E-Mail: Let’s Do the Numbers

Happy New Year!

Whenever I get together with email marketing colleagues, the discussion inevitably turns to metrics. There’s an “I’ll show you mine if you show me yours” dimension to these conversations. Everyone wants to know how her results stack up against the rest of the email marketing world’s.

In the spirit of the New Year, here are the latest metrics for opens and click-throughs, along with some thoughts on improving your own figures and creating performance benchmarks.

First, let’s do the numbers.

Average open rates for house lists are running in the mid-30s (34.3 percent, according to DoubleClick). The range I’m seeing, based on public sources and my clients’ performances, is the mid-20s to just over 50 percent.

Average click-throughs for house lists (calculated as a percentage of messages delivered, not the percentage opened) are running in the high single digits (DoubleClick reports 8.2 percent); the range I’m seeing is just over 1 percent to just under 20 percent.

The latest metrics confirm something I’ve seen throughout my career: Third-party lists don’t perform nearly as well as house lists. The gap in email lists is very pronounced, with third-party lists seeing open rates of one-half to one-third less than house lists (less than 20 percent on average, often less than 10 percent). Click-throughs on these rented lists are also lower, with a range of zero to just over 2 percent.

Opens and clicks aren’t the be all, end all to measure email performance. In fact, metrics mean little if the primary business goal (be it direct sales, lead generation, brand awareness, or something else) isn’t met. That said, these metrics help troubleshoot when performance isn’t what you’d like it to be.

Don’t assume efforts are a failure if they don’t meet these benchmarks. Use these averages as a guideline for setting realistic expectations and focusing efforts on areas where improvement is most likely.

My colleague Paul Soltoff wrote a great column on testing last week. I agree wholeheartedly with his approach and recommendations. That said, I find in email, as with direct mail, your list is the biggest factor in determining performance. So if you’re looking for a big lift in opens or click-throughs, start with your list.

A few thoughts on lists:

  • Smaller lists tend to have higher open and click-through rates. If you experience rapid list growth, your metrics will probably decline. Don’t get too worried, as long as your results are in the normal range. (If your house list goes from 45 percent opens to under 20 percent, it’s time to worry.)

  • If you can, look at metrics for the entire list as well as for various segments within the list. Often, I’ll find a client’s mediocre list has segments (opt-in, new, from a better source) that perform at average to above-average rates. Other segments (appended, not opt-in, old) consistently underperform and drag down the numbers. Be brave enough to go for quality, not quantity. Cut back mailings to the underperforming segments (or stop mailing them completely if they really aren’t active).
  • Lists are an asset. You want to benefit from them without depleting their long-term value. It’s like an endowment, where your goal is to live off the interest payments while keeping the principal intact. Over-mailing, whether email from you or from third parties you rent the list to, lower performance over time. Watch your metrics closely. Don’t go for short-term gains that harm the list in the long term.

There are great benchmark sources out there. You just need to do a little legwork. A few I like:

  • Your email service provider (ESP). Most ESPs collect metrics from the campaigns they send. Although they can’t share specifics, they’ll often share aggregate data. Constant Contact offers average opens and click-throughs to clients as a standard part of its reporting; DoubleClick publishes quarterly summary figures in its Knowledge Center.

  • Industry publications. In addition to special reports that compile metrics from a number of sources (MarketingSherpa just published its 2005 version), look for case studies and articles that mention figures in passing. I collect metrics, logging the ones I come across in a spreadsheet with notes regarding the source, industry, offer, and so on.
  • Colleagues. It’s always a bit intimidating to share metrics. You love it when someone exclaims, “You’re getting an open rate over 40 percent? I wish we could do that!” But it can be humbling when they see figures higher than yours. That said, do it anyway. Talk to colleagues. They’re often willing to share — if you are. Just set your expectations and look for aggregate figures, not numbers for specific mailings, products, or clients (which are often confidential).
  • Historic data. That’s right. A great source of metrics is right under your nose, if you’ve been doing email marketing for any length of time. Whether you’ve got a fancy database that contains your past results or a simple spreadsheet, mine the information. Look at trends and use this information as a way to set benchmarks for future mailings.

I approach benchmarks by gathering data from many different sources and seeing where the numbers fall. Usually, when you bring in enough data, you’ll start to see some consensus. That forms the basis of your benchmark.

Until next time,

Jeanne

Want more email marketing information? ClickZ E-Mail Reference is an archive of all our email columns, organized by topic.

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