Strategic Derivation of the Right Email Marketing Figures

Digital Marketing including email has to deliver proof for its contribution to the company’s success, i.e. it has to be measurable in performance figures. Email marketing in particular, has always stood out because of its precise measurability and a comprehensive fund of possible KPIs (Key Performance Indicators). As a result, we have the temptation to measure everything measurable and then look at what we can do with the performance figures. However, a more appropriate procedure would be exactly the opposite. First, we need to define what to measure and for what purpose.
Every company follows specific targets, e.g. 10 % profit growth for the next fiscal year. In order do determine, whether this target has been reached, it must be measurable, in this example by means of a relative monetary value. Within this strategy, we determine, how the individual departments can contribute to meeting this target, specifically, which targets each individual department needs to achieve. For marketing communication, this may mean contributing a specific amount x to the turnover. In the next step, we will break down this target further into the individual tools of the (digital) communication mix. In email marketing (and other channels) we need to take into consideration primarily two dimensions: effectiveness and efficiency. How can email marketing contribute to meeting the marketing goals (effectiveness) and how economical is it to realise this (efficiency)?

Performance-figure Based Operationalisation of Email Marketing Targets

Both dimensions need to be operationalised, i.e. displayed in figures. With a monetary marketing goal, such as the turnover, the operationalisation is relatively obvious, as the height of the achieved turnover (possibly in relation to the turnover of a previous period) itself already is a performance figure to determine the effectiveness. The core value to determine the efficiency is the return on investment (ROI). The ROI puts the profit gained in a relation with the capital invested. This is how the profitability of the investment can be determined. Performance figures do not only serve success control through target and actual figures at a specific point in time, but also the optimisation of email marketing. When we look at the turnover figure, for example, as a value for effectiveness, it is not only important to know “what the end result will be”, but also to understand the functional chain “behind the turnover”. Three questions arise from this: Which steps are taken in email marketing before the turnover is realised? With which performance figures can the success of each step be measured? Which dependencies exist between the performance figures?
The answer to the first question is independent from the measures used in email marketing. At this point, we limit ourselves to the measure “Newsletter”. The process can be simplified as follows:

Identify the Adjustment Screws

Performance figures can be assigned to each of these steps to measure success. You can find more information on the individual performance figures in our checklist The 25 Most Important Performance Figures in Email Marketing.

In order to optimise the final figure “Turnover”, we must know the dependency between turnover and the upstream performance figures. We need to answer questions, such as: How much does the turnover increase when the conversion rate is increased by factor x? What effects does an increase of the click rate by factor x have on the conversion rate? And therefore on the turnover? What effect does it have on the adjustment screw “a” when adjustment screw “c” is turned? These dependencies must be identified throughout the entire functional chain. We must determine the influence of each adjustment screw on the turnover. At this point, the dimension “Efficiency” is entering the playing field. The question is not only, which optimisation measures have the largest influence on the turnover (probably an increase of the conversions by e.g. user-friendly designs of the landing pages), but also which measure boosts the turnover in the most economic way. If, e.g. the increase of the click rate by 5 % triggers a 2 % higher conversion rate and this optimisation measure is more economic than a direct optimisation of the conversion rate by 2 %, this measure of optimising the click rate would be more favourable. On the assumption of scarce resources, it is important to use these with the maximum efficiency.
Email marketing is not an autonomous channel but part of an integrated communication mix. This means, the adjustment screws in email marketing are not only interrelated, but they are also linked to other channels. A simple example would be the number of recipients in email marketing. Recipients can be generated through different channels, e.g. a website. Here, we come across questions, such as: What effect does an increase of the website visits have on the number of recipients and therefore the turnover in email marketing? Is it more efficient to optimise the generation of recipients via the website or focussing on AdWords?

Cost Savings Through More Efficient Processes

Efficiency and therefore ROI is not only achieved by selecting the most economic measures to boost effectiveness in email marketing, but also through the optimisation of internal processes, such as conception, planning and production. The procedure is similar: display process chain, assign performance figures (e.g. necessary time for production) and identify interdependencies (e.g. between time for production and time for planning). The pressure on marketing to reach goals with less and less costs, i.e. more efficiently, is continuously increasing. A systematic optimisation by means of performance figures is therefore vital.