7 Measurement Considerations for Personalized Marketing Campaigns

How do you evaluate the success of your personalized marketing campaigns? Response rates? That’s a good first measure, but it is a very limited measure of your marketing efforts. To properly evaluate the performance of your campaigns, consider using some or all of the following methods.

1. Conversion Rate. This is the percentage of people who not only respond to the campaign, but who follow through and convert to sales. You can have a 38% response rate to a campaign, but if only 6% of those convert to sales, that’s only 2.3% of the original list. If, on the other hand, you get a 12% response rate but a 60% conversion rate, that’s 7.2% of the original list. That is nearly four times higher.

2. Cost per Lead. Forget cost per piece. How much did it cost to get each person to respond? For example, if you print 100,000 mailers and get a 0.5% response rate (or 1,000 leads), at $0.36 per mailer, each lead cost you $36. If, you print 10,000 mailers and get a 12% response rate, that’s 1,200 leads. At $1.26 per mailer, each lead costs you $10.50. If you are measuring by cost per lead, personalized marketing costs one-third less in this example.

3. Cost per Sale. Not every lead converts to a sale, so if the campaign is a direct selling effort, you might want to see how much it costs to land each sale. With higher conversion rates, personalized campaigns tend to excel here.

4. Revenues per Sale. Better-matched products and services and more engaged respondents are more likely to generate higher revenues than static campaigns. One children’s charity, for example, switched to personalized campaigns and discovered that its average donation increased 168%.

5. Return on Investment. As with other measures, return on investment (ROI) for well-executed personalized campaigns is often exponentially higher than for traditional campaigns. Why? When you take into consideration all of the other metrics,including higher conversion rates and dollars per sale, even a small lift can translate into huge gains in ROI.

6. Lifetime Customer Value. Loyal customers who purchase from a company over and over have enormous lifetime customer value (LCV). Customers gained through personalized marketing efforts, not only tend to purchase more, but are also shown to be more loyal than those gained through static methods. As a result, LCV can play heavily into the cost-benefit equation.

7. Internet Components. If your campaign is multi-channel and includes digital components such as e-mail and personalized response pages, there are other measures that you might want to consider. These include e-mail open rate, e-mail “click-through” rate and form fill or survey completion rates.

Many of these are fuzzy terms. Different marketers use different terms for the same strategies. The point is simply to be aware that there are different ways to calculate response and measure the effectiveness of marketing campaigns.