An analysis is a part of any successful strategy. This process helps you spot both positive and negative aspects of your campaign. Since your goal is to improve your business, to increase conversions or sales, marketing metrics help you get the idea of how good you are doing and how likely you are to achieve your goals.
With email marketing, you need to monitor the successful delivery, as well as the interaction with the content you send through email marketing campaign. To analyze the campaign, you will need an email marketing tool, which will provide an interface with all sorts of different features to measure and track.
The metrics you need to keep an eye on are divided into two groups. First, there is a group of the most important metrics, including the metrics that will help you analyze and improve your email marketing campaign. These metrics can be calculated with a formula, and thus they make it easier to compare the results of different campaigns. The second group consists of the metrics that are considered as less reliable, due to certain limitations. As such, they are not as helpful as the ones in the first group. They are still mentioned because they do offer some insights into the campaign performance.
1. Click-through rate
A click-through rate (CTR) represents the number of people who clicked on one or several links in your email. This metric is the first and the most important one to track.
It is calculated like this:
(Total clicks or unique clicks ÷ Number of delivered emails) * 100
A click-through rate is important because it directly calculates the performance of the campaign. It gives insights into the number of people you are successfully engaging with your content or exclusive offers you send as a part of your email. Not only will a CTR help you measure the performance of the campaign, but it will also help you learn more about your brand, your content, etc. You can either use total click or unique clicks to track, but to make sure your analysis is consistent, always use the one you choose as a preferred reference.
A good click-through rate varies depending on the industry. Your goal should be to determine and improve the existing rate. Another thing that helps evaluating the worth of click-through rate is the number of conversions.
Each conversion is a result of a click on an email link, but not every click will result in a conversion. You should think about this as a funnel. The funnel is the widest at the beginning, once you hit that send button. That is the largest number of contacts you can reach. The funnel narrows down with click-through rate. From that point, the funnel narrows down even more, and that is where we reach conversions.
2. Conversion rate
A conversion rate is the rate of those who clicked on a link in the email and completed an action that was marked as a conversion, regardless if that was a purchase, a download, etc. In order to be able to track conversions, and calculate the conversion rate, you will first need to define a conversion. Many businesses can have different goals as conversions because they are operating in different industries and they have different goals. The important thing is to properly define conversions to be able to track them and thus evaluate the performance of the email marketing campaign.
A conversion rate is calculated like this:
(Number of people who completed the desired action ÷ Number of delivered emails) * 100
To measure a conversion rate you will need:
- Web analytics integrated on your website to track the number and referrals of the visits.
- To set up conversion value because this makes it much easier to incorporate and compare this metric with overall business strategy
Tracking conversions directly helps you evaluate the success. If you properly define a conversion and set up its value, you can simply calculate ROI. It is also helpful to present the campaign results in both qualitative and quantitative ways because this allows better integration of email marketing in the business strategy, and it also provides valuable insights for the future campaigns. For example, based on your prior conversion rates, you can estimate the number of conversions for the upcoming email marketing campaign. This is a helpful part of planning the future campaigns because it can help with planning the budget and it allows you to determine estimates for the particular action you will be promoting through email marketing, such as a product launch, an event, etc.
3. Bounce rate
A bounce rate represents the number of emails that cannot be successfully delivered due to a temporary problem (soft bounce) or a permanent delivery failure (hard bounce).
To calculate the bounce rate, use this formula:
(Number of bounced emails ÷ Number of sent emails) * 100
A high bounce rate can be an indicator that something is wrong. It commonly signifies that your mailing list is obsolete, which means that a lot of addresses are closed and no longer exist. If this is the case, you need to act on it immediately. Completely analyze your mailing list to detect all the email addresses that bounce and remove them permanently. Internet service providers (ISPs) use the bounce rate as one of the factors that affect sender’s reputation which is a good enough reason for you to prioritize this task.
This metric is mainly important because it helps you build sender’s reputation, but it also helps you stay organized in your email marketing campaign. There is no need for you to waste time and effort on 2000 subscribers if half of those emails will bounce. Detect the bounces, and remove the hard ones to get a better mailing list, a list that is full of contacts you can actually reach.
Like the previous two metrics, a bounce rate changes constantly, as old addresses become invalid, or new ones are being added to your mailing list, so make sure you keep an eye on these changes. Since studies show that more than 20% of your mailing list may become obsolete within a year, make sure you revise your mailing list at least once a year, preferably even more frequently.
4. Forward rate
A forward rate or an email sharing rate is the number of recipients who clicked on the forward button (forward to a friend) or the share button (share email content on social media). This act of sharing or forwarding indicates that the subscribers find value in your content, which is why they use this option.
You can calculate this metric using the following formula:
(Number of clicks on a forward/share button ÷ Number of delivered emails) * 100
At first glance, this metric seems less important because it does not provide data about conversions, which are in fact your goal. However, this metric shows an entirely different aspect of your campaign. It shows you how you generate new contacts. Sharing or forwarding an email is extremely helpful for generating new leads. It also shows you how you generate those leads, through emails or social media.
Besides lead generation, a forward or share rate can help you identify the type of content that gets the most exposure. Monitoring this metric from campaign to campaign can show you the types of articles or offers that are most popular among your subscribers, as they are shared the most. As a result, you can shape your content strategy based on the results you get from email marketing.
5. Subscriber list growth rate
This metric shows you the rate at which your mailing list is growing. The number of subscribers is constantly changing. It reduces as you remove bounced email addresses and as people unsubscribe. It grows as new subscribers sign up to receive email updates.
The formula to calculate subscriber list growth rate is this:
(Number of new subscribers – (Number of unsubscribes + email/spam complaints)) ÷ Total number of email addresses on the list * 100
The importance of tracking this metric is in evaluating your lead generation strategy. You should constantly be working on obtaining new subscribers, using different strategies, such as content marketing, social media marketing, etc. Analyzing the list growth periodically helps you establish:
- The strategy that gets best results (for example, when you announce a new ebook that can be downloaded free, this may boost your list growth rate)
- The period of the year that is the most dynamic (you might notice an unusual peak in decline or growth of the mailing list, which can help you determine the right time to launch a certain strategy to generate new leads)
Having in mind the mailing list decay, keeping the list fresh and up-to-date with new email addresses is especially important. Additionally, growing a mailing list is a way to expand your reach, which results in a greater exposure for your company.
Return on investment (ROI) is another metric that reflects the performance of the campaign. With this metric, you basically compare the total costs of the campaign to the total revenue.
What is unique about this metric is that there are several formulas for its calculation, which depends on the type of business and industry.
Here is one formula to calculate ROI:
($ in additional sales made – $ invested in the campaign) ÷ $ invested in the campaign * 100
You will need to set up a value for conversions to be able to calculate the ROI. That is easier when a sale is your conversion because in that case, a sale value is equal to conversion value. However, the situation with ROI calculation is not that simple. Sometimes, it might be a bit more difficult to calculate ROI. For example, you acquire a certain number of sales, you compare that value with the budget invested and you get ROI. In the long run, these sales might lead to more sales, as you obtain some recurring customers. In this case, the sales value you used to calculate ROI in the first place is not correct, thus the ROI for this calculation is wrong as well.
To make sure you get the results that are reliable as much as possible, you will need a deeper understanding of your business and how certain actions affect its performance. For example, try analyzing sales. Obtaining a new client means $100 revenue for you (i.e. sales value). Noticing the past trends in your sales, you notice that having 10 new customers, means you get one recurring customer. Therefore, 10 new customers generate income of $1000 (10 customers X $100 sales value). But this revenue is not final because you will need to add that recurring one. You need to analyze the trends for recurring customers as well, and let us say that each generates two more sales on average. This means that $1000 has to be increased by $200 (one recurring customer X 2 recurring sales). In this example, the total revenue would then be $1200, which means that each new customer is worth $120, $20 more than the actual sales value.
This kind of analysis relies on your past experience and the ability to predict trends. As much as it may seem complex when you have right insights and when you know your business to the core, you will be able to get tangible results.
7. Less reliable metrics
The following two metrics are defined as less reliable because they are not so easy to measure or track due to distinctive features that influence their occurrence.
An open rate is the percentage of those who opened your email.
It can be calculated like this:
(Number of opened emails ÷ Number of delivered emails) * 100
Although the metric seems to offer valuable insights into email marketing performance, because it can show the influence of the subject line, an open rate is a bit misleading metric, which is why it is considered less reliable and sometimes not even worth tracking.
An email is considered opened if the recipient also receives the images embedded in the message. However, many email users have images blocked in their email accounts, which means that even if they do open an email, this act of opening will not be included in the statistics. An incorrect number of opened emails directly leads to an unreliable metric. Some email clients open emails automatically, which can also result in misleading data in the analysis.
Despite the data being unreliable, and thus unable to show the level of success of the email marketing campaign, the open rate still has its use in email marketing. It helps you learn more about your emails and about your subscribers. Use this metric to compare the data of different campaigns, to get a general idea:
- Which subject line works better (a personalized one, the one featuring the name of the company, etc.)
- What is the best time to send an email (the open rate might be higher in a specific period of the day or on a certain day of the week)
- What type of content inspires users to click (the open rate might vary depending on whether you offer a free download or you are announcing a discount in your online store)
Since these insights help you improve certain aspects of your business strategy, the open rate is still a metric worth tracking, but perhaps not as closely as those more reliable ones.
Unsubscribe rate shows the number of users who unsubscribe from your mailing list because they no longer wish to receive email updates from you.
It can be calculated like this:
(Number of those who unsubscribe ÷ Total number of subscribers) * 100
The reasons for unsubscribing can be very different. Sometimes users are no longer interested in your content. For example, you have a marketing blog, and the subscriber has changed career and is no longer interested in industry news. On the other hand, there are situations when you are responsible for users deciding to unsubscribe. It may be due to a lot of emails you send, due to a huge number of promotional offers as opposed to quality resources, etc.
As much as it is helpful for your mailing list success that subscribers unsubscribe willingly, they do not always do that. Even if they do not wish to receive any future email updates from you, subscribers frequently do not want to go through the process of unsubscribing (too many clicks), which is why they simply stop opening your emails instead. This is what makes this metric unreliable.
However, monitoring the metric from time to time can indeed help you find out when the recipients unsubscribe (for example, after your latest commercial campaign) or what is the general unsubscribe rate per month (this affects mailing list growth).
The goal of analyzing all of these metrics is to improve your business. Each metric provides insights into a certain aspect of email marketing campaign, and as such, it is an important part of the progress and performance.