How relevant are response rates? A correction and a follow-up.

In last issue's article, "Would you be happy with a one percent b-to-b response rate? Or are response rates becoming irrelevant?" we misstated the response rate of The Newsletter on Newsletters' recent promo as 0.1 percent. That should have read 1 percent.

The same mistake crept into our quote from George Duncan. It should have read, "Used to be, a 1 percent response to a $200+ b-to-b was the holy grail, but percents of response are considered fairly irrelevant now."

Coincidentally, the same subject was raised in the NEPA Marketing Listserv, so we posted the article. One of the largest number of people ever weighed in with questions and opinions. Here are some of the more helpful comments.

Barbara Kaplowitz

"I do believe that net profit ratio (NPR) is a more important indicator to look at than response rate. In fact, I've always treated response rate as something nice to know, but not terribly significant as compared to more bottom-line numbers.

"However, Jim Sinkinson's take on the importance of not looking at NPR in a vacuum is also critical. You can have a tiny list that returns a single order and shows up with a huge NPR, and still not have a successful campaign. There's a big difference between a good NPR on your main prospecting list, and on a small specialty list that you happen to have in-house.

"Paul Swift's talking about an overall NPR of $3.00, including the use of some of his 'best' outside names. And, the offer was a hard one, which makes the picture even better.

"All that said, every campaign is different, and it's important to know what your desired end goal is before you craft the campaign and put it in the mail or e-mail channel. In acquisition campaigns, are you:

* "Trying to garner the maximum amount of prospect names with hopefully a break-even ROI?

* "Looking for the maximum number of new subs, paid up-front?

* "Re-launching a mature product with a new approach, or testing a premium that might give insight into a spin-off pub?"

Lisa Anthony-Price

"I agree with Barb's assessment of the use of response rates in acquisition campaigns. Response rates have never meant much to me as a single indicator. However, combined with net profit ratio, package cost, lifetime subscriber value, and ancillary revenue, a response rate can place a list or campaign in the context of a publisher's overall goals.

"It is always valuable to stay on top of all the numbers for both acquisition and renewal efforts. That's the best way to judge the health of a publication."

Robin Crumby 

"Response rates have always been 'nice to know,' whereas ROI on campaigns are 'need to know.' But as we quickly found, having an ROI of 300 percent on an e-mail campaign that brought in only one new subscription was misleading when scanning down a list of campaign results, especially when the time taken to organize that campaign was taken into account.

"Of course, it depends on what you're promoting and what the goal of the campaign is, but with DM on new subscriptions still in the doldrums, wouldn't you rather have 100 new subs at an ROI of 120 percent than 50 at 150 percent?

"We should all be treating subscription marketing as an investment in our future and investing as much as we can afford to invest. Even if it means taking a hit in the first year. Just think of all those cross-sell opportunities and keep signing those marketing checks! You'll kick yourself in a couple of years if you don't ...."

Dean H. Anderson

"Good points. In some ways, we strive for lower response rates. It's called market segmentation.

"We look at our markets as a series of ever-widening circles, or subsegments. In the center are people for which a particular pub is a 'must read.' We expect to get high response rates from this subsegment.

"But farther out are potential readers whose enthusiasm for a pub is not as strong. They may be people peripherally involved in a field. Or people further down an organization's hierarchy. (We're a business-to-business publisher.) The farther out we go, the lower the response rate.

"When our response rates are very high, we assume that we're leaving out lots of potential market subsegments we could convert into sales, albeit at lower conversion rates.

"The trick is for us to move as far out in the circles as we can and still make money in the long run.

"The mistake many marketers make is to methodically select down their lists to the ones with the highest response. Over time, this strategy leaves out big chunks of the market that could be marginally profitable."

Kaplowitz, Big Huge Ideas, 7702 Whiterim Terrace, #200, Potomac, MD 20854, 301-983-6634, fax [phone], [e-mail]

Anthony-Price, Success Publishing & Media, 149 Magic Mountain Road, Winchester, VA 22602, 540-877-3671, fax [phone], www.growinginfaith.net

Crumby, Melcrum Publishing, First Fl., Chelsea Reach, 79-89 Lots Road, London SW10 0RN, U.K., (44)(0)20-7795-2205, fax [phone], www.melcrum.com

Anderson, COR Research, P.O. Box 40959,, Santa Barbara, CA 93140, 805-564-2177, www.corhealth.com