Testing your direct mail campaigns is the sure way to ensure your targeting capabilities are successful and generate the highest response rates and returns on investment.
The following is an overview of the importance of testing your direct mail campaigns so you can optimize results and boost financial performance:
Improve Audience Efficiency
Historical direct mail response rates were less than 1 percent. Thanks to improved targeting of market segments, companies in a lot of industries now experience rates of 3 to 5 percent. To achieve such a strong response rate, continually test your responses to see which types of recipients are profitable.
Collect as much demographic, geographic, firmographic, and behavioral data as possible from targets so you can compare this data against responses. You might find, for instance, that people in a particular geodemographic segment respond at a much higher rate than others. Similarly, you could hone in on the most profitable customers by age, gender, company industry or size, and many other factors.
By fine-tuning your mail recipients to eliminate waste and inefficiency, and to amplify profitable segments, you boost your profits over time.
Determine Which Mailers Work
Don’t just test your audience; test your mail pieces as well. In some cases, it is the type of mailer you send that determines the results. Also, different customer types respond to different mailers in unique ways.
Conduct A/B testing on your mail pieces to gauge the reaction from recipients. There are a lot of ways you can do A/B testing on pieces. For instance, test traditional flat mailers against multi-dimensional kits or designs. See if the higher response on the latter justifies the increased cost for the more attention-getting item.
Similarly, test different design factors, color schemes, layouts, and message strategies. Hone in on the primary design and execution factors that get the results you want.
Mailer testing isn’t always just about prioritizing some segments and eliminating others. It is also about determining whether you achieve a high enough return on investment to justify sending campaigns to particular segments. Some companies can benefit from going after multiple customer segments with specific campaigns.
Even if a segment generates profits smaller than your top-performing ones, it is often still worth your investment to target it. Determine your cost of acquisition within each segment by spreading your costs out across each mailer. Then, compare your acquisition cost to the average sale you make within that segment. If your average sale is significant relative to the cost of acquisition, you have a profitable investment opportunity.
These are some of the most important reasons that campaign testing is necessary for success in direct mail marketing. Never take your results for granted; continue to test and fine-tune your audience and your mail pieces to optimize results.
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