If you track nothing else, be sure to track these numbers to find out how effective your email campaigns are.
There are half a dozen key metrics that you should keep track of to determine how well your email marketing messages are working and how much money you’re making from them.
A bounce is an email that doesn’t get delivered to the recipient because the email address you sent it to isn’t valid or active. The cause can be a typo in the email address, a change in the recipient’s choice of internet service provider (ISP), or closing down a domain, server or email account.
On a well-maintained email list, the bounce rate should be small — ideally, about one percent or less. MailChimp, a large email services provider, tracked millions of emails and found the typical bounce rate was around a little under one percent. A bounce rate of eight percent or above means either the list is old and outdated, or you have a quality problem with the list or possibly your method of email distribution.
Every time you send an email to your opt-in list, some of the people on the list will decide they no longer want to get email from you and will opt out or unsubscribe, which simply means they’ll ask you to remove their name and email address from your list and send no more emails to them. For this reason, unless you’re constantly and proactively building your elist, these opt-outs can cause the size of your elist to shrink by as much as 25 to 30 percent a year.
So, in addition to continually building your opt-in elist, you must work to reduce your opt-out or unsubscribe rate, defined as the percentage of your subscribers who opt out of the list each time you send an email to it. Ideally, your opt-out rate should be 0.1 percent or below. That means if you send an email blast to your list of 5,000 subscribers, a maximum of five and preferably fewer will opt out from that single email.
The open rate is the percentage of people receiving your email that click on and open it. According to Constant Contact, open rates can range from five percent to 20 percent, with the average being around 10 percent to 15 percent. Mine varies from eight percent to 25 percent depending on which of my lists I’m sending to.
Some marketers feel the open rate is very important. For each email I send out, I’m much more concerned about the next three metrics: clickthrough rate, conversion rate and gross revenues.
The clickthrough rate (CTR) is the percentage of people receiving your email marketing message who respond to your offer by clicking the hyperlink to reach your sales page for more details and possibly to order. Typical CTRs range from one percent to five percent and sometimes more for each email blast. And a study from Marketo found that text emails on average produce 17 percent higher clickthrough rates than HTML emails.
The conversion rate is the number of prospects who reach or land on your sales page and accept the offer, whether it’s to download a free special report, register for a webinar or buy a product.
Depending on whether you’re trying to generate a lead with a free offer or sell a product, the conversion rate on a landing page can be anywhere from one percent to as high as 80 percent or more. If you’re selling a $29 ebook and get a five percent conversion rate, then for every 100 people who clicked on your email hyperlink and went to the landing page, five bought the product and 95 did not.
The gross revenues are determined by four factors: the size of your elist, the price of your product, the clickthrough rate, and the conversion rate. Let’s say your elist currently has 10,000 names on it and you’re selling them a $39 product; for today, the list size and product price are both fixed.
You could increase your gross sales by improving either the CTR or the conversion rate, but if you boost both, it has a multiplying effect that can take your revenues from modest to spectacular. For instance, if you send an email to a list of 10,000 subscribers with an offer of a $39 product, when the CTR and conversion rate are each one percent, we get only 10 orders for $390 revenues on the email.
If we can boost either CTR or conversion tenfold from one percent to 10 percent, our sales from the email go from $390 to a respectable $3,900. But, if we boost both clickthrough and conversion from one percent to 10 percent each, we multiply our results a hundredfold and make a whopping $39,000 in sales from a single email.