Benchmarking: There’s No Such Thing as an Average 2% Response Rate

It seems easy enough to answer the question: How to know if a marketing campaign measures up? But managing client expectations (whether they’re internal or external) is sometimes more fuzzy

It seems easy enough to answer the question: How to know if a marketing campaign measures up?

Often enough, there are predefined business objectives, acceptable margins for profit and cost, and a marketing return on investment that is straightforward enough to calculate. If one is able to know any and all of these markers, then one can know if a marketing campaign, or even a single tactic, is making the grade.

But managing client expectations (whether they’re internal or external) is sometimes more fuzzy. And a marketing execution doesn’t always go according to plan, prompting investigations on what might have gone wrong. (I’m still surprised how testing is underutilized, for example.)

On the happier end of the spectrum, stellar results might prompt a whole other set of questions: “Did we really beat the long-standing control? This campaign performed gang-busters, how does it measure up to efforts of our industry peers? Is this campaign award-worthy?”

As a public relations professional in the world of direct response, I’ve often been asked to help an agency or marketing client understand how good or bad a particular marketing result might be. When the question is about results that are less than expected, there is often internal wrangling about the creative, the list and/or the strategy — any of which might be the culprit. When the results are fantastic, clients often want to know, are we beating whatever the competition may be up to.

In both scenarios, among go-to options are various industry research sources. Anyone who has a subscription to Who’s Mailing What! archive (direct mail, email), or taps eMarketer or Econsultancy (digital and mobile information), or steps up to Gartner, Forrester and the like for subscriptions to qualitative reporting, certainly has access to great data and idea stores.

I personally keep a copy of “DMA Statistical Fact Book” (annually published) and “DMA Response Rate Report” close at hand. The “DMA Response Rate Report’s” 2015 version is recently published, and is available at the DMA Bookstore. Both are understandably Direct Marketing Association top-sellers.

The “DMA Response Rate Report” aggregates data from respondents — providing a true benchmarking resource. And it breaks response data out by media, and by industry (selling cars is not selling clothes) which gives marketers a helpful guide of what to shoot for and expect. It’s worth a whole other post to delve into its insights, but IWCO Direct and SeQuel Response recently offered some. A quick inspection of the report can let marketers know what they might expect from an otherwise well-executed campaign.

And I’m happy to say to some clients, too, as another benchmark, that they should enter the International ECHO Awards. It’s perhaps the best way to be recognized for achievement (beyond the paycheck). With judges inspecting the world’s best in data-driven advertising, an ECHO trophy says that a marketing team, agency or organization knows its stuff. This year’s competition deadline for entering is July 10, and DMA is offering a Webinar on May 19 to give tips and insights from the judges themselves (speaking will be yours truly, joined by fellow Target Marketing blogger Carolyn Goodman of Goodman Marketing Partners and Smithsonian’s Karen Rice Gardiner). Have only five minutes to spare? You can always hear directly from Carolyn here about the entry process.

Enter early and often! I’d love to point to your campaign as a “benchmark” later this year.

Author: Chet Dalzell

Marketing Sustainably: A blog posting questions, opportunities, concerns and observations on sustainability in marketing. Chet Dalzell has 25 years of public relations management and expertise in service to leading brands in consumer, donor, patient and business-to-business markets, and in the field of integrated marketing. He serves on the ANA International ECHO Awards Board of Governors, as an adviser to the Direct Marketing Club of New York, and is senior director, communications and industry relations, with the Digital Advertising Alliance. Chet loves UConn Basketball (men's and women's) and Nebraska Football (that's just men, at this point), too! 

3 thoughts on “Benchmarking: There’s No Such Thing as an Average 2% Response Rate”

  1. Chet,

    Good piece on response rates.

    You mentioned the traditional 2% direct mail response benchmark for decades.

    Who came up with that 2%?

    It was based on the idea that the typical direct mail test cell was a quantity of 5,000.

    A 2% response from 5,000 is 100 orders.

    100 orders is the minimum number for a back-end to be statistically valid to track for profitability.

    The object was not to get 2%, but to get 100 orders. Depending on price and offer, the number mailed in each test cell in order to get 100 orders could vary wildly.

    And thank you for the shout-out to the WHO’S MAILING WHAT! Archive. In it’s 31st year—with PDFs available on more than 200,000 direct mailings and e-mailings—I still believe it is THE essential service to check out offers, prices, formats in 300 categories—consumer, business, non-profit and catalogs.

    Cheers.

    Denny Hatch
    dennyhatch@yahoo.com
    http://www.dennyhatch.com

  2. All very interesting, especially the headline which, unless I’ve missed something, is not expanded upon in the text.

    It should be an accepted axiom that the most dangerous word in marketing is the word ‘average’. It badly distorts response statistics and can send marketers in the wrong direction.

    Another key metric is calculating what you can afford to pay to get a customer or make a sale and make a profit. How well a ‘campaign’ or better, each part of a campaign does, measured against this benchmark, is the ultimate test.

    May I modestly recommend you take a look at my e-book, ‘Profiting From the Magic of Marketing Metrics’ available from Target Marketing. It is accompanied by templates to help you make the calculations.

  3. Thanks for the blog shout-out — and yes, great piece on response rates.

    I love Denny’s note about where 2% came from. Even to this day I have clients insisting that we deliver 2% response on DM and I argue that a) nothing’s a given; and b) you don’t need 2% to meet your ROI, so let’s do the math to get to an acceptable ROI and then weigh the risk/possibility of achieving that result.

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