Measuring the Success of Your Email Campaigns – Better Results through Smarter Calculations

I am often perplexed by the number of marketers I run into that can’t seem to agree on the best way to calculate the tactical performance of their email marketing campaigns.  So today I am going todiscuss how I do it, and why.

Measurement the old-fashioned way

Long ago in the world of direct mail (if anyone can remember a time before digital), the basis of response rates were measured by counting the total number of call-to-action requests received based on the total number of pieces sent. It’s not hard to imagine where this analysis can have some problems:

  • What if the mail gets lost?
  • What if the address is bad?
  • What if the recipient throws it away without looking at it?
  • What if the wrong person in the household gets it before the intended recipient?

All of these problems have plagued direct marketers for years (and they have built complex models to create allowances for these types of problems). But luckily as Internet Marketers we aren’t faced with these problems.

Data soup

In fact, we are swimming in data about what happens to our mail on every step of its journey.  We know:

  • Exactly when the mail was sent?
  • When it arrived at the recipient’s ISP?
  • If there was a problem with it, what was it?
  • Did it go to the inbox or the junk mail folder? (not all mail providers report this data)
  • Precisely when did the recipient look at it?
  • If he clicked on a link which links did he click on?
  • If he clicked on links, did he ultimate end up buying something?

The data just goes on and on and on.  The amount and precision of data at our fingertips boggles the mind.  Many of us get so intoxicated based on what we CAN measure that we rarely stop to consider what we SHOULD measure (but that is a different topic for a different day).

So Tell Me Why?

So with all of this fantastic data at the ends of our fingers WHY do we insist on measuring tactical campaign performance as: conversions / pieces of mail sent. There is simply no reason for us, as Internet Marketers, to use a calculation so fraught with issues.  So here are a few ideas on how to recast your metrics to get a better indication of what is really going on.

New Math

Open Rate

This metric is simply the number of people who actually took the time to look at what you sent them.  Traditional direct marketers have never been able to uncover this information (let alone on a subscriber by subscriber basis).  Most email marketing vendors calculate two numbers for open rates:

  1. The number of TIMES a mail was opened (gross open rate)
  2. The number of SUBSCRIBERS who opened a mail (distinct / unique open rate)

The variance in these numbers can be attributed to people who save mails and open them several times before actually paying attention to them, the impact of preview panes, and a host of other reasons. So, yhen you calculate your open rates, you want to be sure you use this method:

How to Calculate Email Marketing Open Rate

This shows you the ratio of the total number of subscribers that looked at your mail.  Calculating the Open Rate using total/gross opens lead you to believe that a lot more people are seeing your mail than actually are.

Click Through Rate

The click through rate is really an indication that you have piqued the curiosity of the recipient and s/he is interested in learning more, and possibly taking you up on your offer (provided you have a good call to action in your newsletter).

Also, this calculation should not be performed based on the number of unique clicks for the entire mail, it should be performed for each link in your mail.  This will give you an indication of how each of your messaging drove to each call-to-action opportunity.

  1. Similar to the open rate, most email providers count click throughs based on the total number of clicks and the distinct/unique number of clicks.
  2. Second.  Instead of comparing the Unique Clicks vs. the Number of pieces of mail delivered I use the total number of distinct opens.  My rationale is that I want to know how effective my messaging and creative was at getting the recipient to follow my call-to-action suggestion.  To me this is a much truer test of how effective a mail was at captivating the interest of the recipient.

So:

How to Calculate Email Click Through Rate

And lastly, measuring Call-to-Action or Conversion rates should be based off of the UNIQUE metrics.

 

how to calculate conversion rate on email marketing

I think you will find that making these slight variations in the way you are calculating your email marketing metrics will give you more insight to how well your mails are being received by your customers, how good your creative is at inspiring them to action, and a better sense for your actual conversion metrics.

Feel free to ask questions here or email me and let me know if you think this was helpful.

3 Ways to Dramatically Improve Conversion Rates with A/B testing

June 20, 2011

A lot of Internet marketers I talk with have been slow to adopt A/B testing as part of their on-going optimization strategy.  Many are intimidated by the academic sounding terminology, the breadth of variables available to test, and the perceived complexity of the software.  But A/B split testing is – without a doubt – the [...]

0 comments Read the full article →

Powerful Goal Setting for Performance Marketers

June 6, 2011

On the surface, the topic of goal setting seems so well understood that it doesn’t need to be discussed – but as you will see the results show this is far from being true.  Most of us use the basic three-step process – First, we determine what we want; Then we define what we set [...]

0 comments Read the full article →