Email marketing isn’t easy.
It starts with building a subscriber list, which can be daunting if your business is new. When you start your first campaign, you’ll need to perform lots of research and implement a strategy before ever creating your emails.
Your next step is analyzing your KPIs for email marketing to determine effectiveness. Based on the results, you might need to tweak your strategy for your next campaign or make broader adjustments.
How do you measure the success of your email marketing campaigns? By defining the goals of your marketing strategy and analyzing relevant marketing KPIs. Let’s examine six KPIs that can tell you whether you’ve realized your objectives.
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Click-Through Rate
Think of the click-through rate (CTR) as the bread and butter of email marketing. It’s the number-one KPI used to measure the results of an email campaign. If you ask any email marketer what metrics are most important to them, the CTR will probably be their first answer.
CTR measures how many people opened your email and clicked on a link in its contents. The more clicks you get, the higher your CTR will be.
CTR Formula: (total clicks/total delivered emails) x 100
Example: 250 total clicks/1,000 delivered emails x 100 = 25% CTR
It’s possible to skew the results of the CTR if some users click the same link multiple times. If you suspect some users may click on a link repeatedly, consider replacing total clicks with unique clicks. A unique click will count only the initial click on a link, not subsequent ones.
How do you know if your CTR results are favorable? Simple: compare them to prior CTRs for your other email marketing campaigns.
You can also benchmark them against the average CTR for your market sector. If your current CTR is higher, your campaign was effective. If it’s lower, consider taking a different approach.
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Conversion Rate
The conversion rate is one of the most critical KPIs for email marketing campaigns.
The conversion rate is your money-making statistic. It measures how many people took action after reading your email, such as purchasing merchandise or filling out a lead generation form — in other words, the number of readers you converted into customers or viable prospects.
Conversion rate is the true measurement of the effectiveness of your campaign. It connects the dots between opening an email and following through with its intent.
For example, consider an email with a message urging the recipient to purchase a specific product on sale for 50% off. You gain a conversion every time a customer clicks on the link and buys the product. There’s no conversion if the client doesn’t make a purchase.
As with CTR, a higher conversion rate is better. You’ll compare the results with your other campaigns to determine your campaign’s success.
Conversion Rate Formula: (number of clients who completed a specific action / total delivered emails) x 100
Example: (100 clients who took the specific action / 5,000 delivered emails) x 100 = 2% conversion rate
Statistics on email marketing show that conversion rates differ significantly across industry sectors. For instance, the conversion rate in the industrial sector is 7.4%, while emails in the automotive industry have a conversion rate of just 0.8%.
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Unsubscribe Rate
Measuring the number of people who ask to unsubscribe from your emails is critical.
In an ideal world, subscribers would open every email you send and remain your faithful followers forever. However, maintaining an unsubscribe rate of 0% is simply unrealistic. Many people will ask to unsubscribe from your list for many reasons.
Your goal is to keep unsubscribers to a minimum. If you notice an increasing unsubscribe rate, there may be something wrong with your email marketing strategy. Here are a few reasons clients might opt out of your emails:
- Your content doesn’t relate to their needs or interests
- You aren’t optimizing your emails for viewing on smartphones
- You send too many emails
Fortunately, there are a few remedies that can help lower your unsubscribe rate.
Start by examining your email’s content and comparing it to your target audience. If your content strays too far from your target client’s interests, you need to realign it. For instance, if you run a financial services business and your last few emails have discussed the importance of taking regular vacations, you’re way off-topic.
You should also examine the frequency of your emails. If you send several emails daily to the same subscribers, you’re likely overwhelming them. Try scaling back to once or twice per week.
Unsubscribe Rate Formula: (number of recipients who unsubscribed / total subscribers) x 100
Example: (125 recipients who unsubscribed / 10,000 total subscribers) x 100 = 1.25% unsubscribe rate
According to statistics on email marketing, the average unsubscribe rate is 0.17%. However, unsubscribe rates of up to 2% are standard. If your rate reaches higher than that regularly, it’s time to overhaul your strategy.
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Bounce Rate
Your bounce rate refers to the percentage of emails that don’t reach your intended recipient. All email marketing software platforms will alert you to undelivered emails. You can use the information to calculate your bounce rate and manage your subscriber list.
Ideally, your bounce rate should be as close to 0% as possible. Internet service providers (ISPs) pay careful attention to bounce rates. If they note that a sender has high bounce rates, they can lower your reputation with email providers, which can result in more of your emails going to spam.
There are two types of bounces: hard bounces and soft bounces.
A hard bounce occurs when an email is invalid. The subscriber’s account may be closed, or the email they provided you was incorrect. You’ll want to remove hard bounces from your list immediately.
A soft bounce occurs when there’s a temporary email delivery issue. For instance, the email provider may have technical difficulties, or the subscriber’s email inbox might be full. Once the problem resolves, the provider will deliver the email.
Bounce Rate Formula: (total bounced emails / total emails sent) x 100
Example: (50 bounced emails / 1,000 emails sent) x 100 = 5% bounce rate
According to available statistics, email marketing hard bounce rates average 0.40%, while soft bounce rates average 0.58% across all industries.
Delete subscribers who can’t receive your emails to improve your bounce rates. Give soft bounces a few chances before removing them, but promptly remove all hard bounces.
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Email List Growth Rate
As your company grows, you’ll want to see an increase in the number of subscribers who sign up to receive email communications from you. A steadily increasing email list growth rate is preferable. Occasionally, significant growth rate jumps in your email list may occur, such as during a special promotion or event.
If you see negative growth in your email list, it might indicate a problem or be normal for your organization. Here are a few reasons you might experience a falling growth rate:
- You perform a significant cleanup of inactive email subscribers
- Your email sign-up initiatives need some work
- You don’t have any current marketing campaigns in place to grow your email list
To reignite your email list growth rate, you’ll need to implement a new campaign to encourage sign-ups. A growth campaign will look different for every business; some companies find they can increase their subscribers quickly with in-person promotions, while online businesses may need to deploy other tactics.
List Growth Rate Formula: ([number of new subscribers) – (number of unsubscribes + spam complaints)] / total number of subscribers on list]) x 100
Example: ([600 new subscribers) – (50 unsubscribes and spam complaints)] / 5,000 subscribers on list]) x 100 = 11% growth rate
List growth will vary depending on your industry, the current growth phase of your business, and your strategies to attract new subscribers.
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Total ROI of Email Campaigns
One of the most essential KPIs for email marketing is your ROI. The ROI represents the total revenue you earned from your emails minus the campaign cost. You’ll calculate ROI on a percentage basis. The higher your ROI, the better.
A high ROI indicates your email campaign is effective and worth the spend. A low ROI suggests that you’re spending too much with too little in return. If your ROI is low, you might consider concentrating more of your marketing budget on a more effective channel or making major adjustments to your emails.
Total ROI Formula: [(additional revenue from emails – cost of email campaign) / cost of email campaign] x 100
Example: [($5,000 additional revenue from emails – $500 cost of email campaign) / $500 cost of email campaign] x 100 = 900% total ROI
Based on recent statistics, email marketing has an average ROI of $36 for every dollar spent on a campaign.
Make Sure You’re Tracking KPIs for Email Marketing Campaigns
If you’ve built a robust subscriber list and regularly use email marketing to connect with your clients, you’ll want to ensure that your campaigns meet their objectives. Whether you’re using email to build brand loyalty or as a significant revenue driver, incorporating these key KPIs for email marketing into your metrics can pay off.
