New Free Online Calculator Shows What Response Rate Your Direct Mail Promotion Needs to Generate For It to Be Profitable
Dumont, NJ – You’re getting ready to send out a direct mail campaign. What response rate do you need to have a profitable mailing? Now you can find out with a free online tool, Bob Bly’s Direct Response ROI Calculator, at: www.dmresponsecalculator.com.
When you click on the site, you can access a free “break-even calculator.” You enter the mailing costs – postage, list rental, printing, and so on. The tool automatically calculates the response rate you need to break even.
According to Bly, a freelance copywriter specializing in direct response, “The inexperienced mailer focuses on number of replies, while experienced direct marketers want to know what response rate is needed for the mailing to break even.”
“By break even,” says Bly, “we mean that the mailing generates net revenues exactly equal to its costs.”
The Direct Response ROI Calculator determines net revenue per order by subtracting the cost of goods from the purchase price of the product.
The mailing cost is calculated by adding up postage, mailing list rental fees, printing, and “letter shop” fees – what it costs to have a direct mail service assemble the components of the mailing and send it out. Copywriting, graphic design, illustration, and other one-time costs to create the mailing are not factored into the break-even calculation.
“Break-even calculations are made based on the recurring cost per thousand to mail the piece,” notes Bly.
When is a direct mail campaign considered a success? “That depends on the marketer,” says Bly. “Some marketers want to break even on the initial mailing, while others want to make money – say $1.50 or $2 in sales for every $1 spent in the mail. A few are even willing to lose money on the front-end.”
According to Bly, the “front end” is the revenue from the initial sale to a customer; the back end is revenue from additional sales made to that same customer.
“Almost all direct response companies make the bulk of their profit on the back end,” says Bly.
“Let’s say the ROI Calculator determines that your mailing would break even with a one percent response rate,” says Bly. “That means if you can get a 2 percent response rate, you’d double your money, making in sales twice as much money as you spent on the mailing.
There is no charge to use Bob Bly’s Direct Response ROI Calculator
to determine the response rate your direct mail campaign needs to
break even. To access the tool online, go to:
ABOUT BOB BLY: Bob Bly is a freelance copywriter specializing in direct marketing whose clients include IBM, Nortel, Medical Economics, Sony, and Boardroom. He is the author of 75 books including The Copywriter’s Handbook (Henry Holt). For more free resources for direct marketers, visit his Web site at www.bly.com