We’ll provide simple and powerful formulas to calculate direct mail response rates for your auto shop.
Conceptualminds | April 21, 2022
Calculating Auto Shop Direct Mail Marketing Response Rates
Every entrepreneur and auto repair owner knows this: success is ultimately relative.
In business, success can be substantial—like massive car count growth—modest, like creating a few loyal customers—or anything in between.
Frequently, the best way to win a substantial victory is to build off modest successes.
Building off success in direct mail marketing requires a clear understanding of what your prospects respond to. Knowing how frequently you can expect prospects to respond to mailers—along with a few other figures—gives you the tools to plan bigger and better campaigns.
Our expert direct mail marketers and designers have collected the following advice to help you do just that.
Auto Repair Shop Direct Mail Marketing Response Rate Basics
Advertisers use these rates to figure out how effectively mail campaigns compel prospects into doing business with your shop.
Calculating it is a cinch; divide all responses by the number of mailers sent, and there you have it.
The problem most auto shop owners experience with response rate has nothing to do with math and everything to do with interpreting just what each rate says about that specific campaign.
(And how to translate that knowledge into growing response rates, but we’ll get to that later)
So how do you know if your shop’s response rate is good or bad?
While you can compare yours against industry benchmarks—estimates range from 2 to 5.1 percent—yours depends on a long list of variables. Ultimately, you’ll be competing against your past performance.
That said, you can figure out what is contributing to your rate by looking at other campaign variables, including:
- The format of direct mail used
- The quality of your contact list
- The type of offer you include
- The cost of advertised service
In the next section, we’ll take a deeper look at the above items and what you can expect specifically for your business.
Quality of Your Auto Repair Shop Direct Mail Marketing Contact List
Your response rate depends not just on the number of homes reached but on each home’s familiarity and interest in your business and services.
Campaigns based on an outside prospect list will see MUCH lower rates.
After all, prospects who have not been reached previously are less likely to recognize your brand, let alone respond or purchase.
If, instead, your list consists of homes that have previously done business with you, you can expect a much higher rate—since they’ve already shown both familiarity and interest.
Free & Price Offers
Few things motivate prospects like free offers. This magical four-letter word can compel prospects who haven’t heard of your brand into becoming first-time customers.
As such, campaigns that offer more powerful incentives will convert at a higher rate than those that don’t.
If you opt for a price offer, you can expect a far LOWER response rate – think 1/10th of 1%.
And as your advertised services increase in price, expect that rate to be lower.
This principle also applies to your campaign’s main goal. Generally speaking, campaigns either drive brand awareness, capture leads or generate orders.
Awareness will gather the highest response rates, followed by lead generation campaigns and purchase offers. Of course, In auto repair, purchases are the most important.
Weigh the costs and benefits of various campaign types to get the response rates you’re looking for.
Auto Repair Shop Direct Mail Response Rate Companion Metrics
While establishing your response rate is an excellent way to measure the results of your direct mail, there’s a limit to what it can tell you about your campaign’s actual performance.
Response rates can’t answer very important questions about your campaigns and prospects, including:
- How many follow through with a purchase
- How much revenue each order generates
- How efficiently your advertising budget is spent
- Whether you’re spending more on acquiring customers than they spend with you
When you consider response rate alongside these additional metrics, you’ll get a much better grasp on your campaigns’ exact value and cost, which you’ll need to make strategic decisions.
Conversion Rate
While the response rate shows how many of your prospects acknowledge your mailers, you still need to know how many of these households become paying customers.
After all, it’s much easier to compel an opportunity to respond than it is to get them to pull out their wallet.
Conversion rates indicate how frequently your prospects took the action described in your mailer’s call-to-action (Typically, completing a purchase).
More broadly, it shows you how effectively your campaign compels viewers to purchase. It’s also well-suited to the auto repair industry, as longer sales cycles frequently make it difficult to track customer behavior over the long term.
Average Revenue Per Order (AOV)
Just as conversion rates tell you how often prospects purchase, average order size shows the approximate dollar amount brought by each purchase (also known as Average Revenue Per Order or ARO).
Knowing how much revenue you can expect from each order lets you know how much income you can expect from every conversion. This helps you estimate the number of prospects you need to reach to hit revenue targets.
We have created an easy-to-use print marketing ROI calculator that you can use to estimate the amount of revenue you are likely to generate from your print marketing investment
Auto Shop Customer Lifetime Value (LTV)
So far, we have what appears to be a good way to measure your campaign’s return on investment (ROI). However, this only allows us to evaluate each customer’s single purchase.
As the name suggests, Lifetime value shows how much the average customer will spend for the rest of their natural life with your automotive business. LTV provides the most accurate estimate of your direct mail campaign’s overall value.
Without considering long-term purchases, you can’t truly understand whether your campaigns have achieved a positive ROI.
With it, you’ll not only discover how much you can afford to spend on getting a new car into your bays, you can also optimize your campaigns for even larger lifetime revenue with each customer.
Learn From Every Success
Success looks different for every auto repair business.
Each will not only measure and define success in their own way, they’ll take a different approach to get there. The only requirement: learn from your successes just like your mistakes.
Learn About Conceptual Minds
At Conceptual Minds, our team helps automotive businesses get the most from their marketing dollars with tried and tested methods backed up by regular testing and research.
We equip our clients with the tools and knowledge to eliminate the guesswork from their marketing efforts and get top ROI through our tailored services.
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