Generating Web Response


I am often asked what the typical response rates to a promotion are. There is, of course, no answer to this question. It depends on the audience, the offer, the package, the copy, the timing, and a host of other factors. Some promotions to customers have generated response rates of 40 percent or more. Most promotions to prospects are lucky to achieve a 1 percent response rate. An important aspect of promotion response is the method selected for receiving the response. Is it mail, phone, email or Web? As this book demonstrates, Web response is the most cost-effective and powerful method. Let’s take a look at a couple of cases to demonstrate this point.

Direct-Mail Response

An automobile manufacturer designed a credit card for its automobile customers. It created two different cards: a Titanium card with a $100 annual fee and a Gold card with no annual fee. The Gold card included a $50 reward package and an initial APR of 3.9 percent.

The direct-mail promotions were sent only to the owners of the company’s cars, not to the general public. The automobiles were designed for and sold to an upper-income segment that appreciated their performance and style. The owners were loyal to the brand. The promotions took place at a time when the credit card market had been saturated with offerings for the previous four years. Few cards were generating significant response rates.

Overall, there was a surprising difference in the response to the two cards, as shown in Table 7-2. From these numbers, it is clear that the Titanium card was a loser. The acquisition cost of $297 per account was really uneconomical. You can’t subtract the $100 annual fee from this number because the fee will be paid only at renewal time, 1 year hence. At that time, if this card is like most cards, less than 50 percent will pay the $100 to renew.

Table 7-2 : Card Response

Titanium

Gold

Low response

0.15%

1.01%

High response

0.40%

4.71%

Total response

0.25%

1.60%

Cost/response

$317.50

$49.96

Approval rate

107.00%

87.22%

Cost/account

$297.25

$57.28

The Gold card, on the other hand, produced an unusually good response rate. Since the overall industry average acquisition cost for credit cards is well over $100, this automobile company made excellent use of its customer database to promote these cards, as its cost per account was only $57.

The response to the cards was by phone or mail. No opportunity for Web response was offered. This could have been a serious mistake.

Direct Mail versus Email

A major manufacturer of business-to-business computer products created an innovative Web site that was designed to

  • Teach IT managers about the value of the company’s services

  • Get them to register

  • Profile them for the sales force

A creative direct-mail piece was sent to 186,000 IT professionals drawn from lists of customers and rented lists of computer magazine subscribers. It directed people to go to the Web site. Parallel to this, an email campaign was launched to 56,000 IT professionals. The email lists were primarily lists of trade show attendees. The results comparing the various lists used, shown in Table 7-3, were quite interesting.

Table 7-3 : Cost per Registrant

Direct mail

Email

Cost per piece

$0.76

$ 0.14

Number sent

186,361

53,250

Low response

0.26%

0.00%

High response

4.03%

7.79%

Total response

1.42%

1.04%

Percent registering

1.01%

0.29%

Cost per registrant

$75.25

$48.28

What Table 7-3 shows is that the email promotion did very well against the direct-mail promotion. The response rates were lower and the percent registering was much lower, but the cost per registrant was almost half that of direct mail. What can we conclude from this?

  • Direct mail is not dead. It will continue to be a useful and effective direct marketing technique.

  • Email gets lower response rates, but it produces results at far lower cost.

There is one really powerful lesson from this case that does not show up in the numbers presented so far. That lesson concerns the responses that came from an unknown source, as shown in Table 7-4. This is where the company was a real winner.

151

151

Table 7-4 : Responses from an Unknown Source

Direct mail

Email

Unknown source

Number of log-ons

2,639

553

1,288

Number registered

1,885

153

882

Cost per registrant

$75.25

$48.28

$00.00

Gross revenue

$942,500

$76,500

$441,000

Marketing costs

$141,846

$ 7,387

$0

Net revenue

$800,654

$69,113

$441,000

Where did all of these “unknown source” registrants come from? Analysis of this situation tells us a lot about modern direct response techniques.

The Value of Web White Mail

In a traditional direct-mail campaign like the credit card example, the responses arrive via a toll-free number. When you call this number, an operator asks you for your source code. Good operators can usually worm this number out of the respondents, even though they may not have it with them when they call. When the operators cannot determine the source, they dub the source “white mail”—responses from an unknown source.

On the Web site, it is different. In this example, responders were supposed to enter their PIN when they came to the site as a result of an email or a direct-mail piece. If they did not remember their PIN, they were invited to visit the site and register anyway. As you can see, 1288 of them visited the site, and 882 registered.

We will never know whether these 1288 people came as a result of the email campaign, whether they came as a result of the direct-mail campaign, whether they stumbled on the site through the recommendations of a friend or associate at work, or whether they came because of a combination of these reasons. But that points up a difference between live phone operator response and Web response: the fact that an entertaining Web site with a relevant quiz can lead people to visit the site to see what it is. There is no commitment. You can be anonymous, and disappear if you are not interested.

On the other hand, practically nobody calls a toll-free number just to see what it is like. There it is tough to be anonymous. You know you will be talking to an operator. You don’t want to waste her time. Therefore,

  • Web response will generate a lot more white mail than phone response.

  • This response can be the most valuable output of the entire process.




The Customer Loyalty Solution. What Works (and What Doesn't in Customer Loyalty Programs)
The Customer Loyalty Solution : What Works (and What Doesnt) in Customer Loyalty Programs
ISBN: 0071363661
EAN: 2147483647
Year: 2002
Pages: 226

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