Base Rates: Your Secret Weapon Against Marketing Mistakes

My first Kickstarter raised $12,500 and I felt like I'd cracked the code.

After a false start and with zero real business experience, I'd actually funded a project!

But sure enough, as I ventured deeper into the rabbit hole of crowdfunding and started studying what successful campaigns actually looked like, reality became more complex.

My "success" was decidedly middle-of-the-pack. No doubt it was better than average for a complete novice in the board game industry, but nowhere near what campaigns that build sustainable businesses achieve.

That's when I learned one of the most important lessons of my marketing career: context matters more than outcomes. This stuck with me so much that as I migrated from making board games to marketing, it became a fundamental part of how I choose which projects to get involved in and what tactics to use to increase their base rates of success.

It’s perplexing but true: what looks like success without benchmarks can be mediocrity with them. What feels like failure might actually be exactly where you should be given your circumstances and experience level.

This is why I’m obsessed with base rates of success. It is #1 thing I ask when evaluating whether to have Pangea Marketing take on another client.

“Do we have a high chance of helping this client achieve their goals?”

The answer needs to be yes more often than not.

Asking this question point blank isn’t about being a pessimist. It’s the #1 guardrail I have against chasing unicorns and panicking at actually-acceptable performance. In other words, it’s a razor-sharp tool for making decisions based on reality.

But let’s start with the obvious question.

Base rates are simply the normal probability of success for any given situation. If 2% of website visitors typically convert, then that’s your base rate. If 30% of new businesses survive five years in your industry, that’s the base rate. If email campaigns in your sector average a 1.4% click-through rate, that’s your base rate.

This is one of those concepts that is so mind-bogglingly obvious when spelled out like this, but that is so valuable to understand. It has applications in medicine, sports, business, and a bunch of other places too.

Ignore them at your peril.

Base rates come from looking at big datasets over time rather than individual success stories. They tell you what usually happens, not what could happen in the best case scenario. They’re bone-dry boring, unglamorous, and absolutely critical for making smart calls.

The magic happens when you either do things that have a high base rate of success or you consistently beat base rates, even by a small margin.

But perhaps the best way to understand the value of base rates is to talk about the three big mistakes that their use prevents.

Understanding base odds protects you from three costly mistakes that plague marketers and business owners—even otherwise very smart and savvy ones.

What makes these mistakes dangerous isn’t that they’re small tactical errors. Nor are they obviously wrong, either—a fact which only adds to their perniciousness.

These are strategic issues that will burn time, money, and trust. In my experience, if you can avoid these problems, you’ll already be starting strong.

You know, $250 per qualified lead sounds like an awful lot. So it’s tempting to see a figure like that in the abstract and have a bit of a panic spiral.

I mean, that’s high, right? Something has to be wrong. Time to go straight to triage mode and start fixing first and asking questions later.

Maybe not. It’s worth considering: what does a qualified lead cost in the industry in general?

If the answer is $500, then if you cut that marketing campaign, you’d be making a colossal mistake.

In this scenario, the real tragedy wouldn’t be “poor” performance—it would be waste.

If you were to start A/B testing everything, switching platforms, hiring new staff, or worse, abandoning channels that are actually working, you could turn excellent performance into an actual problem through misdiagnosis.

This is quite literally one of the reasons why doctors take an oath to “do no harm.”

Let’s be honest: every marketer wants that killer case study. The ad campaign in a tight industry with the 10x ROAS. The viral post that made a million leads. The email sequence that converted 47% of subscribers.

Yet for every unicorn case study, there are dozens of campaigns that performed at or slightly above baseline. And those aren’t the ones that get spun up into carousels and posted all over LinkedIn.

Survivorship bias makes us think outliers are the norm instead of what they actually are—statistical noise.

When you have a positive outlier, by all means, celebrate! But don’t buy lottery tickets every week because you got $500 from a scratch-off you found on the street one day.

In the long run, marketing feels a lot like Moneyball: if you can deliver consistently above baseline every quarter, you will outperform the strategy that hits 300% once and baseline the rest of the time.

Compound growth beats lottery tickets.

This is where the concept of base rates becomes a career and business development tool. Some projects, clients, and opportunities have generally low base rates of success, and taking them sets you up for failure that has nothing to do with your competence.

I’ve seen a lot of talented marketers fail to get traction because they’re either in a hardscrabble industry with a low or negative growth rate. I’ve seen capable folks work for companies or clients that take a grim view of marketing. The marketers will end up blaming themselves much of the time, but that’s not fair—the base rate of success was just awfully low to begin with.

Everybody knows you need to choose your battles. Understanding base rates helps you choose better battles.

And that feels better than blaming yourself when you had only the slimmest chance to begin with.

So how does this play out when you're actually trying to grow a business? Here are three ways I use base rates to make better decisions every day.

When I evaluate potential clients now, I spend significant time understanding their base rates before we even talk strategy. I think about questions like:

Because you know what’s worse than a marketing campaign failing?

A marketing campaign failing and the business owner having to pay huge agency bills.

Basically, it’s a reality check that helps my team avoid projects where the odds of success are low, unless the client is 100% on-board with going for a moon-shot. It prevents heartbreak on both sides.

But it’s also a good idea for setting realistic expectations from day one. When a client expects 10x growth in six months but their industry average is 15% annual growth, we need to have that conversation upfront.

The best clients understand base odds and want to systematically beat them.

When we work with clients, the first question isn't "How can we 10x this?"

It's "What would beating baseline look like, and are we there yet?" If you're underperforming baseline, optimization makes sense. If you're at baseline, small improvements compound. If you're beating baseline, be very careful about what you change.

Because the truth is, 10x stories are very rare. When they do happen, they're usually the result of multiple factors aligning—what Charlie Munger calls a lollapalooza effect.

If you want a 10x outcome, you need a bunch of things to go right, such as:

It need not necessarily be these five factors in particular, but it does need to be multiple overlapping factors. And indeed, these perfect storms do happen, but they're not a strategy you can count on.

Most successful agencies and marketers have a portfolio of campaigns that perform consistently above baseline, not a handful of massive outliers.

Base rates should determine how you spend money and time—likely your two most limited resources.

Instead of spreading resources across high-risk, high-reward bets, concentrate most of them on strategies where you can reliably beat baseline.

You can chase viral marketing stunts and spend money on expensive convention booths. But if you have perfectly good advertising, SEO, or cold email campaigns that work, then spend the bulk of your time optimizing those.

Does this mean you should never explore new tactics or try longshots?

No, just make sure you do so wisely.

Base rates are a great foundation for strong marketing.

And if you lay that foundation, you can build from reality, not from hope.

When everyone else is pivoting because last month's numbers were "disappointing," you can see whether you're actually underperforming or just experiencing normal variance.

And if you can do that, it’ll be easier to set realistic timelines and expectations. That’s a surefire way to build up trust with your clients, stakeholders, and your team. It just makes it a lot easier to deliver what you promise because your promises are based on realistic base odds.

So before you make big decisions with marketing, ask yourself 3 questions:

If the answers reveal poor base rates or unrealistic expectations, something has to change.

Let others chase unicorns. Focus on beating baselines instead.