Just like a Sailor requires a compass for direction in sailing so does a business person require Key Performance Indicators (KPIs).
This is more important to email marketing where 81% of small businesses rely on email marketing yet according to 99Firms only about 17.75% of all the click-through emails lead to a purchase. This is a clear indicator of inefficiencies in the sector.
What are KPIs?
Talking about Key Performance Indicators we refer to leading indicators that help measure, analyze, and optimize your email marketing (or any other) campaigns into the proper way of doing (proper) things for the success of those indicators.
To identify crucial email marketing Key Performance Indicators is art and science rolled into one.
And hey, you cannot measure the success of your email marketing campaign by the use of a single metric. Instead, the key is to focus on the most important. And in this article, crucial email marketing metrics include the following…
Crucial Email Marketing KPIs
Is the percentage of email recipients who complete a desired action like clicking on a link to purchase a service or a product.
To calculate this rate, divide the number of recipients who completed the desired action by the total number of delivered emails and then multiply by 100.
Ideally, if a recipient clicks through on your email, the next step is to make him or her use your offer so that if your offer is for an individual to download an e-book for free, then anyone who goes ahead to download the e-book can safely be regarded as a conversion.
This metric is very helpful especially if your goal is to generate leads because it shows you how to analyze email marketing success through your newsletters in generating leads and prospects.
Click-Through Rate (CTR) or CTOR
CTR refers to the percentage of email recipients who click on links therein a given email.
It is calculated the following way: the total number of clicks / number of delivered emails x 100.
This metric allows you to calculate with ease, the performance of every email that you send thereby letting you know directly, how many people are engaging and are therefore possibly interested in learning more about your offer.
CTOR is a Click-to-Open Rate, and it is especially widely used in email marketing .
Learn more about it in our CTOR guide
List Growth Rate
This is one of your email marketing analytics which enables you to know the rate at which your email list is growing and to calculate it, take the number of new subscribers – (the sum of those who have unsubscribed and those who have complained about the email or simply flagged it as spam) / the total number of email addresses on your list x 100.
Apart from Call-To-Action metrics, it is a good business practice to monitor whether the list of your audiences is growing or shrinking as you always seek to ensure growth.
Statistics out there show that there is a natural decay of email marketing lists and that expiration is at an unprecedented rate of 22.5% every year.
Overall Return On Investment (ROI)
The overall return on investment (ROI) is total revenue divided by total expenditure.
It is calculated this way: (Amount in additional Sales made – Amount invested in the campaign) / (Amount invested in the campaign) x 100.
The above formula is only basic for the calculation of ROI but there are several other ways depending on the type of business you may be engaged in. Additionally, it is important to point out that determining the overall ROI of your email marketing is highly recommended whereby you should assign different values to a variety of leads based on how likely they may generate revenue for the company.
Is the percentage of total emails sent that could not successfully be delivered to the inbox of your recipient.
The formula to calculate it is simple. Divide the total number of bounced emails by the number of emails sent out and multiply by 100.
It should be clarified at this point in time that there are bounces that are classified as ‘Hard’ while others are classified as ‘Soft’ bounces.
Soft bounces result from temporary problems such as issues with the server of your recipient or a full inbox. On the other hand, hard bounces are normally as a result of non-existent, closed, or invalid email addresses and should thus be removed from your list to safeguard your reputation with Internet Service Providers.
Although a bounce rate does not have a direct link to your goals, you are still advised to be keen on the same so as to ensure that there are no issues with your emails and thus save your company from being regarded as a spammer which can really be costly for genuine emails.
This is the percentage of email recipients that open a given email sent. According to Forbes, a good open rate you should aim for should be about 20-30% opening rate.
The Open rate counts for nothing if it is accompanied by Click-Through Rate because the opening an email gets meaning if the recipient gets to see images that are embedded in the message and remember, quite a sizeable number of email users have ‘image-blocking’ functionalities enabled. This means that even if they open the email they won’t be part of your open rate statistics thereby rendering this metric inaccurate and unreliable for that matter.
Nevertheless, there is still some value in the open rate metric, especially when used as a comparative one between weeks.
Refers to the percentage of email recipients who unsubscribe from your send list after opening a given email.
Many subscribers who are fed up with receiving email messages from your brand may not even bother to go through the formal process of unsubscribing. Instead, they may just choose to stop opening, reading, and clicking on your email messages.
This is one reason why it is much more reliable to gauge email marketing efficiency by using Click-Through-Rates and Conversion Rates as Key Performance Indicators of email marketing. Through these two metrics, you can easily identify unengaged subscribers to remove them at some point.
Although the unsubscribe rate is also not directly related to your goals, it is nonetheless helpful for determining your overall list growth rate.
Email Sharing or Forwarding Rate
Is the percentage of recipients who clicked on a ‘Share this’ button to forward email content to friends or to post on social media.
You can calculate this as follows;
(Number of clicks on a share and/or forward button divide by the total number of delivered emails) multiply by 100.
This metric may seem insignificant at face value but it is one of the metrics to keep tracking anyway because this how you also generate new contacts. Additionally, email sharing or forwarding helps you to discover the type of offers that are mostly shared thereby giving insight for your future email campaigns.
Much as the above Key Performance Indicators (KPIs) may be crucial on how to measure email marketing efficiency, it must be appreciated that goals for email marketing may differ from one company to another.
Most importantly, it must be clear from the outset, what it is that you intend to achieve with your email marketing campaigns before you embark on or continue to send and measure the effectiveness of your campaign.
To start your email marketing adventure, contact us and order the customized mailing list of your target audience