dotdigital’s Client Services Director, Skip Fidura, takes time out to help you understand just what email is costing – or generating – for your business. This is the first in a series of blogs looking at helping calculate the lifetime value of your email marketing programme.
In 2010, we wrote a blog on ‘5 Steps to Ensure Spot-On ROI Tracking’, which looked at how even though overall UK marketing spend fell in the final 3 months of 2009, it was expected to increase in 2010, including email marketing, for the first time since early 2007.
Well, four years later, the latest research from the DMA’s annual National client email report found that “more than half of UK client-side email marketers anticipate increasing their 2014 email expenditure, after ROI for the channel reached 2,500% in 2013. (Source)
And according to MarketingCharts, “8 in 10 US marketers who responded to an Adobe survey agree that there is more pressure to show return on investment on marketing spend”.
So, with that in mind, here are some thoughts on how you should be tracking and measuring the ROI from your email marketing and how you can improve it.
Like any other marketing activity, you need to set goals for your email marketing that are specific, measurable, achievable, realistic and timed. These goals should go deeper than the process metrics like opens and clicks that are easy to track. They should be based on the performance metrics that are true indicators of success for your business. You can then work backwards to see how the process metrics correlate and identify which are the best indicators of true success.
Track your customer journeys – from email through to purchase
Site tracking enriches your data and your understanding of your contact’s engagement with your site.
What to do with this ROI information?
Split testing on ROI as a metric is extremely powerful as it enables you to increase the effectiveness of your campaign.
Most ESPs will give you the power to test subject lines, content, friendly from names and from addresses for open or click performance. While these will give you some insight, most of us make no money from these process metrics and we need to be looking at these tests in the context of sales and ROI, whether that is units sold, revenue, AOV or order frequency.
How to improve your ROI from email marketing
Once you have a better understanding of your email marketing’s performance, you can benchmark your metrics against previous periods and start looking at ways to improve it going forward. To start, have a look at these key factors:
- Segment your data to send relevant emails
- Use marketing automation to be proactively reactive. In other words, use automation to immediately react to strong buying idicators with programs such as abandoned browse, abandoned basket and thank you messages with crosssell up sell offers. Split test your emails to see what works best for you, including subject lines, friendly from name, creative and from address
- Test different landing pages and see what resonates with your audience best
Tools in dotdigital Engagement Cloud that make it happen
For a while now in dotMailer, you can set up site and ROI tracking. If you haven’t already, find out how to here
ROI Split Testing
A new feature to dotdigital’s split testing functionality enables you to measure winning split test campaigns on ROI data, not just the amount of clicks and opens. If you’re using our site and ROI tracking, you can start using this immediately. Read more in our blog post and forum.
Is there another way?
By now you might be thinking this assumes all of my email marketing is done in a vacuum – that none of my other marketing influences this behavior. Attribution could be the topic of a whole book, not to mention another post. In short you are correct, as this uses last touch attribution. In our experience, it is not a perfect system but it is directionally accurate. In some cases email gets the credit at the expense of other channels but this balances out with those situations where the other channels get credit at the expense of email.
If you are not comfortable with this, there is another way to look at it. Instead of focusing on the value driven by a campaign, turn the question around to look at the value of your email list as an asset to the business. This can be measured simply by taking the revenue generated by those customers for whom you have an email address, which gives you the value of the list. You then divide this value by the number of addresses, which gives the value of each address.