Email marketing isn’t as well defined as some of the other marketing disciplines, although it is certainly on the way. When I started in the email marketing, I had a very hard time trying to decide what metrics would really be useful to me. After working at two very large companies that have solid programs, the following are the metrics that I have found to be the most useful. I am sticking to metrics as the basis for this article; future articles will give you ideas on how to effectively use these metrics to analyze your email marketing campaigns.
Emails Sent
This refers to the number of email addresses to which you sent a specific email. All of these emails will not necessarily get delivered due to bounces and blocks by ISPs. This is a good metric to use because you can analyze how much money you are spending on emails that do not make it to the inbox for some reason.
Emails Delivered
This is the number of emails that actually reaches a recipient’s inbox, however there is no guarantee that it did not go into their spam folder. I base most of my calculated metrics on this metric because you know that the recipient actually had an opportunity to open the email unlike “emails sent”.
Percent Delivered
This metric is the total emails delivered / total emails sent. If you are below 97% you probably have issues. It is a good indicator of how clean the emails on your list are. If this is a low number for you, check out your bounce rate to see if it is high. You may have a lot of people signing up for your email and then abandoning their email accounts.
Open Rate
Open rate is calculated by total emails opened / total emails delivered. I use emails delivered rather than emails sent, because at least everyone had an opportunity to open it since the email was actually delivered. This metric can tell you how interesting your subject and from lines are to your prospects.
Click Rate
Click rate can be calculated differently depending on the company. I have always used the click-to-open rate which is calculated by total clicks / total opens. The other variation of this would be total clicks / total emails delivered which gives you a very low percentage. A lot of companies do not use this metric because if they didn’t open the email, there is no possible way they will click on the email. Just make sure you are consistent and compare your campaigns using the same metric.
One thing that may affect this metric is your message. If it is consistent with your subject line or an offer that the customer really likes you will see higher rates. However if you have a high open rate, but very low click rate, you may have issues with your subject line and message not being in sync.
Bounce Rate
This metric is a measure of total bounces / total emails sent. A bounce is an email that does not make it to the inbox because the email address is not valid (hard bounce) or the inbox is too full (soft bounce). For an overall analysis, I generally include hard and soft bounces together, but if you are doing a deeper analysis into list cleanliness, that is where you may want to look at each one separately. The reason email sent is used in this case is because the email never reached the recipient, so using emails delivered would not make sense.
One reason mentioned above for a high bounce rate may be potential customers initially interested in receiving an incentive for signing up for email, so they use a junk account that they never pay attention to or close. When you try to send them emails, they bounce. That is why it is good to have a policy in place where if they have 2 or more bounces you remove them from your list. Otherwise ISPs may start blocking your emails.
Opt-Out Rate
This is the total opt-outs (unsubscribe) / total delivered emails. If you are looking at your email marketing program overall, it is a good measure of the interest your customers have in receiving your emails. It is also good to look at this metric for each email campaign because it is probably not a good practice to continue with email campaigns that have high opt-out rates unless they have extraordinary sales.
Spam Complaint Rate
This metric is the total spam complaints / total delivered emails. Many ESPs split this metric out into AOL and Other. In order to make sure you have a high deliverability rate, it is important that you keep this metric in check. If you have a lot of spam complaints, ISPs will start blocking your email because you look like you are a spammer.
Sales / Orders
Both of these metrics are pretty straight forward. It is just the amount of sales and orders generated from your email. You just have to decide how to set up your reporting correctly so you can accurately report on these metrics. In the past I have reported on these metrics both from business objects querying our databases and also Omniture.
Average Order Value (AOV)
This is a calculated metric based on total sales / total orders. This tells you how much the average order from your email generated. This is an important metric when analyzing why your sales are higher or lower than previous weeks. I always look at AOV to determine what effect it had on overall sales.
Sales / Email
This metric is calculated by using total sales / total emails delivered. This will tell you how much each email you sent generated. So if you sent 10,000 emails that generated $.05 / email, your total sales was $500.00. You can also use this metric further to predict if you were able to increase list size by an additional 10,000 addresses, in theory, a similar campaign would generate $500 more in sales from the increased list size.
Response Rate
Response rate can be calculated by total orders / total emails delivered. This tells you how many people of your total list actually responded to your email campaign. These rates are generally pretty low since you are using total emails delivered as a base and many of those people didn’t even open or click from the email.
Conversion Rate
This metric is total orders / total clicks. This tells you how many of those who clicked through to your website actually made the purchase. I prefer this metric over response rate because it is analyzing only people who are already engaged (clickers). It does not include those who didn’t open or click and therefore gives a higher percentage.
Wrapping Up
Hopeful this will give you insight into some useful metrics for your email marketing campaigns. In the future, I plan to continue writing about how to use this metrics to analyze your email campaigns.