imageMEDIA is pleased to announce the introduction of a new tool designed to assist in the planning and modeling of direct mailing campaigns. The imageMEDIA Return on Investment Calculator, ROI Calculator, enables you to quickly choose from a list of available mailable products, set campaign assumptions and see both quantitatively and visually the anticipated results. Further, snapshot reports from the ROI Calculator can be sent to any desired email address so that the assumptions and results can be saved and shared.
The ROI Calculator considers several aspects of a mailing campaign. First, the costs of the campaign are collected: the price for the printed material, the campaign setup, the postage price and the list price. For convenience, the printed price is directly connected to the imageMEDIA database to ensure accurate and current pricing assumptions. When specifying the product, one can also specify how many pieces will be sent; this enables accurate estimations of postage pricing even when using a list of different quantity than the printed number of pieces. Available postage options are based on the size of the product as well as the quantity to be mailed. The list pricing estimate is based on lists purchased from imageMEDIA.
If one does not want to use a standard product, one can manually set all the cost parameters by clicking on the USE MY OWN NUMBERS link. This allows one to override any of the pricing mentioned above and is particularly handy if one wants to use a custom product or would like to embed any additional costs that may be unique to the campaign.
The Average Cost and Average Selling Price determine the results for gross and net revenue. The Average Selling Price determines the gross, along with other factors, and the net is a function of Average Selling Price less Average Cost.
ROI Calculator Example:
If you are a real estate agent who makes a 6% commission and sells homes with an average cost of $150,000, the Average Selling Price would be $9000 ($150,000 * 0.06). If it costs you on average about $2500 (time, gas, other) to close a deal, you would use the following values:
- ROI Calculator -> Average Cost: $2500
- ROI Calculator -> Average Selling Price: $9000
Campaign Responders are those who express interest in the campaign and complete the first campaign target by responding to the call to action. This call to action could be phone call, a site visit, or whatever other option is appropriate to the campaign. The number of Responders is determined by the response rate – adjustable by dragging the marker on the Responders slider, or by manually entering a percentage in the adjacent box. In order to allow for more precise control of the slider, the ROI Calculator assumes that the response rate will be 15% or less. If this is too constraining, one can check the Enable 100% range for responders and the full range will be available.
ROI Calculator Example:
Suppose that you send 5000 postcards promoting your Sales Training Seminar that calls on recipients to register at your web site. If you expect 100 people to come to the web site to get more information, you would use a Response Rate of 2% (100 responders / 5000 recipients).
- ROI Calculator -> Responders (%): 2
Campaign Conversions are those who complete the final campaign objective, monetized in the Average Selling Price field. The number of Conversions is determined by the conversion rate, the percentage of Responders that complete the campaign objective. This means that a conversion rate of 100% will yield a number of Conversions equal to the number of Responders.
ROI Calculator Example:
If you are a shoe store that sends a cooperative advertising postcard featuring an in-store coupon associated with your latest running shoe, the conversion rate measures the number of people that make a purchase using that coupon. Since it could be difficult to measure the number of people that came into the store and opted not to purchase, we will set the Response Rate equal to 100% and then set the Conversion Rate to the anticipated result. So, if 2,500 postcards are sent to a targeted list of local race participants we might expect 100 transactions or a conversion rate of 4%.
- ROI Calculator -> Responders (%): 100
- ROI Calculator -> Conversions (%): 4
ROI Calculator Uses
The ROI Calculator has been designed to help provide additional insight into the planning of a mailing campaign. With it, one can quickly determine at what point a campaign will be profitable. For most campaigns, the area of focus is the quantity. However, it is important to have realistic expectations for response and conversion rates. Adjusting product information and response and conversion rates represent the Forward usage of the calculator; there is also a Reverse usage.
The ROI Calculator can also be used to determine the pricing of a product or service offering. Reverse usage means to hold the product pricing, response rate and conversion rate constant while varying only the Average Selling Price. Many organizations neglect marketing expenditures when pricing their offering, or fail to precisely quantify it as a component to their individual offerings. By using the ROI Calculator in Reverse, one can ensure that the selling price is sufficient to ensure the desired profitability.
ROI Calculator Results
The results of the campaign are expressed visually and quantitatively. A bar chart shows the relationship between the campaign cost, the gross revenue and the campaign net, or profit. The return on investment is showed prominently as well as the total profit and profit per piece. In this area, there is a button that allows one to immediately begin the campaign, if the user so chooses.
Additionally, the Campaign Forecast provides line item reporting of the campaign. These values include:
- Campaign Cost
- Campaign Net Revenue
- Cost per Responder
- Cost per Conversion
- Campaign Gross Revenue
Finally, the results of the ROI Calculator can be sent to any given email address by entering it into the EMAIL REPORT field and clicking