Conversion rates: they’re one of the most popular key performance indicators in sales and also one of the most difficult to quantify. But regardless of your industry, being able to calculate conversion rates is necessary for measuring success and optimizing the sales funnel journey. You just need to know what you’re looking for – and how to get there.
At their core, conversion rates are about clearly identifying how many leads you move from one stage of the sales journey to the next. And they don’t start and end with how many final purchases you obtain. You can learn a lot from calculating conversion rates for everything from how many opt-in newsletter subscribers your landing page pop-up acquired to how many potential customers redeemed a promotion from your direct mail campaign. Knowing how successful you are at each stage can then provide you with crucial insights that help you modify your processes and make them more effective.
Today’s sales and marketing campaigns are increasingly incorporating a mix of both print and digital strategies. In the case of the former, calculating conversion rates becomes a way to measure not just the ROI and efficiency of direct mail, but to gain a better understanding of the precise ways print marketing elevates the digital side of your campaign.
In this article, we’ll go over how to calculate conversion rates for direct mail using Tactile Marketing Automation (TMA®) – the best tool for multi-channel orchestration and tracking your results. But first, a rundown of the basics:
Conversion Rates and Direct Mail
What are you trying to achieve with your direct mail campaign? There’s a simple answer, of course, which is “sales.” But if the only thing you’re tracking is how many leads you convert into the final stage of the sales journey, you’re missing the more nuanced data that can help you funnel leads further and faster.
The direct mail conversion rates you choose to measure are highly dependent on the structure of your campaign. Here are just a few of the key metrics you can calculate conversion rates for:
Response rates. How many new leads responded to your direct mail? How many old leads? How does your direct mail response rate compare to your digital response rate? (According to the DMA, the average direct mail response rate is 5.3% for old leads and 2.9% for new prospects. Both rates exceed those of online display ads [0.9% response rate], social media [0.6% response rate], paid search ads [0.5% response rate], and email marketing [0.45% response rate]).
Promotional success. If your direct mail included a coupon or some other type of redeemable promotion: How many leads used it? How many of them were new customers? How many of them were old customers?
Digital success. If your direct mail included a URL, PURL, or QR code that drove leads to a complementary digital component of your campaign: How many leads followed the link? How many of them followed the link and took other actions after doing so?
Sales funnel. How many leads showed interest as a result of the campaign? How many showed consideration or intent to make a purchase? How many actually did make a purchase?
Conversion rates on these types of data metrics matters, because all of it clues you in on your leads’ behavior and how you can modify your campaign to maximize certain outcomes. The more you measure, the more you learn about how you can better target your marketing campaigns to the leads who are most likely to convert.
The Conversion Rate Calculation Breakdown
Figuring out what you want to measure is the easy part. Now, it’s all about doing the math.
Your conversion rates are the successful completions of each of the steps you’re measuring in comparison to how many leads you reached out to. For example, if you’re measuring the conversion rate of how many leads took advantage of a coupon, you’ll look at how many redeemed the coupon in light of how many received it.
It will look something like this: [Number of people who used your direct mail coupon / Total number of people you sent the coupon to] x 100.
Let’s say you sent out 1,000 coupons and 250 were redeemed. To get your conversion rate, you’ll do 250/1,000 x 100 to get a conversion rate of 25%.
Or perhaps you want to compare conversion rates as a way to measure the success of your direct mail campaign in relation to your email marketing campaign. In that scenario, looking at conversions in terms of response rate would be helpful.
To do it, calculate your conversion rate for your direct mail response rate as [Number of leads who you received a response from / Total number of people you sent direct mail to] x 100. Now do the same for your email marketing response rate and compare the final percentages.
Calculating conversion rates for a metric like this is much more informative than looking at the response rates alone. Getting 400 responses to an email campaign may seem like a bigger success than the 200 responses you got from your direct mail efforts, but it all depends on how many leads you reached out to in the first place. If you sent out 40,000 emails and 5,000 pieces of print mail, your email conversion rate would be just 1% compared to 4% for mail – a helpful piece of context for determining where you should put your resources.
Your conversion rates are much more valuable when they’re understood in relation to set parameters, so when pulling insights from your conversion rates, don’t forget to factor in time, too. Contextualize your conversion rates in terms of your own timeframe-based goals for certain months, quarters, and/or years for a clearer picture of what marketing efforts worked out the best for you.
The role of Tactile Marketing Automation®
And this brings us to Tactile Marketing Automation (TMA®), a tool from PFL that makes it easier to send highly personalized, highly targeted mail, and easier to both track and improve conversion rates.
To get the most out of TMA® when it comes to your conversion rates, you have to use it to its full potential. Leverage all your data by integrating TMA® with your CRM and any other automated marketing campaign platforms that you use. For the highest quality conversion rate results, look for incomplete or duplicate data that could be skewing your outputs and modify as needed.
Once you have your TMA® set up, you’ll be able to use it to track response rates and other conversion metrics based on unique components of your campaign. You’ll also be able to see how leads are impacted by the changes you make based on conversion rate data, with real-time insights and A/B testing that helps you change gears quickly and effectively.
Ultimately, knowing what your conversion rates are and using that information to take actionable steps toward improvement are two different—but equally important—tasks for maximizing your marketing impact. Keep asking questions, coming up with new metrics to measure that can in turn inform your practices. Staying inquisitive is necessary if you want to continually learn and grow from your metrics.
Let’s convert better together. Visit PFL.com for more information on tactile marketing automation and how to build an integrated platform that gives you all the insight you need to do more with your marketing.