Behavioural evaluation: Sales and Response Rate20th February 2021
As opposed to direct marketing, where advertisers send the same message to everyone and expect a large portion of those people to reject the message behavioral marketing takes online information and uses it to tailor the message to the user.
Behavioral targeting uses web analytics, computer applications and cookies, browsing and search history, and IP addresses, to create user profiles of individual consumers. With that information, the website’s ad server will then generate relevant and targeted content or advertisements that appeals to their interests.
Response rate is a measurement of the amount of people who respond to a certain call-to-action. When marketers want to solicit a response from consumers, they will distribute an offer to the consumers. The consumers who respond to the offer are calculated into the metric.
Measuring response rate has multiple applications in marketing, depending on the marketer’s need. The measurement could be based on the amount of people who responded to a marketing survey, the amount of people who filled out a contact form asking for information, or any other action that requires a response.
Marketers should actively encourage recipients to respond to the offers. Response rates that are too low can result in a sample bias, thus skewing the results and producing inaccurate results for marketers. Careful attention should be paid to eliminating any additional factors that might produce biased results.
Keep in mind that although response rate is a helpful metric to know, it can be misleading as well. Rates can vary dramatically depending on the demographics of an area, the relevance of the offer to the target market, and how compelling the offer is. In some cases, a high response rate can be related to unsatisfactory results, whereas a low rate could produce results that are very positive.
The rate of sales within a retail market is calculated by taking the value sales of the product, dividing by the average number of stores selling, multiplied with the numeric distribution, divided by the weighted distribution.
The calculation looks like this:
(Value Sales / average # of stores selling) * (numerical distribution / weighted distribution).
So, what does the rate of sales actually tell us? It tells us, as the name implies, the sales rotation of any given product(s), in a retailer, in a defined period of time such as moving annual total.
Manufacturers of FMCG products can for example use this fact to gauge whether or not a certain product is given the right amount of priority by a retailer.
It’s one thing to look at value sales on any given period and comparing this to the previous year or previous period to see if sales go up or down, but if we would like to know how a particular SKU is performing, irrespective of the distribution of the product within the retailer(s) (to a certain extent), we would also need to look at the sales rotation, i.e., how fast is this product actually selling when it’s on the shelf at a given retailer in a defined period of time. This can then in turn be used by the manufacturers to show which products should be prioritized from the retailer side, as a product with a higher rate of sales will all else being equal equate to higher sales and thus drive more value to the category.
It can also be used to measure the effectiveness of each retailer compared with each other to see who’s performing best and thus who should be given priority by the manufacturer.
Most of the largest online retailers and social-media sites already use behavioral marketing technique as do the companies that purchase ads from those sites. However, behavioral marketing isn’t only used purely to “sell you stuff.” By targeting ads to specific needs, companies can also provide goods and services that will not only fill consumer closets, but improve their quality of life. For example, a pharmaceutical company can create and implement advertising that encourages people to use and continue taking a new cancer or hyperactivity drug.
Because behavioral marketing is extremely targeted, this strategy doesn’t work as well with products that appeal to a more general audience. Additionally, because of the data being used, privacy issues and legislation to address those issues will affect the approaches used by marketers going forward. However, when used properly, behavioral targeting can be a very effective way to reach the right customers with the right products and services.