Are You Using The Right Metrics?

In these days of tight marketing budgets, you must rely on relevant and accurate reporting to stay on top of your email program’s performance and defend your company resources. You need to know the four basic strategies to measure performance as well as the metrics that measure correctly.

The scalpel is handy, after all, but you wouldn’t use it to carve a turkey. If you choose the wrong metric, you could overlook major problems that imperil performance or email’s significant contributions to your company’s performance.

Step One: Understand Process vs. Output Metrics

I like to classify measurement tools into two general categories:

Process metrics are diagnostic in nature and should be tracked over time to determine how individual elements of your email program are contributing to overall success. These are some email process metrics and what they measure:
 
Open rate: Subject line effectiveness, trust and brand strength.

Bounce rate: List hygiene and opt-in process.

Spam complaint rate: Relevance, trust and opt-out ease.

Unsubscribe rate: Relevance, customer engagement and delivery on expectations.

Click-through rate: Relevance, offer and content quality, design and engagement.

Delivery rate: List-building practices, list hygiene and ability to follow deliverability best practices.

Forward/Share rate: Subscriber interest and viral nature of offer/content.

List churn: Effectiveness at managing combined churn factors-bounces, spam complaints and unsubscribes.

Engagement/Activity: Ability to keep subscribers engaged over time.

Output metrics measure your email program’s performance against your company’s strategic marketing and business goals, including:

Revenue: Total revenue generated from your program over a given time period.

Cost savings: Money saved by using email over higher-cost communications channels.

Share of wallet: Use of email to increase greater share of customer spend.

Customer retention: Use of email to minimize customer defection.

Leads generated: Number of leads generated via email program.

Step Two: Determine Your Measurement Strategy and Choose the Right Metrics

These four approaches give you a basic understanding of where to employ measurement, along with the right metrics for the job:

1. Message/Diagnostics 

Use: This approach answers the basic questions “How did our last email message perform?” and “Did we meet our short-term or campaign goals?” It also helps you identify issues that may be causing reduced email performance, such as blocking or bulk-folder filtering at ISPs or high list churn.

Metrics: Open rate, click-through rate, bounce rate, spam-complaint rate, delivery rate, engagement rate, unsubscribe rate.

2. Actionable Insights

Use: Here, you can use various metrics to understand your customers’ behavior by testing and analyzing segments of your list based on demographics, geography, past buying behavior, action on emails, list source, etc. For example, analysis by gender and age might reveal that women between the ages of 18 and 35 have the highest click-through rates on average, creating an opportunity for greater targeting and personalization to increase conversions.

Metrics: Open rate, click-through rate, conversion rate, forward/share rate, etc.

3. Benchmarking

Use: Compare your email program to your peers and to your own past performance to see how your email metrics stack up, or to look for trends. This is probably where most marketers currently spend a lot of their time, but the other three uses of metrics will provide greater benefits to your program.

Metrics: Open rate, click rate, forward/share rate, unsubscribe rate, bounce rate, conversion rate, etc.

4. Company Goals

Use: These metrics measure how your email program is delivering against your overall marketing and company goals. Of the four strategies listed here, this is the one that will best help you demonstrate email’s value to your company.

Metrics: Revenue, cost savings/improved margins, share of wallet, customer retention, leads generated, etc.

Think Beyond Email

 For email to grab increased management mindshare and resources, marketers need to think outside of the box and beyond the purview of opens and clicks. Think real business impact and helping solve some of your company’s most-strategic issues.

Work with other departments to collect data that measures email’s impact. For example, email can reduce call-center expenses by providing educational content, FAQs, operating instructions, contact information and procedures, payment reminders and other information, all of which can reduce your customers’ need to call support for help.

When you expand your measurement horizon beyond benchmarking to include diagnostics, actionable insights and progress toward business goals, and when you work with other departments to measure impact and influence, you get a real sense of your email program’s performance, which you can communicate to your senior management. That’s your best possible defense for your marketing resources.

by Loren McDonald
Loren McDonald is vice president of industry relations for Silverpop, a leading provider of engagement marketing solutions for both BtoC and BtoB marketers.
Courtesy of http://www.mediapost.com