Email marketing is often praised for its high return on investment, so it’s no surprise that so many brands focus their attention on this channel. However, like any other marketing effort, it’s important to have a solid process in place for measuring email success.
To help you better understand the results your email campaigns are generating, we asked a group of Young Entrepreneur Council members the following question:
Q. What is the best way for small businesses to determine the return on investment on an email campaign?
1. Lifetime value of the customer
As a business, you need to know the lifetime value (LTV) of your customers. Once this is established you can build your metric for ROI of an email campaign. Understanding the LTV of your customers is extremely important, not just in email, but in all of your marketing campaigns to make sure you are getting the ROI necessary to confirm success. —Chris George, Subscription Trade Association (SUBTA)
2. Click-through rate
If your goal is to get subscribers to click on your emails to take them to your latest blog post or landing page, then you want to track your click-through rate. To calculate this you take the total clicks and divide it by total emails delivered. The higher the click-through rate, the better. —Syed Balkhi, WPBeginner
3. Conversions
Our goal when sending emails to our clients is that they take clear action, such as clicking “Learn More” or “Buy Now.” We can tell how effective our communication has been by comparing those rates to our prior campaigns. —Rachel Beider, Massage Outpost
4. Actions after opening
The reality is there’s no singular metric that determines the ROI of an email campaign. There’s simply too much variety between different companies and industries. And within a company, there can be different objectives behind each email campaign. There’s one general rule though: The open rate does not mean anything. You need to dive deeper and look at conversions, CTRs, and unsubscribe rates. —Thomas Smale, FE International
5. Unsubscribe rates
Measure the success of your campaign by looking at unsubscribe and user action rates, and look for patterns. For instance, if you had a record number of users unsubscribe after you sent a particular campaign, you obviously need to change the tone of the next one you send. If people are unsubscribing, they did not think your information offered any value. —Blair Thomas, eMerchantBroker
6. Alignment of engagement metrics
The one thing you want to look at is the volume of people engaging with the email. I’ve seen small businesses that have high open rates, but when it comes down to the clicks and conversions, it’s nearly zero. If you have an effective email campaign, all of these numbers are usually aligned and there isn’t a big gap between them. This is why it is important to look at volume and conversion. —Sweta Patel, Silicon Valley Startup Marketing
7. Completed results
To get the most ROI for your email campaign, you want to find out how many people completed the result you wanted them to. The result will differ depending on the campaign. For example, if you are emailing to find out why customers canceled, you want to track the response rate. Or if you’re trying to sell them something, that would entail tracking revenue. —Jared Atchison, WPForms
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8. Revenue generation
Goals may vary from client to client and campaign to campaign, but one thing that’s universal is how much money a campaign brings in. Focusing on revenue from new client acquisition is a key metric because most people just look at open rates and click-through rates. It isn’t enough for them to just open your email and click a link—it has to be tied to revenue and tracked all the way through to the sale. —Joel Mathew, Fortress Consulting
9. Acquisition costs versus revenue
The first factor that should be tracked is the cost of acquisition when adding new subscribers to your mailing list. The next factor is the amount of revenue generated per sale. After that, the remaining factors are the conversion rate of subscribers to sales and the number of sales for each converted customer. Putting all of these factors together will provide a clear vision of your ROI. —Bryce Welker, CPA Exam Guy
10. Health and deliverability
It’s important to consider factors like list health and deliverability, not just direct engagement and per-campaign success. These are the macro trends that will drive long-term success. It’s great if a particular campaign drives engagement and conversions, but if that comes at the cost of alienating large portions of your subscriber base, you may be slowly killing your golden goose. —Ryan D. Matzner, Fueled
11. Whichever metric reflects your campaign goal
The metric of success will only vary by the goal. For example, if you want more exposure, you should use the number of new subscribers or open rates; if you want to sell goods, track traffic funnels leading from promo emails to checkout pages. Adjust your metric of success to match your goals for the campaign. —Zev Herman, Superior Lighting
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