Learn how to measure response rates to e-mail marketing.
These days it's becoming all but impossible for the average marketer to figure out what results to expect from e-mail marketing efforts.
Not only are there still no widely accepted standards for return on investment (ROI) measurement, but the industry is still so far from maturity that the results we see today don't give us a clear indication of what we should expect tomorrow.
Marketers themselves exacerbate the problem by highlighting only the most successful of their efforts. Thus, we have all heard about response rates of up to 65 percent and have been told to expect average response rates between 5 percent and 10 percent.
But what do these numbers mean, and which results really matter?
Know the Lingo
Let's start by laying a little groundwork regarding terminology. Some of the most common terms you'll hear bandied around include:
Bounce rate. This measures percentage of unsuccessful deliveries: In other words, how many of the messages you tried to deliver that failed to reach their destination.
Click-through rate. This is the number of recipients who, as a result of receiving an e-mail, clicked through on one or more links within the message. This can be further broken down to provide information about how many individual recipients clicked through on particular links or clicked more than once on a given link.
View rate. This is a term used loosely to describe the number of recipients who opened an e-mail message in HTML format. In reality, this only indicates how many recipients were using HTML-capable e-mail software and either opened the message or began to load it in their message preview window.
Keep in mind that in most cases, you will not be able to differentiate between those who read the e-mail and those who saw it begin to load then deleted it. Rich media e-mail providers can usually provide accurate information about how many times the rich media presentation was viewed, both in part and in full.
Referral rate. This is the number of times a message in a viral marketing campaign is forwarded by a recipient to friends and colleagues.
Opt-out rate. This is the number of people who choose to opt out of or unsubscribe from future messages.
Clearly, all of the measurements provide the marketer with good intelligence.
For example, a low click-through rate and a correspondingly high unsubscribe rate give a pretty clear indication that the program is not providing value.
Likewise, a high bounce rate tells you that there is probably a problem with the quality of your e-mail address list.
A high referral rate is a good indication that your message has hit home with its offer, content or both.
But How Do I Apply It?
I know you won't let me off the hook without some hard numbers to go along with all of the above. So for the sake of guidance only, here's what you should expect.
Bounce rates should be below 2 percent to 3 percent for a list of reasonable quality.
Opt-out rates need to be maintained well below 5 percent, too, for the reasons already discussed.
Click-through rates will range from 0.5 percent to 30 percent.
Third-party opt-in lists used for acquisition purposes will generate click-through rates of 3 percent and lower. Although these lists generated rates above 10 percent this time last year, the novelty of e-mail is quickly wearing thin.
In the middle, at 5 percent to 10 percent, are in-house lists used for retention marketing to existing customers.
At the high end, at 10 percent or more, are rich media e-mails and well-targeted or incentive-bearing retention and loyalty campaigns.
Cut to the Chase
These response numbers can act as a guide, but don't focus on them so much that you forget the most important metric: incremental sales. All the subscriptions, click-throughs, and pass-alongs in the world are of no value unless they make a positive impact on your bottom line.
And how do you measure this? It should be simple. After all, you just need to measure how many sales were generated by your e-mail campaign.
But the reality is few organizations have integrated their various marketing and sales initiatives well enough to do this effectively.
You can start by customizing each e-mail message sent with a unique user ID code, which can be used at point of sale, on the Web, or by mail to fulfill an offer. Or, with the most capable e-mail marketing systems, you can track individual sales driven by e-mail to your e-commerce site.
Does this sound suspiciously like what you've been doing for many years already? Well, it is. But now you also have a growing armory of new e-mail-specific tools at your disposal.
However, don't let the novelty of any new technology or its seemingly astonishing response rates seduce you.
Remember, the only measure that matters is the bottom line. After all, the only true purpose of marketing is to drive profit.