Lately I’ve had several conversations with email marketing acquaintances about what is considered a “good” open rate, what people should be looking out for in their reports, how they know their email campaigns are doing well, what about social media reporting, etc.
Depending on the type of business you are in, your priority metrics will be different. For several years, Open Rate, Click-Thru Rate, and Forward to a Friend were king in email reporting land no matter what business you were in. You simply cared about engagement – Is this email recipient reading my messages? Do they care about what I have to say? ….. and the indirect line to profit.
In all reality, having a high open-rate has absolutely nothing to do with if your recipients care about what you have to say. Technology has gotten to the point where Open Rate and Forward to a Friend border being irrelevant – hence the onset of tools that help marketers understand engagement and yes, revenue.
Of course, there were a ton of variations on these three depending on which Email Service Provider you were working with as a value-added report metric. In the end however, most marketers ended up sticking to those three simple metrics (if at all – you’d be surprised how many email marketers never read their reports).
Today however, if you are in the business of email marketing, you are definitely also in the business of generating revenue for your company. So I ask you – Do you know how much money each email campaign you send generates per recipient?
The “per recipient” puts an interesting spin on your metrics as it gives us a tieback to engagement across the entire recipient database. It’s fine and dandy to say that this email campaign generated $100,000 – but if you had to send the email to 3 million people to get that $100,000 dollars and the revenue came from 1500 conversions (and btw you had to spend $21,000 to get it), you’re looking some ugly engagement numbers and probably getting some Spam reports.
Yes, I know that not everyone is going to bite every time. Yes, I know that times are tough. But, what if you targeted your campaigns to send less and make more per recipient? Overall costs go down, and overall engagement goes up. Think about it.
If the answer to my question is no, then now is THE time to take a step back and run through this 5 Step Plan:
- Know What You Spend: List out all costs associated with an average campaign, including human asset, time spent in reviews, etc.
- Calculate Recent Campaign ROI to Benchmark: Now that you know how much you spend, you might be able to take recent campaigns and create a benchmark. Don’t compare yourself to others just yet – just get a number that you know is accurate. You may need to skip down to #3 and come back if you send a lot of campaigns and have no idea how to tie purchase back to a specific email campaign.
- Connect Email to Web: If your company does not have a partnership with Omniture, Coremetrics, or some other web analytics firm, sign up for Google Analytics. Then, work with your web team to get your site to play nice with whatever tool you end up using. This is not a requirement for understanding return by campaign if you are sending only a few campaigns a month – but if you are sending several per week to segmented audiences, you will need to know where that email recipient is coming from for which purchase to effectively calculate revenue by campaign.
- Segment Your Database: You may need to send out several short surveys over time with a coupon to get responses. You probably already have a lot of information in your transaction database. Take a look around and figure out which are the right segments for you: Seasonal Shoppers, Clearance Bin Buyers, Make Me Feel Special Buyers, Only Buys Photography Electronics, etc. Create some simple segments to start with so you can build a use case for getting some help.
- Test Segments for ROI Comparison: Send at least a dozen campaigns over the course of at least 2 months to different segments. Make sure you are watching sending frequency and stay minimally within your current range. Calculate ROI per recipient and compare. What did you find?
I guarantee you that you will generate more revenue per recipient. I can also say that with 100% confidence, your management team will find this one simple metric per campaign to be infinitesimally more useful than open-rate, for one. It’s worth the effort, I promise.