One of the best things about direct marketing – such as digital marketing, email, or direct mail – is that it's possible to gauge whether your marketing is working or not. A basic number used to calculate the effectiveness of direct marketing is response rate, which measures the percentage of people who found your message or offer attractive enough to act on it.
You determine your response rate by taking the number of people who responded to your ad and divide that by the number of people that saw the ad, or in the case of direct mail, how many mailers were sent out.
For example, if you sent out 50,000 direct mail pieces and they used a unique URL or some type of form to track responses, and 500 people responded, the response rate ends up being .01 or 1%.
Whether that 1% is good or bad really depends on your industry and the channel you're using in your marketing.
Obviously, if someone responds to your marketing they're that much closer to buying - but it's not a guarantee. In fact, the average response rate (something we're often asked about by our clients) varies from channel to channel and industry to industry as the chart below illustrates:
You should use these averages to see how your response rate compares and made adjustments to the channel, message, and call-to-action accordingly.
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And, as always, if you have a marketing metric that you'd like us to break-down in an upcoming video let us know and it might just be our next Ad Math topic.