The concept of response rate is pretty easy, and it’s not a difficult metric to calculate. But how do you define a response? What constitutes a ‘good’ versus a bad response rate? How do you boost your response rate? Here’s a brief primer on response rates to help you answer these questions.
In their Marketing Dictionary, Track Maven defines Response Rate as:
“A measurement of the amount of people who respond to a certain call-to-action. When marketers want to solicit a response from consumers, they will distribute an offer to the consumers. The consumers who respond to the offer are calculated into the response rate. The response rate is found by dividing the number of recipients who responded to the offer by the total amount of recipients, and it is usually presented as a percentage.”
If you think that response rate sounds a lot like conversion rate you’re not alone. The two can be used interchangeably. Both are quantitative metrics that define performance; both can be used as key performance indicators for all types of marketing (and other) campaigns.
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How do you define a response?
This may seem like a silly question but bear with me.
Different types of campaigns, with different business goals, have different definitions of a response. For instance, I recently helped a client market an instant win online game; here the end goal we were looking for was just for someone to play the game. The definition of response here was to play the game; there was no revenue involved.
For another client I developed an acquisition email marketing program to drive people to join their non-profit association. Here the response was defined as a ‘join’ – and it required payment.
Even a single campaign can involve many different types of responses. When I work on lead generation campaigns for clients the initial response is for the person to provide their contact information. But this is just the first in a chain of actions (speak to a sales rep, get a demonstration) that leads to the final and most important response: a purchase.
A click, whether on a display ad, an email message or another digital marketing piece, is also a type of response. While you can define a click as your response, there’s usually something further down the conversion funnel that’s better to use for this metric.
You want your response rate to be a measure of success or failure for a campaign. To do this you need to define it so that it reflects, as closely as possible, your bottom line performance goals. And when you think of it this way, your response is usually not a click.
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What constitutes a ‘good’ versus a ‘poor’ response rate?
This is a tough one; there’s no single ‘good’ response rate for every marketing campaign.
For instance, in the examples above you would expect (and it’s usually true) that a response rate based on a free action (like playing an online game) would be higher than the response rate on a paid action (like joining a membership organization).
And the response rate on a direct marketing campaign (where a purchase is the action) is lower than on a lead generation campaign (where the action does not involve money).
In the offline direct marketing world (think postal mail) the conventional wisdom has long been that a 2% response rate on a house list is good. Third-party lists (list a company rents from someone else) perform about half as well as house lists, so a 1.0% response rate would be considered good.
While email marketing industry benchmarks are interesting, the best way to determine whether your response rate is good is to compare it to an internal benchmark. Internal benchmarks are based on your list, your product lines, your price points, etc. – they are completely customized to your situation so they are better to use for comparison than industry benchmarks.
So use the industry benchmarks as a gauge of what might be possible; but use your own internal benchmarks to determine whether your campaign is performing well or poorly.
One more note: if there’s money involved then it’s unlikely that response rate is a sign of the success or failure of a campaign. You’ll need a metric that involves revenue, preferably some form of return-on-investment (ROI), to do that.
How do you boost your response rate?
There are a multitude of ways to improve the performance of your email marketing boost your response rate. Here are a few.
- Make Sure Your Emails Are Being Delivered to the Inbox
If your email messages are being diverted to the junk folder or not delivered at all your response rate will suffer. If you are looking to boost your response rate first check to be sure your email messages are being delivered to the inbox.
- Look for Ways to Boost Your Open Rate
If subscribers aren't opening your email messages, they can't click on them. There are many simple things you can do to improve your email open rates.
- Work on Improving Your Click-through Rate
Even if people are opening your email messages, they may not be clicking on them. Be sure you've done all that you can to improve your click through rates.
- Optimize Your Landing Pages
Often when the response rate is low the issue lies not with the email but with the landing page. If you see that people are abandoning here without moving forward, take steps to a landing page that converts.
- Remarket to People
Remarketing and retargeting are similar but slightly different ways to reconnect with people who visited your site but left before making a purchase. Remarketing tends to mean that you’re using email as the channel, whereas retargeting tends to utilize display advertising and other tactics. These efforts tend to boost response rates significantly went done well.
So, do you feel like you have a better grasp on what types of response rates to target after reading his article? I hope so.
There’s no ‘one-size-fits-all’ response rate – no single number that you should shoot for to be successful – or which, if you miss it, it will doom you to failure. If you don’t already have internal benchmarks this is a good time to create them. And if you do have them, then it’s a good time to look toward boosting your performance to beat them. Give it a try and let me know how it goes!
I hope that you’ll continue to read and educate yourself about online marketing. There’s a lot to know – but the more you know the more successful you’ll be. Check out some of the other posts about response rates here on the Pinpointe blog.
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