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The Net Takeaway: There Are No Industry Averages! Get Over It!

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There Are No Industry Averages! Get Over It! · 05/19/2004 11:04 AM, Analysis

The one question I get asked more than any other is “What is the industry average click rate for fill in the blank”? This can be about banners, popups, emails, whatever. Most recently, thanks to some press releases, our clients are asking again “Are we beating the market average?”

Its a symptom of the “one number to rule them all” approach, whereby its really hard for people to balance multiple factors so they want just a single number to judge whether they are doing well or not.

Bigfoot and Doubleclick, two large emailing companies, exacerbate the situation by releasing their “benchmark” studies. Bigfoot’s is here and recent Doubleclick ones are here.

There are so many problems with these reports, I don’t even know where to begin. But here are some:

So, there are so many “variables” around these numbers that, like the average “2.4 children”, it becomes useless. Do you really want to measure your business against a meaningless number?

I also hear “Oh, its just a guideline” or “its just directional”, which is a way of saying “I get you that its meaningless, but its a number, so it must have some meaning by definition”. Sorry, its just not so. We can divide your height by the temperature and call it your average IQ, but that’s really all meaningless. Yes, its a number, and yes, I call it something… but that doesn’t make it truth.

Direct mail still had the mythical “2%” conversion rate, though no one can yet show me a master citation for this. But direct mail people have figured out over the years that they should break out different forms of communications. The vast majority, of course, is sales mail, but they tend to split out bill enclosures, renewals vs. acquisition subscription mails, etc. And when you do all that, the 2% quote doesn’t really make much sense anymore.

(As an aside, another irksome approach is the “market share” question, which implies that there is a 0-sum game of spend. For some B2B product, that may be so, but in many cases, market share is not the right approach. Some of these brands complain that they only have x% of the market… but for all we know, that x% is stable revenue while the rest of the market are fighting over fickle, non-brand loyal consumers with high acquisition costs… so I’d rather have the x%, all things considered… but I digress.)

Instead, don’t worry about how others are doing. You have no idea what they did to get that high click rate (perhaps they gave away coupons or margin, perhaps they got great clicks but horrible conversion, etc., etc.). You should be measuring yourself by your own benchmarks.

What does a generic, non-customized mail do for you? What if you include an offer? Fine, you now have a benchmark, including cost and ROI. Now, start manipulating things: Vary the offer. Include different types of messages, some more content focused, some more brand. Vary the frequency. Utilize all that data you’ve been collecting to custom publish. Track the costs for each of these changes, and compare that to the revenue/profit. Are you improving? Good. Are you not? Let’s keep testing.

Note that I don’t care if you are beating some industry average. Since there is none that anyone can trust, why waste your time comparing to it? We compare the stock market to the Nasdaq or S&P 500 in part because they are well defined indexes. But when it all comes down, do you care that your stock beat the index, or that it went up?

This is the same claim I make when optimizing web analysis. Folks like to say, “I heard at a show that my direct competitor has a 10% visitor conversion ratio, so why can’t we have that?” Well, perhaps you can. How is your product return ratio? How are the credit quality of the folks you get? How much are you willing to spend on customized marketing via email? Does that ratio count return visitors, or all visitors? Perhaps that 10% is a great number, and your competitor is willing to accept a high rate of returns, low margins, and many fraudulent credit cards.

Again, you don’t know all the facts round a single number, so to try and beat it is a waste of time. Focus instead on fixing your own house. Learn from admirable and clever strategies and tactics that your esteemed competitors do… but make sure your own house is in order before worrying about how to clean out theirs.

(Disclaimer, sort of: I work for an email marketing company, though its not one of the above. I think we do a pretty good job, but so do the above. If you like lots of service and help with extremely complex campaigns, my company is probably a better bet. If you like more control and have the time to manage your own campaigns, the above companies, and many others, will do a fine job.)

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