It's All in the Numbers, If You Know Where to Look
Whether we're in a new business pitch, or at a tradeshow, or at a networking event, we're often asked how success is measured in our business. In the direct response arena, it's fairly simple - direct sales and revenues. And do those sales/revenues exceed the marketing investment to acquire that customer.
Success lies in the data, pure and simple. So to understand a campaign's efficiency, and to make solid ROI optimization moves, there are many metrics we measure and analyze. Below we've listed the top six direct response metrics, when measured properly, can provide clear answers and direction for just about any campaign.
CPR – cost per response
Media spend / total responses (phone + web)
Here we factor in all responses and divide into the spend. This provides a good benchmark of how responsive the program is and can be an indicator of how strong the creative is pulling.
CPC – cost per call
Media spend / total calls
While phone volume is declining currently, measuring cost per call is still a very reliable metric for efficiency, as toll free calls are tracked in a 1:1 ratio to each network via unique toll free number.
CPV – cost per visit
Media spend / unique web visitors
It is not uncommon to have at least 80% of upfront response go to the web when phone and URL are displayed. CPV gives a clear indication of web response and efficiency. In pure drive to web programs, CPV will be the key front end response metric.
CPL – cost per lead
Media spend / total leads
For lead generation programs, or two-step sales models, CPL will be the key metric in evaluating efficiency. CPL is dictated heavily by the conversion path process (phone or web) and not the creative or media.
CPO – cost per order
Media spend / total orders
In the end, CPO is the ultimate metric in any direct response campaign. However, CPO is a product of the sales conversion process, not creative or media, so care should be given in how this metric is evaluated.
AOV - average order value
Revenues / total orders
AOV is an important direct response metric in that it can be directly compared to CPO to determine whether revenue exceeds the cost to acquire. AOV can and should be heavily influenced by a solid upsell strategy.
Depending on a direct response campaign's compexity, many more metrics may come into play. For example, on a drill down basis, some companies will use a CPLS metric. CPLS is cost per lead sold. Thus in a two step model, leads are measured on the front end, then corresponding sales conversion data is supplied later as the sales cycle completes. This data then paints a clear of how many of those leads actually convert to a sale, a key metric for any sales department within an organization.
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