Measuring Marketing

Chapter 61 Direct Marketing Return On Investment

Measurement Need

As with many proposed expenditures, a company’s leaders want to know the return on investment (ROI) for a given project.

Solutioni

Direct marketing ROI is the return on your direct marketing investment.

$ROI=\frac{\left(\left(DM\times R_r\times C_r\times S_a\right)-C\right)}{C}$

Where

DM = total number of direct marketing pieces sent

Rr = response rate

Cr = conversion rate of people who actually made a purchase

Sa = average sales per purchase

C = total cost of direct marketing campaign

Let’s assume our auto supplier from Chapters 57–60 has decided to market premium luxury floor mats by sending direct marketing communications to 250,000 target customers at a total cost of $200,000. The marketer’s research ...