It has been proven time after time that email is one of the most important tools for marketing your products/services on the web. Email marketing is also the #1 method to grow your influence and build a relationship with your target audience.
No matter what business you are in or what type of products/services you sell, you can always use email to bump up those sales numbers. As long as you are not indulging in any dubious tactics, email marketing can work for you. It can help you take your business to the next level in a short period of time.
According to a study conducted by MarketingSherpa, a staggering 60% of marketers have experienced a positive return on investment with email marketing.
So what’s stopping you? If they can, why can’t you?
Even Direct Marketing Association (DMA) found out that over 65% of consumers have bought a product online, all thanks to an email marketing message they received.
As we can see, email happens to be the most trusted method of communication for the majority of consumers. However, keep in mind that email marketing can backfire if you don’t do it right.
How do you ensure your email marketing efforts pay off?
How can you make every email marketing campaign successful in its own right?
What is the best way to keep increasing your ROI with time?
The answer to these questions is to focus on the most important key performance indicators or email marketing KPIs.
By tracking the right metrics and knowing what’s not working, you can improve each campaign without making the same old mistakes. You can actually grow faster by taking the right steps at the right time.
However, before we go further, let’s first look into…
What Do We Really Mean by Email Marketing KPIs?
The email marketing world is vast. And it’s easy to get lost in it if you don’t follow the right directions. Email marketing KPIs are “leading indicators” that help you craft better email marketing campaigns. They guide you and show what exactly you should be doing to improve your chances of success.
In order to find out why an email marketing campaign worked or bombed, you need to analyze it from all angles. Which means no single metric can give you a clear idea.
It’s crucial that you…
- Choose the metrics that help you appropriately gauge the performance of your campaign.
- Measure a set of metrics and ensure that you maintain real balance.
So how do you go about finding email marketing KPIs that are suitable for your business? A lot of experts would say that it’s simple science. While others would tell you that you need to follow your gut.
Either way, you’ll have to take a step by step approach, and focus on those email marketing KPIs that are in line with your business goals.
Here’s the basic funnel of email marketing KPIs…
In the following article we will be looking into 9 important email marketing KPIs that your business needs to track, regardless of what industry you are in.
Metric #1: Email Delivery Rate
There’s no doubt that having a big email list of prospects/customers is always great for your business. Because you can reach out to them whenever you want at a fraction of cost.
However, there’s one catch: emailing a huge mailing list doesn’t necessarily mean all of your emails are delivered. While you should always strive to deliver your email to most of your list, you simply cannot aim for a 100% delivery rate.
One reason is that emails get dumped or changed more often than you think. So if your delivery rate is 75%, it means the remaining 25% of emails are unreachable or do not exist.Another common reason for emails not being delivered is due to a low “sender reputation score”, which is a score assigned by an Internet Service Provider to an email sender.
This score is calculated on a scale of 1 to 100. The higher your score is, the better your chance of hitting your recipient’s inbox. So make sure you have a good sender reputation.
Now, there will be times when some of your emails will end up in the spam/junk folder. This could be due to your email service provider or because you used some spam-trigger words in your email copy.
However, since these emails were technically delivered, you won’t count them under the “un-delivered” category. If you want, you can use the Inbox Placement Rate (IPR) as a KPI in order to see the percentage of emails that have actually reached the inbox.
Metric #2: Unique Open Rate (UOR)
Does every subscriber on your email list open all of your emails? The obvious answer is no. Your open rate denotes the number of your recipients who opened your email.
Since it shows how many people are actually interested in opening and reading your emails, it’s one of the most crucial email marketing KPIs to keep track of.
Having a good open rate can mean three things:
- You wrote a great subject line that enticed a considerable percentage of your email recipients — without getting lost in their crowded inbox.
- You have already built a great relationship with your subscribers and they know you well enough.
- You successfully managed to dodge the spam folder for most of your recipients because a low open rate may sometimes (not always) show that a high percentage of your emails are being sent to the junk folder.
Here are unique open rates from different industries…
However, you’ll have to take this metric with a pinch of salt. Because there are times when your emails may end up in the spam folder and still get opened by some of your recipients. And not to forget, sometimes your emails may automatically get opened by email clients such as Hotmail.
Last but not the least, try to build strong relationships with your email subscribers. Because when they know you more, they trust you more. And that’s exactly why the sender name is the strongest reason why people open emails. The more familiar the name is, the better.
Metric #3: Click-through Rate (CTR)
Email marketing is all about driving relevant traffic that ultimately converts into more business. Which is why click-through rate is one of the most appropriate email marketing KPIs to measure when it comes to understanding your subscribers and their motivations.
Having a favorable click-through rate is a clear sign that your recipients are not only opening your emails, but are also engaging with the content. It shows that your copy is resonating with them and is doing its job. These are the people that want to learn more about your brand, products, and services.
Of course, before you aim for a high click-through rate, you should aim for having a good deliverability and open rate. Because the more emails get delivered and opened, the higher the chance of someone clicking on your links.
Here’s how to calculate your CTR:In case your emails don’t contain links, you should either focus on the open rate or see how many people are responding back, a.k.a track the response rate.
Improving your email click-through rate isn’t rocket science. You can always have more people clicking on your links by:
- Keeping your email minimal and aim for the essentials
- Formatting all your emails and making them mobile-friendly
- Motivating your readers and giving them a reason to click
- Having a clear call to action and repeating it throughout the email copy
- Adding a video to make your email copy more interesting
You can figure out your click-through rate percentage by dividing the number of unique clicks on your email links with the amount of emails sent, times hundred.
Metric #4: Click-to-Open Rate (CTOR)
While it’s common to keep a tab on email marketing KPIs such as the open rate and click-through rate, few businesses focus on the click to open rate (CTOR).
The reason why this metric is helpful is because it actually lets you measure the overall effectiveness of your email marketing over a period of time.
Your email to open rate may differ from other businesses because it’s a metric that tends to fluctuate depending on how relevant your email content is. In general, a good CTOR hinges between 20% and 30%.
Getting a high percentage of email subscribers to open your emails is a challenge in itself. But what’s the use if people open your emails but do not click on the call-to-action link?
The click to open rate metric tells you two important things about your campaign:
- How relevant your email subject line is to your email copy. Because having a high open rate but low click-through rate indicates that your subject line worked, but it over-promised or wasn’t relevant enough. On the other hand, if your subject line performed poorly (you got low opens) but a high number of recipients clicked on your link, then your subject line wasn’t enticing enough.
- How interesting and relevant the content was to your subscribers. Because if your subject line is in sync with your email copy, and the layout is good, then you’ll have more number of people clicking through your call-to action links.
So yes, it does boil down to the kind of content you are sending to your email subscribers. By working on improving your content, you are indirectly working on improving your CTOR.
In order to improve your CTOR, you need to know how effective your content is. Try comparing the CTOR of your individual email campaigns with your average CTOR.
You can do this for all types of email you send out, such as your welcome email, transactional emails, autoresponder messages, newsletters, etc. With time, you can read into this data to make real improvements to your content and increase your CTOR.
Metric #5: Unsubscribe Rate
When it comes to email marketing KPIs, unsubscribe rate is one metric that should never be ignored because it is directly related to your email marketing activity.
Unsubscribe rate simply informs you of the number of recipients who clicked the ‘unsubscribe’ link in your email, but it’s more integral thank you think. Because the number of people who said that they do not want to receive your emails is equally important to the number of people who want to remain on your list.
You obviously want each of your email marketing campaigns to be profitable. But you cannot do it at the peril of your email subscribers. Ignoring the importance of delivering value to your subscribers is not right.
Your unsubscribe rate helps you get more out of your email marketing campaign by making sure you’re on the right path. It informs you of things like…
- How your email subscribers perceive or see your emails and if they are in sync with their interests
- How your content is performing and if it is actually delivering real value to your email list
- How you are doing in terms of getting the ‘email sending frequency’ right
- How soon new subscribers are getting bored with your content before unsubscribing
The formula for calculating your unsubscribe rate is pretty simple…
So what is a “healthy” unsubscribe rate, you ask? Try to keep it below 2%. And, to make sure you’re on track, the number of people unsubscribing should always be lower than new subscribers coming in.
The rule of thumb is to aim for a low unsubscribe rate, which means your subscribers are finding value in your emails and want to continue receiving your content. And yes, sudden increase in unsubscribe rate should be closely studied.
Do keep in mind that every person that clicks on the unsubscribe link is leaving voluntarily, and that’s a good thing. Why?
Because it brings down your email client costs and also helps you increase your engagement rate. Both of which in turn can improve email deliverability. Low engagement rates can tell an Internet service provider (ISP) that your email content isn’t good enough.
Metric #6: Spam Complaint Rate
Out of all the email marketing KPIs, the spam complaint rate is the scariest, for obvious reasons. People hitting the spam button for your emails is never a good thing. So you definitely want this metric to be as low as possible.
On the surface, people are just marking your email as spam. But if you look deeper, they’re actually complaining to their email service provider – and that is serious. As it can ultimately have a negative effect on your email deliverability.
If more and more people start reporting your email as spam, email service providers will begin to skip the inbox and directly push your emails to the junk folder. Which eventually affects your engagement metrics.
Now, the problem is, your emails can get into trouble even if they aren’t spammy in nature. So keeping track of this metric and lowering it is important. It starts with building trust with your email list, controlling your email frequency and using relevant, non-spammy looking subject lines.
Being an ethical email marketer, you may always strive to have a low spam complaint rate. But what if you still experience a high complaint rate? If you look closely, it could be because your subscribers are having a hard time leaving your list.
You should always make your unsubscribe link is highly visible. Because if people cannot find it, they’ll go for the spam button, which is right in front of them. Make it easy to leave, and your list will require little cleaning.
Metric #7: Bounce Rate
Bounce rate represents the percentage of total emails sent that were not delivered to the recipient.
This is how you calculate it…
Bounce rate helps you closely evaluate the deliverability of your emails. Having a higher bounce rate means that something went wrong with either…
- The email client
- The email message
If you’re not keeping an eye on the bounce rate, you’d be missing out on the actual numbers of your email marketing campaign. You must add it to your “must track” KPIs if you haven’t yet.
There are basically two kinds of bounces that you need to track:
- Soft Bounces
Soft bounces mainly happen due to short-term, superficial problems that get resolved in due time. For example, an email sent to a valid email address may bounce back because the inbox was full or there was some technical issue with their server.
Even though in some cases the recipients server will hold and deliver the emails later on, It’s always a good idea to re-send soft bounced emails. Since these are good email addresses, you do not want to miss them.
- Hard Bounces
Hard bounces on the other hand happen because of an invalid or non-existent email address. There is zero chance of delivering emails to such addresses, which essentially makes them dead. The reason for a bad email address could range from a job change to a typo from your end.
Every email list owner needs to clean their list of bad email addresses on a regular basis. If you are experiencing a high bounce rate, it simply means that you’re not taking care of your list.
Also, you need to stop people who use dummy email addresses by adding a double opt-in form. Single opt-in doesn’t help you verify an email address whereas a double opt-in does.
Hard bounce email addresses may look harmless, but they’re not. You should waste no time in removing hard bounce email addresses from your list mainly because it affects your reputation with the ISPs. Even if you’re not a spammer, you will look like one in the eyes of your ISP if you get a high number of high bounce rates.
Metric #8: List Growth Rate
When you’re leveraging email marketing, how can you not take list growth into consideration? Of all the email marketing KPIs, email list growth actually tells you whether you’re progressing or not.
Because if your email list is growing, you can continue doing what you’re doing. And if it’s shrinking, you may want to check the source of the problem. Either way, you won’t know what’s happening unless you track your list growth rate.
Here’s how you determine your list growth rate…Now, the obvious reason to grow your email list is to reach out to a bigger audience and get more out of your email marketing. But that shouldn’t be the sole reason.
You need to focus on list growth also because you will consistently lose subscribers over the year, which need to be replaced by new ones. When you have a steady list growth rate, your list will be healthy enough to make your email marketing campaigns successful.
One more thing, as you focus on list growth rate, you should try getting targeted, quality subscribers. Make quality your priority, not quantity. Or else there’s no use growing your list.
Metric #9: Conversion Rate
Conversion rate holds importance over all other email marketing KPIs simply because it means business. Your conversion rate denotes the number of email recipients who clicked on the call-to-action link within your email copy and took the required action.
Different email marketing campaigns have different goals. Depending on what you want to achieve from your email campaign, conversion for you might be…
- Registering for a particular event
- Filling out a lead generation form or contact form
- Signing up for a demo of a product/service
- Downloading a free software tool or a piece of content
- Buying a product or signing up for a free trial
Once your email subscribers open your email, the next and the most important goal is to convert them by making them take action that you want them to take. So if you’re running a webinar and send your email list a link to join it, every recipient that clicks on it and joins the webinar will count as a conversion.
The reason why conversion rate happens to be one of the most critical email marketing KPIs is because it tells you how close you are to reach your main business goal.
Your call to action (that leads to a conversion) is naturally connected to what you want to achieve with your email marketing, so getting more conversions has a direct impact on your return on investment.
Start Tracking Your Email Marketing KPIs
Our goal today was to give you the most in-depth explanation of email marketing KPIs as we possibly could. Hopefully you took something away from it.
We love helping small business owners like yourself, so if you’d like to take your email marketing efforts a step further, that’s what we’re here for. Give us a call or contact us here to speak with an email marketing experrt today about how we can grow your list, open rates, and conversions!