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Conversion Rates? What Do You Track?

  |  January 15, 2002   |  Comments

Once you've adopted and used the best practices for email marketing, it's time to calculate the results.

Greetings and Happy New Year, email marketers! I hope the holiday season brought everyone good times with family and friends. As for me, I feel as though an entire year has passed since I last wrote, so bear with me if I'm a bit rusty.

Lynne took us back to basics last week, so, to follow through, I thought it would be fitting for us to consider how to measure your success after you've followed those AIDA (attention, interest, desire, action) principles. We are going to look at reporting with a focus on conversion. The word "conversion" can have several meanings. In direct response, it's all about getting the targeted individual to take action on the offer you have put before her. Email is direct response marketing, so when you are trying to read the results of your campaigns, you probably look at conversions. To do this, you need to look at various data points and compare them to each other -- within a campaign and, in most cases, across campaigns or mailings.

Although the ultimate action in our email campaigns may vary, we need to guide the recipient through some steps in each email we send. When looking at results, you should consider as many of these steps as possible so that you have a complete picture. I'm going to skip the rates for bounces and unsubscribes, as they are numbers you should be filtering from your "sent mail" count. If you are not, you really should be. Failing to filter them is like doing data processing (merge/purge) offline and losing 5 percent of your names to bad USPS addresses but still counting them as names mailed.

So what conversion rates do you consider? We look at the following with regard to our own as well as our clients' campaigns:

  • Open rate

  • Click-through rate (CTR)

  • Conversion: click versus purchase

Open Rate

The open rate is calculated by looking at your sent mail count compared to the number of email messages opened. Now this number is always a bit precarious, as I do not know of any way to count the open rates for text emails. Depending on the service or technology you are using, the open rate number may include only the HTML recipients or HTML opens and text recipients who clicked. Do you know what your number includes?

In any case, you will want to take your opened email count and divide that by the sent mail count to create a percentage. This will allow you to better compare lists and events that have varying quantities.

This calculation should tell you something about your subject line and how open (excuse the pun) your audience is to receiving your mail. If your open rates are low, you need to come up with more enticing or applicable subject lines, consider if your audience has lost interest in your messages, or both. See if you can engage them by testing subject lines, your "from" name and address, or both.

CTR

This seems basic enough, but, again, there are some differing variables that could significantly swing the number. Generally, people seem to look at the total number of clicks divided by the sent mail number. However, we often take it to the next level by considering the number of unique clicks divided by the total mail sent. It's just human nature for people to click on one or more links just to see what is being offered. Of course, the resulting number for uniques will not be as pretty as if you had counted total clicks, but you will have cleaner results and a better picture of what is happening with your mailing.

Certainly, you need to have a tool that allows you to look at uniques to get to this level of detail. If the only number you have is total clicks, you can still properly read and compare results, as well as make assumptions, as long as you are consistently calculating this number. In either case, you should understand how the number you are using is derived.

CTR is one of the most important numbers. If people are not clicking, then you may not be presenting enough benefit-oriented offer statements. Maybe your offer is not strong enough (have you gotten creative with your offer testing?), or maybe you are just in front of the wrong audience --- interested enough to read your mail but not enough to buy. Hmm...

Conversion

To convert is to "win over" -- this per my handy Microsoft Word thesaurus. To calculate this number, you may have to consider several levels of conversion. It all depends on the call to action you are making. Are you requesting information or a purchase? Maybe you are going to request information and later try to convert them again into buyers. (In many cases, there is yet another step -- the conversion to a repeat buyer -- but we won't go there in this column.)

You again have a choice of numbers to use here. When we calculate conversion, we usually look at the number of completed actions (completed form or sale) divided by unique responders. We will also calculate the percentage of completed actions versus the total sent mail number.

It helps to look at both calculations so that you can see how many people showed interest and clicked but did not complete the action and how many received the mail and did not act.

Yet another way to look at this number is to consider the number of messages opened versus the conversion number, although we do not bother with this too much -- it's a level of detail that has not necessarily been illustrative to us in our analysis.

Overall, you need to consider the tools you are using and what data is available to you. One of the most important things to remember is to be consistent with the data points you choose to consider. Make sure you understand how the data is derived for each of those data points, because you may not have considered some hidden variables -- especially if you work in an organization where another group or individual creates your reports for you (such as a different internal department or an outside agency/vendor).

I'd love to know what calculations you use -- especially if you can share actual numbers. It's always great to have information about what's happening out on the front lines. And it's even better when we see information that covers an industry or type of business that is unique.

Have a great week. And happy birthday, Martin Luther King, Jr.! (Today is his actual birthday.) If you've never read his famous speech before, I highly recommend you do. Check it out here.

--Jackie G.

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ABOUT THE AUTHOR

Jackie Gallogly and Lynne Rolls

Jackie Gallogly is the marketing technology officer for Inbox Interactive Inc., an email marketing agency. Focused mostly on client house list and retention services, her responsibilities include strategy and offer development, managing client databases, email deployment, and account management for new and existing clients. Thirteen years of direct marketing experience, the past threededicated to electronic marketing and systems, make her a seasoned veteran.

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