Database: Close the Loop Properly
Response Rates Are Not Baseball Scores
Many marketers looks at results in multidimensional ways to understand the winning combinations of name sources, selection criteria, creative packages, offers and channels. However, when an analyst breaks down the responders into smaller groups using all possible combinations of study elements, the segment size may become too small to yield any meaningful statistics. There may be less than 10 responders with income over $75,000 who received letter version No. 2 plus a free shipping offer in a segment called List A. To avoid situations like this, it is more prudent to examine each measurement criterion separately.
Even when only one element is studied at a time, marketers must be aware of the statistical validity issue when comparing multiple segments. For example, there is little difference between response rates of 1.15 percent and 1.23 percent, unless over 100,000 pieces were mailed in each group. Too often marketers jump to conclusions and treat response rates as the ultimate ranking tool. To be fair, one must be aware of the sample size, confidence level and size of differences to be measured. Without statistical training, you must be careful not to draw conclusions too hastily. After all, those 5,000 merge/purge survivors in segments A and B may not be big enough to tell you any story about less than half a percent difference in response rate. When in doubt, please consult a statistician, or at least download some utility programs off the Internet and plug in the numbers before cleaning up your vendor list.
Closed-loop marketing is one of the most overused terms in marketing, and yet many marketers do not close the loops properly. Remember that imbedding key codes in your mail pieces is just the beginning. Properly analyzing the results and applying the knowledge to the next mailing will complete the circle.