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Do You Know Your Cost Per Lead?
July 12, 2008

Most marketers are used to thinking about their direct marketing pieces in terms of cost per piece. How much did that piece cost you to print and mail? $.42? $1.42? It depends on how many you print, how many different pieces are contained in the envelope, and what kind of postal efficiencies you can generate.
 
Cost per piece is an important number. But how many leads do you get from those direct mail pieces? And how much did it cost you to generate each lead? That is the difference between cost per piece and cost per lead. 

According to statistics from the Direct Marketing Association, the average sales lead costs $1,500. Why? Because the average direct mail piece is a #10 envelope, printed in two colors, with logo and return address. Inside is a two-color form letterhead with black type, along with a four-color sell sheet, business card, and business reply card. In lots of 10,000,  that’s $15,000 to produce. In recent years, the average response rate to generic direct mail solicitations has dropped from .5% to .1% response rate—or 10 responses. At that point, you’ve invested $1,500 to get 10 people to respond to your Amessage.

Those are industry averages, of course, based on static mass mailings. Still, this is the most common form of direct mail marketing used these days.

Do you know how much each lead costs you? You might want to check. Especially if you are doing things the “same old, same old” way. Even if your cost per piece is low, you might find that this is an extremely expensive and inefficient way to generate sales. But you won’t know unless you track it. 

Next time, we’ll look at how one company dropped its cost per lead from $1,500 down to $100.

Have questions? Comments? I'd love to hear from you. You can email me at htollvr@aol.com. For more information on primers for marketers and small businesses on digital, 1:1, and Web-to-print technologies, visit www.digitalprintingreports.com.

Posted by Heidi Tolliver Nigro on July 12, 2008 | Comments (1)