Response Rates: What’s Really Being Said?
By Heidi Tolliver-Walker on November 6th, 2012
Last week, I started a lively discussion on Digital Nirvana with a post about the limited role that response rates should be playing in evaluating the success of marketing campaigns. Response rates have a role — and an important one — but not as the primary measure.
Yesterday, I read yet another example of why this is so important. In a press release — I mean article — posted on PR Web, a company was promoting personalized direct mail, saying, “Some companies have seen response rates rise by more than 3% when simply personalizing an ad.”
I have three issues with this particular statement.
1. What does this author mean by “have seen response rates rise by more than 3%”? Does she mean a rise of 3 percentage points or whether she was referring to lift? The way the statement was worded, the wording is actually referring to lift. Yet the author more likely intends 3 percentage points. The author’s intent here matters because there can be a big difference between a 3% lift and 3 percentage points.
This is a tricky metric that is often used to make improvements in response rates or other metrics appear greater than they really are. For example, you may hear that Campaign A had a lift of 27% over Campaign B. In terms of real numbers, however, Campaign A might have achieved a response rate of 1.3% and Campaign B a response rate of 1.7%. That’s a lift of 27%, but whether that is significant depends on the value and volume of products being sold. It also depends on the LCV.
2. As I discussed in my previous post, a rise in response rates doesn’t necessarily mean an increase in ROI. How much your ROI increases as a result of personalization (if at all) will depend on metrics such as cost per lead and dollars generated per sale. You can have an increase in response rates without any increase in profitability whatsoever.
3. Is the author talking about personalized ads or direct mail? The author writes about achieving this 3% increase by “personalizing ads,” but the discussion revolved around direct mail. The picture that went with the article also showed an envelope with a personalized sticky note. From what I remember, direct mail pieces with sticky notes are not ads. Once again, this kind of imprecision matters because, if you’re promoting products or services related to personalized marketing, that kind of sloppy language can make the difference between being credible and not.
We’re all imprecise sometimes. I am, too. (The comments to last week’s post as Exhibit A!) I just hope we’re all astute enough to be able to recognize imprecision when we see it and know the real issues if and when we are more tightly clued in. If not . . . we may as well believe all the political ads we’ve been watching for the past six months, too!
Speaking of which, I want to quote a woman in the poll line this morning: “Are you registered to vote? No? Then I don’t want to hear your political opinion!”