Email marketing for E-commerce, Part 3. Stats and Metrics
This is the third and final article on email marketing for E-commerce. We recommend that you first read the previous articles in the series:
● Part 1. Where to start. Building Subscribers Base. Segmentation.
● Part 2. Email Types And Sales Automation.
In this part, we will focus and elaborate on statistics and various metrics in email marketing. Stats helps business owners to monitor the effectiveness of their email campaigns and make decisions about future newsletters.
Email marketing without evaluating results is similar to taking a shot in the dark. Sending out emails and hoping they hit the required target. Don’t do that!
Deliverability
Deliverability shows how many emails from the ones you have sent have been received in the target’s mailbox. The emails can either be received in the inbox or spam. Where exactly does not matter as long as the email is received in the mailbox.
Deliverability depends on the mailing service you use. Services monitor the reputation of their servers, clean customer bases from non-existent addresses, help conscientious companies to make high-quality emails and ban spammers. As a result, good service ensures a delivery rate of over 99%. If you have less, make further inquiries and ask questions to the tech support team.
Where to look: Statistics on total deliverability is usually shown in the email marketing platform. For example, in UniSender you can find this information under «Campaigns», in the «Sent Reports» section:
Deliverability rates to separate mail platforms can be viewed in postmasters. These are analytics services on the base of email providers such as Gmail, AOL, Yahoo, e.t.c. Not all postmasters show deliverability rates. For example, in Gmail, you can evaluate the mailing performance and get these stats. However, AOL doesn’t provide such stats.
Open Rate
If a sent email got into the mailbox, it doesn’t mean that it will be read. Open rate shows how many subscribers have opened your email or newsletter and at least briefly read it.
Where to look: The general statistics for open rate can be viewed in the email marketing platform that you use. For example, in UniSender, the analytics section is located in the “Tools” tab.
Click Rate
Subscribers who opened your email and viewed the material may be interested and click on the links. The ratio of clicks to delivered emails is called click rate. It shows how effectively you were able to interest subscribers with your content.
Where to look: In the analytics section of the email marketing platform.
Clicks To Open Rates
Click rate is calculated in relation to delivered emails, so it directly depends on the open rate. The more emails will be opened, the more links will be clicked. To eliminate the influence of open rate, email marketers use a CTOR (Click To Open Rate) indicator.
Where to look: Clicks and opens can be viewed in the statistics section of the email marketing platform. But CTOR has to be counted manually.
Unsubscribes and spam complaints
Unsubscribes show the percentage of customers unsubscribing in relation to delivered emails.
Spam complaints are the proportion of people who clicked on the ‘This is spam’ button in relation to delivered emails. It is important to note that spam complaints are worse than unsubscribing. This is because unsubscribing only reduces the base, while complaints affect the reputation on which deliverability depends. If the number of complaints exceeds 0.1%, the future email campaigns can be blocked completely 😟
Where to look: Unsubscribes and spam complaints can be viewed in the email marketing platform. Here you will see all the users who have unsubscribed or complained, irrespective of the postal service they use.
Conversion
Conversion gives information on the number of people who received emails and fulfilled your goal.
Goals are different. Most often it is a purchase or request for a purchase. Also, the goal may be to register for an event or view a certain number of pages.
Where to look: Tracking conversion is more conveniently done through Google Analytics. With the proper setting of goals, using Google Analytics, one can take further action by selecting “Source of Traffic” → “Source / Channel” to see the conversion of email.
Lifetime Value (LTV)
LTV enables a business owners to find out how much money clients bring throughout their time of interaction with the company.
LTV helps to understand:
- Through which channels you get more valuable customers.
- How much additional resources should be spent on attraction and retention.
- How effectively you retain customers.
There are several formulas for calculating LTV. Expressed below is the generally used formula for calculating LTV:
LTV = average check * number of orders per month * average margin * average “lifetime” of the client
For example, the average check of one client is $100. He makes 2 orders per month and, on average, spends 5 months with the company. The margin on goods is 15%. Now we can calculate LTV:
LTV = 100*2*0,15*5 = 150
Where to look: The average check and the number of orders can be viewed in Google Analytics or in another analytics program you use.
Margin is the difference between the price of a product and its cost. For example, sneakers cost $50, and the cost of making them is $40. The margin is 100% — ($40 / $50 * 100%) = 20%
The average customer lifetime is the time between his first and last order.
Reputation
Reputation is a complex indicator that is calculated by email providers such as Gmail, Yahoo, AOL and Outlook. It shows how much mail services trust you, and determines where the emails will be received: either in the Inbox or in the Spam.
Where to look: Reputation can be tracked in postmasters. In each postmaster, reputation is measured by different indicators:
- In Gmail, sender reputation is made up of IP reputation and domain reputation.
- In AOL, you can see the current reputation in the Tools & Technical Help tab.
The postmasters for Yahoo and Outlook do not provide information about IP and domain reputation.
Customer Acquisition Cost
Customer Acquisition Cost (CAC) is the total amount spent on attracting one new customer. This indicator helps to evaluate:
- The ratio of profit from one client to the number of funds spent on its attraction.
- Payback period for funds invested in clients attracting.
- When exactly profits will be accrued and how much will be spent on attracting users.
Where to look: To calculate the CAC, you need to know:
- The sum of all expenses spent on the marketing channel.
- The number of customers who came through this channel.
Here’s the formula for calculating CAC:
ROMI
ROMI shows how much money a business or business owner receives for each dollar invested in marketing. ROMI clearly demonstrates how successful and effective certain marketing strategies, promotions or solutions have been. ROMI is easy to interpret and understand. The higher the final figure the better.
Where to look: ROMI is calculated using the formula:
Additional analytics tools
А/В tests
A/B tests are powerful tools that help to adjust the advertising campaign to the preferences of the audience. However, test results are sometimes surprising: for example, we once found out that a text letter sells products better, and emails without prices for products lead to more conversions.
To conduct an A/B test, you need to send two variants of the email to two groups of subscribers. Depending on the purpose of the test, which can be either for an increase in open rate, transitions or sales. Furthermore, we can estimate which option produces better results or passed the test. Then we send the email with the best indicators to the rest of the subscribers.
Here are some tips to help you get the A/B test right:
- Test all kinds of emails: welcome, transactional, promo and content. In any email, there is always something to inspect and improve on.
- Change the key elements of the email. It’s reasonable, first of all, to focus on the key elements that influence the behavior of subscribers: topic, call-to-action, images, e.t.c.
- Test only one item at a time. In each test, you need to check only one element of the letter. If we test more than one element at a time, we we not have a clear or detailed knowledge of the exact element that influenced the behavior of subscribers.
- Use similar subscriber segments for tests. For example, send the emails to only active subscribers or to people from the same region.
- Check the size of the test groups. In small test groups the test result might be an accident. Online calculators such as Kissmetrics, AB Testguide and Optimizely can help you choose the number of subscribers for the test:.
- Tell colleagues about the result. It will be useful for the copywriters, designers and marketers in other areas. Such communication improves the work with the customer base and saves the time of colleagues.
RFM analysis
RFM is an analysis method that allows you to segment customers by frequency and amount of purchases. So it is more convenient to identify those customers who make more money.
How to divide subscribers: The essence of the RFM analysis is that we divide all customers into groups, depending on how long ago they made their last purchase, how often they purchased products and how large the total amount of their orders was. For each of these signs, we distinguish three equal groups. Then we assign a numerical designation from 1 to 3 to each group.
By recency:
- 1 — long-standing customers;
- 2 — more recent customers;
- 3 — recent customers.
By frequency:
- 1 — purchases very rarely (single orders);
- 2 — purchases infrequently;
- 3 — purchases often.
By monetary:
- 1 — a small amount of purchases;
- 2 — an average amount of purchases;
- 3 — a large amount of purchases.
For example, the customer with the numerical designation ‘111’ once made a single order for a small amount. In other words, the client is not so much of a customer. However, this is not the case for the customer with the numerical designation ‘333’. This customer often purchases products for a large amount and their last purchase was made recently. Customers with the numerical designation ‘333’ are our best customers.
This is the final article on email marketing for E-commerce. What other areas of business would you be interested to read about? What subtleties of email marketing do you find interesting? Write about them in the comments
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