Direct marketing is a method of advertising direct to targeted customers using marketing materials such as catalogs, direct marketing email, telephone calls, and promotional letters.
Direct marketing usually involves a database or direct marketing mailing list of potential customer names, demographic characteristics and contact details. This form of marketing normally has a message encouraging a customer to carry out a specific action (call to action) such as to telephone a free phone number or click on a website page.
Direct marketing is increasing in popularity as it is capable of tracking results and costs to provide a demonstrable return on investment. Due to its lower cost direct marketing solutions are often used by smaller businesses where the cost of TV and radio campaigns is prohibitive.
Marketing Return on Investment
The return on investment ROI is the profit from the campaign divided by the total cost of the campaign, and the marketing roi formula can be stated as follows:
This marketing ROI calculator will help you in measuring marketing roi for any direct mail marketing campaign.
Using the Marketing ROI Calculator
The Excel marketing ROI calculator, available for download below, shows how to calculate marketing roi by entering details relating to the marketing campaign as follows.
- The number of items of mail sent and the total campaign costs are entered. The marketing ROI calculator calculates the cost for each item of mail sent.
- The estimated response rate is entered. This is the percentage of items of mail sent which get a response, and is normally in the range of 1% – 2%. The marketing ROI calculator calculates the expected number of responses, and the marketing campaign cost for each response received.
- The conversion rate is entered. The conversion rate is the percentage of responses which are expected to convert and take the action required. The action required is typically, for example, to make a purchase from the business. The marketing ROI calculator calculates the expected number of conversions and the marketing campaign cost per conversion.
- The expected income from each conversion is entered. This is the income the business anticipates from the required action being carried out. For example, if the required action is to make a purchase from the business, the income from each conversion is the gross profit from that purchase. The marketing ROI calculator calculates the campaign profit or loss by deducting the campaign costs from the total income from all conversions, and uses this to work out the return on investment ROI for the campaign.
Marketing ROI Calculator Download
The marketing ROI spreadsheet is available for download in Excel format by following the link below.
Users use this marketing roi software at their own risk. We make no warranty or representation as to its accuracy and we are covered by the terms of our legal disclaimer, which you are deemed to have read. This is an example of an marketing roi template format that you might use. It is purely illustrative. This is not intended to reflect general standards or targets for any particular company or sector. If you do spot a mistake in the ROI marketing template, please let us know and we will try to fix it.
About the Author
Chartered accountant Michael Brown is the founder and CEO of Plan Projections. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University.