PURL, you can monitor their actions, like website visits, form submissions or product interest, visits to landing pages and gather data for follow-up marketing.

For example, a fitness center might send postcards with PURLs that direct each recipient to a personalized sign-up page for a free trial. By tracking who visited the page and completed the form, the center can identify leads, measure campaign success, and tailor future offers to their interests.

Coupon codes

Your direct mail piece can contain a unique or campaign-specific coupon code that customers can redeem either online or in-store. When the code is used, it can be tracked back to the specific mail campaign, allowing you to analyze its effectiveness.

For example, a clothing retailer might send a postcard offering “20% off with code FALL20” for the fall season. When customers use this code during checkout, the retailer can track the number of sales driven by the direct mail campaign and calculate the return on investment (ROI).

Custom phone numbers or email addresses

Using custom phone numbers or email addresses in direct mail campaigns is a smart way to track responses and measure success. By assigning a unique phone number or email address to each mail campaign, you can directly monitor how many people contact you through that specific channel.

For example, a home services company might send a flyer offering a special discount and include a custom phone number, like 1-800-555-DEAL. All calls made to that number can be tracked, helping the company know exactly how many leads came from the direct mail piece. Similarly, using an email like promo@company.com allows you to monitor responses tied to the specific campaign.

Analyze Direct Mail Campaigns With Postalytics

Postalytics provides marketers with valuable insights to improve performance and achieve better results. 

With features like real-time tracking, campaign metrics, and detailed reports, businesses can easily measure engagement and response rates of direct mail marketing campaigns. 

You can easily integrate with CRM systems and use tools like pURLs, QR codes, and variable data to track success and personalize direct mail. 

Ready for direct mail success? Get started with a free plan and get better results with direct marketing.