Email marketing is definitely the most advantageous marketing method since it allows users to track all the steps and any behavior of the persons interacted. When considered with all the analyzation skills and statistics you have on an email marketing platform, it is hard to define which parameters are the most valuable to re-design your campaigns for a more successful email marketing. You must have heard of “open rates”, “click-through”, “bounce” etc. What does all these terms mean? How are they calculated? What should you change to catch better rates in all of them? Let’s look together here…
1) Click-through Rate
What It Is: The percentage of email recipients who clicked on one or more links contained in a given email.
How to Calculate It: (Total clicks OR unique clicks ÷ Number of delivered emails) * 100
Example: 500 total clicks ÷ 10,000 delivered emails * 100 = 5% click-through rate
(Using either total clicks or unique clicks in the calculation above works, as long as you use the same approach consistently.)
Click-through rate (CTR) is likely the first answer you’ll get when you ask an email marketer what parameters they track. It’s what I like to call the “day-to-day” email marketing stat, because it lets you easily calculate performance for every individual email you send. From there, you can track how your CTR changes over time.
CTR is also frequently used for determining the results of A/B tests, as these tests are often designed with the intention of finding new ways to get more clicks in your emails. Click-through rate is a very important parameter for all email marketers to be tracking, as it gives you direct insight into how many people on your list are engaging with your content and interested in learning more about your brand or your offer. Read this blog post to learn what a “good” click-through rate is, according to industry benchmarks.
2) Conversion Rate
What It Is: The percentage of email recipients who clicked on a link within an email and completed a desired action, such as filling out a lead generation form or purchasing a product.
How to Calculate It: (Number of people who completed the desired action ÷ Number of total emails delivered) * 100
Example: 400 people who completed the desired action ÷ 10,000 total email delivered * 100 = 4% conversion rate
After an email recipient has clicked through on your email, the next goal is typically to get them to convert on your offer — in other words, to take the action that your email has asked them to take. So, if you’re sending an email to offer your audience the chance to download, say, a free ebook, you’d consider anyone who actually downloads that ebook to be a conversion.
Because your definition of a conversion is directly tied to the call-to-action in your email, and your call-to-action should be directly tied to the overall goal of your email marketing, conversion rate is one of the most important parameters for determining the extent to which you’re achieving your goals.
In order to measure conversion rate on your emails, you’ll need to integrate your email platform and your web analytics. You can do this by creating unique tracking URLs for your email links that identify the source of the click as coming from a specific email campaign.
3) Bounce Rate
What It Is: The percentage of your total emails sent that could not be successfully delivered to the recipient’s inbox.
How to Calculate It: (Total number of bounced emails ÷ Number of emails sent) * 100
Example: 75 bounced emails ÷ 10,000 total emails sent * 100 = 0.75% bounce rate
There are two kinds of bounces to track: “hard” bounces and “soft” bounces.
Soft bounces are the result of a temporary problem with a valid email address, such as a full inbox or a problem with the recipient’s server. The recipient’s server may hold these emails for delivery once the problem clears up, or you may try re-sending your email message to soft bounces.
Hard bounces are the result of an invalid, closed, or non-existent email address, and these emails will never be successfully delivered. You should immediately remove hard bounce addresses from your email list, because internet service providers (ISPs) use bounce rates as one of the key factors to determine an email sender’s reputation. Having too many hard bounces can make your company look like a spammer in the eyes of an ISP.
4) List Growth Rate
What It Is: The rate at which your email list is growing.
How to Calculate It: ([(Number of new subscribers) minus (Number of unsubscribes + email/spam complaints)] ÷ Total number of email addresses on your list]) * 100
Example: (500 new subscribers – 100 unsubscribes and email/spam complaints) ÷ 10,000 email addresses on the list * 100 = 4% list growth rate
Aside from the call-to-action statistics (CTR, conversion rates), you’ll also want to be keeping tabs on your list growth and loss. Of course, you should be aiming to grow your list in order to extend your reach, expand your audience, and position yourself as an industry thought leader. But believe it or not, there’s a natural decay of your email marketing list, and it expires by about 22.5% every year — which means that it’s more important than ever to pay attention to growing your subscriber list and keeping it at a healthy size.
5) Email Sharing/Forwarding Rate
What It Is: The percentage of email recipients who clicked on a “share this” button to post email content to a social network, and/or who clicked on a “forward to a friend” button.
How to Calculate It: (Number of clicks on a share and/or forward button ÷ Number of total delivered emails) * 100
Example: 100 clicks on a share/forward button ÷ 10,000 total delivered emails * 100 = 1% email sharing/forwarding rate
The rate at which your email recipients forward or share your email with others may not seem all that significant, but it’s arguably one of the most important parameters you should be tracking.
Why? Because this is how you generate new contacts. The folks on your email list are already in your database. So while conversion is still a primary focus, this doesn’t help you attract new leads. Encourage your readers to pass along your email to a friend or colleague if they found the content useful, and start tracking how many new people you can add to your database this way. (Read this blog post for tips on getting people to forward your emails.)
Keep a careful eye on your sharing rates to discover which types of articles and offers tend to get shared the most, and use that insight when you plan email campaigns in the future.
6) Overall ROI
What It Is: The overall return on investment for your email campaigns. In other words, total revenue divided by total spend.
How to Calculate It: [($ in additional sales made minus $ invested in the campaign) ÷ $ invested in the campaign] * 100
Example: ($1,000 in additional sales – $100 invested in the campaign / $100 invested in the campaign) * 100 = a 900% return on investment for the campaign
(Note: This is the most basic formula to calculate ROI — but there are several ways to approach calculating the ROI of your email campaigns. Depending on your type of business, you might prefer a different one.)
As with every marketing channel, you should be able to determine the overall ROI of your email marketing. If you haven’t yet, set up an SLA system whereby you assign different values to various types of leads based on their likelihood to generate revenue for your company.
How many of each of these types of leads did you generate via email marketing? How does this translate to potential revenue? Actual revenue? These are the types of parameters that will help you show your boss and your sales team how valuable email marketing is as a channel that drives real, tangible results.
It’s worth mentioning that there are also a couple of email marketing stats that really aren’t worth tracking closely.
What It Is: The percentage of email recipients who open a given email.
Most email marketers are still bent over backwards trying to optimize their subject lines for higher open rates. While this can have a positive impact — and more opens are a great thing — they really should be focused on optimizing their click-through rates, instead.
The fact of the matter is that open rate is actually a very misleading parameter for a few reasons. Most importantly, an email is only counted as “opened” if the recipient also receives the images embedded in that message. And a large percentage of your email users likely have image-blocking enabled on their email client. This means that even if they open the email, they won’t be included in your open rate, making it an inaccurate and unreliable parameter for marketers, as it underreports on your true numbers.
Note: You can get some value out of open rate as a parameter if you use it as a comparative one. For instance, if you compare the open rates of this week’s email send to last week’s email send (both to the same lists) it might give you some insight since the variables are somewhat controlled.
As with open rate, the unsubscribe rate isn’t a reliable picture of the health of your email list. Many subscribers who are tired of receiving email messages from your brand won’t bother to go through the formal unsubscribe process. They’ll just stop opening, reading, and clicking on your email messages.
That’s why it’s much more effective to measure subscriber engagement by click-through rates and conversion rates. From there, you can keep an eye out on unengaged subscribers so you can consider removing them at some point, like we went over earlier. Checking your monthly unsubscribe rate is helpful for calculating your overall list growth rate, though, so do keep an eye on it every once in a while.
The bottom line? Be smart about which parameters you’re tracking, and make sure you’re able to effectively measure your individual email performance, the health of your email list, and your progress toward your overarching goals. As long as you’re able to determine each of those, you’re on the right track for more effective email marketing.
Source: Hubspot Blog/Lindsay Kolowich