Email marketing is probably the most effective channel in terms of ROI.
With a 42:1 return on investment, who could argue? But guess what? If done better, the ROI could be even higher. But to do better, you need to understand what needs to be optimized. So, you need drive insight from a huge array of data points. However, as time-poor email marketers, we are often stuck in a rut of metric analysis: opens, clicks, unsubscribes, and so on.
There are plenty of email marketing campaign tips out there, and this article is gives you some of the most important ones: identifying the other key email marketing KPIs every email marketer should be analyzing to become the best. Imagine a world where your ROI is even bigger. Realizing the true potential of email marketing is crucial to your success.
Email marketing metrics to measure
The following list of email marketing metrics are the key things you need to measure in order to boost your ROI. Before going forward, make sure to see what email marketing software solutions are available to help boost your overall ROI as you keep track of the steps in this list.
1. Email list growth rate
Without healthy, growing email lists, the benefits you reap today may not be sustainable, which is why keeping a focus on your list growth is essential.
To calculate the rate at which your list is growing: (Number of new sign-ups – unsubscribes) divided by the total number on your list x 100.
2. Unique open and click rates
Many people open or click your email several times, meaning the total rates will give you an unrealistic view on how relevant your email is. The unique open/click rate shows the number of subscribers that have opened or clicked your email. The unique open/click rate is the deduped number of people who have opened/clicked your email. This number is then usually shown as a percentage of the total number of people you have sent your email to.
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Understanding the click-to-open rate will help you identify the relevance of the email content to the people who have opened your email. This also helps you identify whether the creative needs optimizing. A decreasing click-to-open rate may mean that your content and email design needs work.
To calculate the click to open rate: (Unique number of clicks divided by unique number of opens) x 100
As mentioned earlier, list growth is essential. Many unengaged subscribers will fail to respond to your emails, others that don’t want to hear from you will hit the unsubscribe button. By measuring the unsubscribe rate, you will understand whether your emails are delivering the expectations to your audience.
To calculate the unsubscribe rate: (Total number of unsubscribes divided by total number of emails sent) x 100
3. List churn
The unsubscribe rate will give you churn on a campaign by campaign basis, however understanding your list churn over time will give you a better indication of whether your email strategy needs some work.
To calculate list churn rate in the last 12 months: (Total number of email unsubscribes in 12 months divide by total number of subscribers) x 100
4. Open reach
An open rate tells you how many opens you are getting on a campaign basis. But what you really want to know is how much of your database is engaged. Is it the same 20% that open on a regular basis or maybe there are different people opening across different campaigns. A reach allows you to understand how many people are you engaging over a period of time.
To calculate your open reach: (Total number of unique subscribers that have opened over a period of time divided by total number of subscribers) x100
5. Heat map tracking
Do you wonder which links in your emails are most popular? Do emails with lots of links work? Does the audience just click on the top links? Are your calls to action performing as well as they could? Understanding the answers to these will allow you to identify where you can optimize and test.
Most email platforms will give you this report out of the box. If not then you will need to look at the number of clicks per link and overlay this onto your creative.
7. Delivered rate
Email deliverability success is one of the most crucial aspects of your email strategy. If your emails are not being delivered all the rest of your hard work on content, creative etc will have gone to waste.
This will be a metric from your email marketing platform. It will tell you the number of emails actually delivered vs. the number sent.
8. Hard bounce rate
Your hard bounce rate is indicative of a healthy list. The higher the bounce rate, the more the ISP will identify you as a poor sender, resulting in more of your emails hitting the junk folder.
This is also a metric given by your email marketing platform. It will tell you how many emails were bad or invalid.
9. Inbox placement rate
Understanding your inbox placement rate will help you identify whether you are getting the optimum results from your email campaigns. There are many factors that impact your inbox placement, and analyzing this number first will help you identify whether you have a deeper problem.
Not all email marketing platforms will tell you your inbox placement. However, if your emails are not performing well, or there is a need to deliver more value from your campaigns, it's important to find a way of calculating this.
10. Complaint rate
This is the number of people that have hit the SPAM button or junked your email. Even a tiny number of recipients doing this can have an impact on your sender reputation. This is the number of people that have complained vs. the number of emails delivered.
11. Landing page bounce rate
Post-click metric tracking is essential to measuring the true success of your campaign. To be honest, your boss will rarely care about the open rate or click rate – it is what they do after they click. The bounce rate shows you the percentage of people who leave your site after visiting only one page. If the bounce rate is high, then you know your audience are not interested in taking action.
Most ESPs won’t give you landing page metrics, so a good place to start is GA. Setting up landing page tracking in GA is simple, once signed in you will need to find your tracking ID and insert these into your landing page. Once complete the landing page reporting within GA will enable you to monitor a whole range of metrics.
12. Conversion rate
Email is highly responsive. However, few marketers show these metrics in their reporting dashboards. High clicks, low conversions - you have a potential issue with your landing page. Low clicks, high conversion rate - you may have a potential issue with your data, your message, your offer and so on!
The conversion rate is the percentage of subscribers that complete a purchase/fill out a form over the total number of your audience contacted.
13. Average Order Value (AOV)
Keeping track of average order value helps your e-commerce business in a number of ways, including understanding your customers’ spending habits, informing your pricing strategy, and measuring the success of your marketing efforts.
To use AOV to measure marketing success, take a benchmark and see how this figure improves as a result of your efforts. It may cost you money to earn new customers but increasing average order value is normally inexpensive. It can often be achieved by tweaking tactics and won’t require a whole new campaign. What’s more, increasing average order value directly impacts your bottom line.
Average order value is an important e-commerce metric. It refers to the average amount that is spent in each transaction on your e-commerce website. To work out your average order value, simply divide your revenue by the number of orders you’ve received.
For example: If your site made £70,000 last month from 1400 orders, your average order value would be £70,000/1400 = £50.
14. Return on Investment (ROI)
Email marketing produces some of the highest ROI. It has a low cost to market and is easy to set up. Measuring the ROI allows you to prove the value of your email activity, whether the amount you spend on technology and time returns on this investment. It is one of the most important metrics board level to deliver a business case on further investment.
If you are looking to show ROI as a percentage: Total revenue – Total investment cost (Technology & Time spent) / by total investment cost x 100.
15. Customer Lifetime Value (CLV)
The old adage that it costs less to retain and grow a current customer than it does to acquire new rings true still today. In fact, it costs over five times more to acquire a new customer. The CLV gives you the why behind so many engagement initiatives. Engage and grow you will soon find your profit margins grow! Once you have understood your CLV, an objective would be to improve this year over year.
There are several ways to calculate your customer lifetime value, and this can often become really complex. Testing and understanding methodologies allows you to land on one that works for your business. Speak to your ESP about how they can help you discover the best way to get to this metric.
16. RFM value
Recency, Frequency, and Monetary (or RFM) value allows you to understand your most valuable customers. This then gives you the insight to go and find more of them! Defining these segments is crucial to your business success.
The nudge effect
Many a marketing professional will talk about the nudge effect of email marketing; however, how do you prove this to your business? Are your “unengaged” subscribers really unengaged? Should you remove them from your database?
Measuring your other marketing channels post-campaign will allow you to understand the correlations. A direct response channel email is almost an enemy to itself; if you can’t measure it, then did it not happen? If you applied this thinking, then you certainly wouldn’t spend on out of home, advertising, and so on.
Email marketing, as with any other channel, delivers much more than just the sale. It allows you to deliver on your brand story, keep customers engaged, and nudge recipients to take the next best action.
Interested in learning more about all things email marketing? Check out our resource hub with over 25 useful resources to keep you on your learning journey!