The 3 Most Important Email KPIs:
How to Measure What Matters
You’ve finally got your welcome flow up and running and you’re gearing up to tackle your winback series.
You’re churning out quality, relevant blog-based emails on a regular basis.
You’ve got emails going out whenever you have a new product to launch and when you’re running promotions.
Open and click rates are looking good, too.
Now you can sit back, relax, and watch as your revenue soars and your customer base becomes larger and more loyal - right?
One of the most important (and often overlooked) steps in executing a successful email marketing strategy is analyzing how your customers respond to your emails and applying what you learn along the way. But most companies only track open and click rates or the total revenue coming from their emails. The problem is, this doesn’t paint the full picture of how their email marketing is directly affecting their bottom line.
Yep, you knew we were going there - KPI reporting is a must when it comes to moving your email revenue needle in a positive direction.
Fortunately, this process isn’t as complicated as it sounds. By examining three basic KPIs you can leverage your customer data to truly optimize your email strategy to increase sales.
What to Measure and Why
#1 Percentage of Revenue
Let’s say you’re making 10K from email every month and your total business revenue is 30k per month. Sounds good, right? But that 10k is going to look a whole lot less impressive once you’re generating 150K per month in total business revenue.
Don’t make the mistake of only tracking total email marketing revenue. Instead, monitor how big a slice of your revenue pie is coming from email marketing and adjust your strategy accordingly. In general, you should shoot for 30-35% (with about 15-20% coming from flows and 10-15% coming from campaigns) of your total revenue coming from email and 40-50% when you’re running a promotion.
And what should you do if your email revenue isn’t hitting the mark? It’s simply time for an audit so you can take a look at what’s underperforming. If it’s your flows, you need to take a look at which ones you might be missing that could be critical for your business. If it’s campaigns, you might need to adjust how often you’re sending them.
#2 Revenue Per Recipient
Pay attention to how much revenue you’re generating for each person you send an email to every time you send them something. Most companies only track the total revenue an email campaign generates. But as your list size and business grow, you’ll naturally see that revenue increase and it doesn’t give a good indicator of whether you’re making the most out of your list.
For example, imagine generating $10,000 from a campaign sent to 5,000 people versus generating the same amount from a campaign sent to 1,000,000 people. That $10,000 made from 5,000 people reflects a much more successful monetization of your list.
And if you’re finding that the revenue generated per recipient is low, you’ll need to make your list more effective by analyzing your messaging, finding out if you’re sending emails to the right people at the right time, and perhaps doing some list cleaning.
#3 Average Order Value
Measure the average order value (AOV) generated when a customer purchases through one of your emails. Email AOV is generally higher than on-site AOV since email customers are better nurtured and better understand the value of your products. A good rule of thumb is that email AOV should be about 15-20% higher than your on-site AOV.
If your email marketing efforts are producing a low AOV, you likely want to examine how effectively you’re communicating value to your customers. As yourself, is your messaging is relevant and valuable to your audience? Are you addressing customer FAQs and pain points? Are you demonstrating social proof? Look for ways to ease any friction that your customers might experience within your email sales funnel.
The Bottom Line
By measuring these three basic KPIs, you’ll go a long way in your ability to increase the effectiveness of your email marketing strategy. Because when you know how your customers are responding to your emails, you’ll learn how to best optimize your communication and promotional strategies to increase sales. And remember, this process isn’t just about tracking the big wins (but high fives for those). By examining the mistakes too, you’ll be more able to avoid similar pitfalls in the future.
Want more information on how you can improve your email marketing strategy to meet your business goals? Contact us today at email@example.com.
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