My 8 Favorite Metrics for Judging the Health of an Email-Marketing Program

How healthy is your email-marketing program? In this month’s feature article, I share my favorite email-marketing metrics—as well as several industry benchmarks—to help you answer that question.

How to Gauge the Major Areas of Your Email Program
The metrics that I’ve listed here focus on four main areas that define the health of an email-marketing program:

  • The strength of your email list.
  • The effectiveness of the factors that drive open rate (e.g., subject line, from line, preview pane).
  • The relevance of the content to your audience.
  • The extent to which you’ve met your specific results.

Let’s take a look at the eight metrics that I consider the most important for gauging how each of these components of your email-marketing program is performing:

Strength of your email list
This first set of metrics helps you understand the true strength of your email list.

  1. Bounce Rate
    This metric measures the portion of recipients who didn’t receive your email message. The bounce rate is further broken down into “soft” bounce rates and “hard” bounce rates. Typically caused by such issues as network problems or a full mailbox, soft bounces are likely temporary and eventually will be delivered. Hard bounces, however, will never be delivered. They’re returned to the email server because the email address is invalid or doesn’t exist. Typos in email addresses are frequently the cause of hard bounces, for example, indicating that your list needs some cleaning up.

    Bounce Rate = # Hard Bounces / List Size

    What’s an acceptable bounce rate? According to MailerMailer’s email-marketing metrics report for 2009, bounce rates vary by industry, ranging from .9% in banking to 4.3% in real estate. At FulcrumTech, we like to see bounce rates lower than 1% for our clients.

  2. Unsubscribe Rate
    The unsubscribe rate measures the number of people who “opt out” of your email list. In addition to measuring the quality of the subscribers on your list, it’s also a good indicator of how relevant your audience finds your content.

    Unsubscribe Rate = # of Unsubscribes / List Size

    At FulcrumTech, we believe unsubscribe rates higher than 1% indicate that there’s a problem that needs to be identified and addressed.

  3. List Growth Rate
    This metric measures how rapidly your list is growing. To determine your list growth rate, subtract the number of unsubscribes and bounces from the number of new subscribers and divide that number by the previous number of subscribers on your list.

    List Growth Rate = (New Subscribers – Unsubscribers – Hard Bounces) / List Size

    A steady, positive list growth rate helps keep your list healthy and contributes to the overall success of your email-marketing program. As you establish your target growth rate, keep in mind that building your list based on quality versus quantity is more important.

  4. Inactive User Rate
    The inactive user rate measures the number of recipients on your email list who haven’t opened your emails over a period that you believe indicates they’ll likely never open again (e.g., 6 months for a monthly newsletter list). In addition to indicating whether your content is keeping your audience’s interest, this metric is also important because it can impact your email deliverability. Sending to people who repeatedly don’t open your emails can lower your email reputation and decrease your inbox delivery rates.

    Number of Subscribers Who Haven’t Opened Your Emails for > 6 Months / Total Number of Subscribers

    If you determine that you have a high number of inactive users on your email list, you may need to take action to help re-engage them. For more information, check out a previous NewsLever article on this subject — “5 Steps for Re-Engaging the Inactive Users on Your Email List.”

Factors that drive open rate
The following metrics help you understand how well your email efforts are at getting someone to open the email, the first level of engagement.

  1. Unique Open Rate
    This metric measures the number of people who open an email message. Are your subject lines effective? Is your message resonating with your audience? That’s what this metric helps to determine.

    Open Rate = Number of Email Messages Opened / Total Number of Email Messages Sent

    MailerMailer’s email-marketing research found the average open rate for 2009 was 11.8%. Open rates varied widely by industry, however, with some sectors achieving more than 20% and other less than 10%. Banking (8.2%) and entertainment (9.2%) were among the sectors with the lowest open rates, while religious (21.0%) and agriculture (25.3%) had the highest open rates.

Relevance of the content to your audience
These next metrics help you understand how well your content matches your audience’s needs and interests. If you’re not taking advantage of the many opportunities to tailor your messages and make them relevant, these next metrics will make it clear.

  1. Click-Through Rate
    The click-through rate measures how many times the links in your email message were clicked. The more relevant your content and marketing messages are to your audience, the higher the click-through rate. If your open rates are high and your click-through rates are low, you’re doing a great job of generating interest in your emails, but the content is not resonating.

    Click-Through Rate = Total Number of Unique Clicks / Number of Links in the Email x Total Recipients

    According to MailerMailer’s email-marketing metrics research, the click-through rate also varies by industry. For example, in 2009, the religious sector achieved rates of more than 10%, while the entertainment and restaurant industries had click-through rates of less than 1%. The average click-through rate across all industries for 2009 was 2.1%

  2. Click to Open Rate
    This metric is the ratio of unique clicks as a percentage to the unique opens. It measures how effective your message is in motivating recipients to click a link once they’ve opened your message.

    Click to Open Rate = Number of Unique Clicks / Unique Number of Opens

    The click to open rate is valuable for evaluating the effectiveness of the content of your messages and your offers, as well as your calls to action. We like to see click to open rates in the range of at least 25% to 30% for our clients at FulcrumTech. Depending upon the level of relevance and customization, however, we’ve seen rates of 85% or more.

The extent to which you’ve met your specific results
The final metrics need to be partially defined by you. What are you trying to achieve with your email-marketing efforts? For example, if you’re selling something, it will be your revenue targets. If you’re looking for leads, it’s the number of qualified leads. Whatever you define, it should be measurable.

  1. Conversion Rate
    Are you getting the results you’re looking for? That’s what this key metric tells you.
    The conversion rate tells you how many of the people you sent the email to actually clicked all the way through to complete the desired conversion – such as making a purchase, completing a survey, or signing up for your e-newsletter.

    Conversion Rate = Number of People Who Converted / Total Number of Recipients

If you’re looking to increase your conversion rates and improve the overall health of your email-marketing program, contact us or give us a call today at 215-489-9336. Our team has the expertise to look at the individual metrics and determine what areas of your email-marketing program need improvement.

Email-Marketing Industry Benchmarks

Check out the following statistics for an idea of email-marketing benchmarks and trends:

  • Benchmarks:
    • Average Open Rate – 22.0%
    • Average Click-Through Rate – 5.9%.

    Epsilon Quarter 4 2009 Email Trends and Benchmark (Jan 2010)

  • Marketing emails using a house list are experiencing, on average:
    • Open rates of almost 20%
    • Click-through rates of 6.64%
    • Conversion rates of 1.73%
    • Bounce rates of 3.72%
    • Unsubscribe rates of 0.77%.

    Direct Marketing Association (2010)

  • To track campaign success:
    • 72% of marketers rely on clicks
    • 59.2% of marketers rely on conversion rate
    • 58.4% of marketers rely on impressions.

    Datran Media “Marketing and Media Survey” (2010)

Source: EmailStatCenter.com

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