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September 28, 2005

The truth about response rates

How do you really measure response rates? Is the old concept of aiming for a 2% response rate true or misleading? Here's the truth, the whole truth, and nothing but the truth...

The idea of aiming for a 2% response rate to your marketing campaign has been around forever. It originated with direct response mailings and has carried forward to online marketing as well.

Just how good a gauge of response is this really?

Well, if you apply a little common sense, you'll quickly see that it's completely meaningless. Here's what I mean. 2% response rate for selling cheap items - in the $15 to $20 range - will kill you. There's just not enough profit there to make it worth the investment of your time, energy, and money.

But how about a 2% response rate if you're selling time share units at a luxury resort where the average selling price is $50,000 or more?
In this case, 2% would shoot your profits off the charts. But you're not likely to get a rate anywhere close to this.

So what do you use then as an accurate, completely reliable gauge of response to your marketing? The answer is simple: dollars in versus dollars out. Did you make a profit or not? And if you did, is it enough of a profit to keep the campaign going or would you be better off investing your resources in another campaign or project?

Always remember, the only thing you can deposit in your bank account is dollars, not percentage rates of response.

Posted by Bob Serling at September 28, 2005 04:25 PM

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Posted by: Mike Sigers at October 9, 2005 08:42 AM

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