How To Interpret Response Rates Correctly

Some have a hard time with this, but you can use your response rates to tell you some important stuff…if you read them right…

A great article on direct mail statistics lays out the truth about response rates. In essence, it says that sales matter (or conversion rate), profits matter (or return on investment) and that ad response rates are considered good or bad based only on those two things.

There’s one important indicator the article didn’t touch. The gap between your response rate and your conversion rate. I call this…

The Fallout Rate

It’s basically the difference between your response rate and conversion rate. It’s like you pick up a few calls on your sales train and some of them “drop” before you reach the sales destination (the cash register).

To illustrate, suppose you advertise your consultancy company by mailing out 1000 ads, and from there you get 100 responses and 20 sales. Your response rate is 10% (100/1000) and your conversion rate is 2% (20/1000). Your fallout rate is 8% (Response rate minus conversion rate)

Kind of high right? What is significant about the fallout rate?

Well the fallout rate tells you how many sales you lost from interested customers. The smaller the fallout rate, without losing conversion rates, the better. The bigger the fallout rate, the more likely something is up…

Suppose the response rate is measured by the people who call your consultancy and the conversion rate is determined solely by the number of people you close on the phone. What does a high fallout rate mean?

The fallout out rate examines your response to conversion process. If the fallout rate is big (especially if its more than your conversion rate), there’s probably a big hole somewhere on your way to a sale.

It could mean that your sales pitch is not up to par. It could mean something in your ad is misleading or promising too much because they are disappointed with what they find after they talk you.

It could mean your sales process is weak or too complicated so potential buyers lose interest. It could mean your sales staff is rude or that your ad doesn’t sell enough to the right people. Maybe you’re attracting too many weak leads from your ad…

Yeah now you have to find exactly what the problem is. That will take some investigating and research on your end.

Its an important indicator to look at, as it tells how your marketing to sales process is doing. You could spot trouble and work on finding out the best solution to fix your marketing to sales process. You’ll know you got it right when your fallout falls (without reducing the number of response rates)

Figure out what your fallout rate is for each ad you produce. It’ll help you keep your competitive edge efficiently.