Profiting from Your Email Conversion Data
By: Bryan St. Amant
For marketing professionals, an email list is like fruit on the vine. Earlier we talked about building our lists, giving us the raw material we need to produce email magic. But like our vineyards, lists represent only potential and it's our job to maximize conversion of this potential into sales and marketing results.
Fortunately, there's no better medium to optimize than email marketing. Fast turnaround times and easily measurable results mean we can quickly learn which techniques produce the best returns. And if we carefully maximize the conversion of our email programs we can consistently produce significantly more profit than un-optimized campaigns.
To capture this profit potential and make the most from your harvest of email names, you'll need to understand and act on your email conversion metrics. That's why this month's wine marketing tip is: Profiting from Your Email Conversion Data.
To see how email conversion affects the profitability of your campaigns, it helps to look at a basic profit formula for email marketing:
Email Profitability = [List Size * Conversion Efficiency]/Email Costs
While list size definitely drives top-line revenue, list acquisition can often be costly enough to offset short-term profitability.
For most campaigns, conversion efficiency has the same impact on top-line revenue as list size, but a unique characteristic of email is that conversion rates can often be increased significantly with little or no added cost. If your focus is maximizing profit or ROI, conversion is the place you should probably start.
So what data should you collect to monitor your conversion process?
Much has been written on this topic and the fact is you can probably collect more data on email marketing than any other direct response medium. But as with many endeavors, we find it helps to start with the basics.
Think about the steps your email goes through before it "converts" to a sale. First, it has to successfully reach your prospects. Then it has to get opened. Once opened, prospects will need to click through to a landing page (online store, lead form, or registration site). And before you can claim victory, customers have to complete the sale, submit the form, or take some other action you desire.
The basic data you need to monitor this process are:
# emails opened (measurable for HTML only)
# click-thrus to landing page
# sales/leads converted from landing page
The good news is that just about any email marketing software/service will collect these results for you, if you request them. To do it yourself, you may have to use tracking URLs to measure click-thrus and conversion, and other web tricks to measure emails opened, but with a little effort you should be able to collect all the data you need to analyze and optimize your email conversion rate.
Once you collect the data, how do you handle it?
Note that different metrics report different facts about conversion. Some numbers tell you how many people made it through a certain step, while others tell you how many were lost. So to start, it helps to transform this raw data into a consistent format.
It's important to see exactly where you're losing sales, so we recommend calculating the percentage of names lost at each step in the conversion process. A typical chart might look something like this:
Conversion Efficiency Report - Sample Campaign
raw data # lost # remaining % loss
# mailed 1000 0 1000
# bounced 137 137 863 13.70%
# unsubscribed 3 3 860 0.35%
# opened 326 534 326 62.09%
# click-thrus 212 114 212 34.97%
# conversions 75 137 75 64.62%
Now that you have the data, what do you do with it?
At first, the best answer may be nothing. Unless you already have typical conversion data for your customers, you may want collect these numbers for a couple of campaigns to learn what's normal for your lists. Once you have a mental picture of what a "good" campaign looks like, then your charts will start to speak volumes to you and give you clear direction on the actions you can take to maximize your profits.
More often than not, if you're disappointed in a campaign's results, conversion metrics can tell you exactly what went wrong.
Did the undeliverable rate suddenly spike? Maybe you have a bad list or a problem with your email server. Unsubscribes going above 1%? You're probably not targeting messages to people who want to receive them. Open rate low? You might have a weak subject line. Click-thru rate low? Then the creative is weak, the offer's not compelling, or the links may be broken. Conversion rate low? Maybe the landing page needs some work. You get the picture...
By understanding where we're losing our sales in the overall process, we know what areas to work on if we want to maximize our results. Even if no area is obviously broken, this technique will help you see the bottlenecks in your conversion process so you can focus your efforts in the direction that will produce the greatest results.
The profit potential from this approach can be phenomenal!
On one campaign we considered spending $100K on additional prospect names to help achieve our desired results. Then we learned that conversion from our landing page was only running 6%! A few tweaks later, we improved landing page conversion to 18%...tripling profitability with no investment other than a little time.
Where else can such quick and inexpensive changes have such a large impact on the profitability of your business?
Especially in these times, it's good know you can contribute directly to the bottom line. But for maximum profit, you have to know where to focus your efforts. And that's exactly what your email conversion data will tell you, if you let it.