Boosting Your Conversion Rates

Why do we, as email marketers, care about inbox deliverability? That’s easy – because it can significantly impact your bottom line. Deliverability issues are usually reflected in open and click-through rates (CTRs), which are easy to see, and then in conversions and (if applicable) revenue generated. Fewer emails delivered means fewer opens, fewer clicks, and fewer recipients that have the chance to take action on your email messages.

The recent release of the Q4 2011 Email Trends and Benchmarks report, published by Epsilon and the Email Experience Council, got me thinking. Last month’s 2H 2011 Global E-mail Deliverability Benchmark Report, published by Return Path, showed a significant decrease in inbox deliverability for the first time in years. So are companies seeing a decline in open and click-through rates as a result?

My understanding is the Epsilon data is reporting on North American sends, so I focused on the North America deliverability data from Return Path. The variance between deliverability in Canada and the United States was much more in the second half of 2011 than it was in the first, so in addition to the aggregate figure I pulled in the data for each country (yes, I know that Mexico is also part of North America, but Return Path doesn’t include them in the breakout).

Analyzing data from these two sources, I was surprised by the findings.

Despite the decrease in deliverability reported by Return Path, average open rates were up in the second half of 2011, according to Epsilon/EEC. The overall average open rate for Q4 2011 was 24.8 percent; Epsilon hasn’t reported an average open rate of 24 percent or above since at least 2007 (the reports I have on hand only go back to Q1 2008).

The Q3 2011 overall average open rate was 23.8 percent; the only other instance of an open rate at or above 23 percent was in the first quarter of this year (again, looking at data from 2008 to present) when it was 23.3 percent.

So despite the decline in deliverability reported by Return Path in the second half of 2011, Epsilon reported the highest open rates seen since at least the beginning of 2008.

Next I looked at overall average click-through rate, calculated by dividing the number of unique clicks (one per email address) by the number of email messages assumed delivered (sent minus bounces) in 2011. Here the story is a little bit murkier.

It’s a little hard to see on the aggregated chart at the top of this column, so let me run through it for you. Overall average click-through rate was 5.9 percent in Q1 2011 and it fell to 5.2 percent in the second quarter. After rebounding a bit to 5.5 percent in the third quarter, it fell back to the second quarter level (5.2 percent) in Q4 2011.

The relationship between the first and the third quarter is what you would expect based on the decrease in deliverability reported by Return Path. But the boost in the third quarter (compared to the second quarter) and the fact that the fourth quarter wasn’t lower than the second quarter doesn’t quite make sense.

Looking at the longer term, overall average click-through rate, unlike overall average open rate, has been trending downward.

It’s interesting to see that first and third quarter click-through rates typically best those reported for the second and fourth quarters. And that the fourth quarter CTR is always the lowest or tied with the second quarter for the lowest of the year. This likely has to do with the large volume of email sent in support of the December holiday season.

It’s still surprising that the Q4 2011 CTR wasn’t lower based on lower deliverability. My take on this? The Epsilon/EEC data on click-through rate doesn’t support or refute the decrease in deliverability reported by Return Path. It’s inconclusive.

So how do we explain this apparent discrepancy in Return Path’s reported decrease in deliverability when juxtaposed with the increase in overall average open rate and the inconclusive fluctuation in the overall average click-through rate reported by Epsilon/EEC?

I don’t have a solid answer for you here. Obviously, many things impact open and click-through rates, not just deliverability.

I know that my clients, and hopefully all email marketers, are constantly testing to improve performance. Much (but not all) of this testing is focused on boosting open and click-through rates.

So one explanation is that those efforts are working and that they’ve been successful – so successful in the case of open rates that they’ve been able to overcome and thrive in the face of fewer email messages making it to the inbox. The results on boosting click-through rates have been more mixed, although one could argue that they were somewhat able to mitigate the deliverability decreases in the third quarter of 2011, if not in the fourth (that’s open to interpretation; perhaps this is why the CTR for Q4 wasn’t lower).

We’re working under the assumption that both these reports, which come from very reputable sources in the industry, are accurate. I do believe this is correct, but it surprises me that they seem to be in disagreement – or at least defy what seems logical.

Most importantly, how should these two reports impact how you handle your email marketing? Truthfully, they really shouldn’t.

Every email marketer should be constantly monitoring their own deliverability, addressing issues as they arise, and striving to get more email messages to the inbox.

Every email marketer should be testing on a regular basis to boost their own conversion rates and, if appropriate, the revenue they generate from email. Having healthy open and click-through rates helps with this, and if yours are dropping you should test ways to boost them along with testing other campaign elements (like landing pages), which are often closer to the conversion.

Until next time,

Jeanne