An Introduction to E-Mail Marketing Funnel Analytics and ROI Calculation

Published: 21st July 2010
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Sending an e-mail, or a group of e-mails to a mailing list (E-Blasts), seems like a relatively simple endeavor. It's a pretty simple form of communication, but the response rates and effectiveness can be highly variable. By monitoring each funnel of the e-blast process, you can optimize the process and develop the most profitable strategy for your company.

Deciding on how to craft the message is an entirely different discussion. View our E-Mail Marketing Page for some basic information on these important aspects such as getting past SPAM filters, what makes a good subject line, and how to create effective calls of action (possibly future blog topics as well). Today, I focus on how to measure effectiveness and how to optimize to increase response, in what I'm calling the 4 funnels of the e-mail marketing process.

Oh, and for this kind of stuff you'll need an analytics program. Google Analytics will work for most people (sans open rates), but if you are running a high-traffic e-Commerce site you'll want to move towards Omniture, Webtrends, or some other paid service with higher functionality.

The 4 Funnels of E-Mail Marketing:

  • Delivery Funnel

  • Open Funnel

  • Page Funnel

  • Conversion Funnel

1. The Delivery Funnel

The Delivery Funnel is essentially the quality of your mailing list and your ability to get through SPAM filters (this part isn't really measurable). This is the easiest part of the funnel to get through, so you should be as close to 100% as possible.

Out of Office Rate: Don't send messages on Mondays or Fridays (especially B2B e-mails). People are more likely to take long weekends. Stay as far away from holidays as well, as people are more likely to extend vacations around that time as well.

Unsubscribe Rate: First of all, if someone unsubscribes from your mailing list, take them off of it. Even if you've purchased a mailing list and/or are sending unsolicited e-mails in the first place, it's basic e-mail ethics to respect user wishes. Second, make sure the e-mails are relevant. Someone unsubscribing essentially means they are upset at receiving your e-mails, and it probably would have been better if they hadn't even gotten it in the first place.

Undeliverable Rate: Prune these from your database after every E-Blast. Hopefully, it's done automatically for you (same goes for Unsubscribes). Don't flood your server with unnecessary bounce-backs.

2. Open Funnel

This funnel includes getting the user to open the e-mail and click on something inside it. Generally, this is the desired response as an e-marketer. Getting your readers' attention and convincing them to initially act on it may be the most difficult part of the entire process.

Open Rate: You may think that Open Rate is entirely based on the subject line of your message. While that's an extremely important part, it isn't the only one. Crafting a catchy subject is great, but you'll also want to consider when you're sending the e-mail. Are your customers more apt to open e-mails on Tuesday or Thursday? At 10:00am or 2:00pm? These are questions that testing and analytics can help answer.

Click Rate: Now that they opened the e-mail, your copy has to be intriguing enough to inspire a click for more information. Of course, rich text and HTML e-mails continue to increase in popularity and have been shown to result in higher click-thru rates. Testing different setups, copy, and call to actions is important in increasing click rates.

3. Page Funnel

It may seem like the e-blast work is over. Your customer received the e-mail, opened it, and clicked through to your website. Success!? Not quite. There's no money in your pocket yet. So, page optimization and landing page monitoring plays an important role in e-mail marketing. The Page Funnel is getting customers from a landing page and into the conversion process.

Landing Page Bounce Rate: How many visitors only look at the landing page after clicking before exiting? Optimize your landing page to engage customers interest and push them further in the purchasing process.

Landing Page Time on Page: Is your landing page full of a lot of information? Does your website have a longer sales cycle where an immediate purchase seems unlikely? Time on Site could be a better metric in these cases, as it measures how long visitors were engaged with the information you are providing.

Navigation Steps: Your landing page should be funneling visitors towards a distinct conversion. It could be 1 step or it could be 10 steps. You'll want to monitor customer navigation along the entire way. Figure out where customers are abandoning the conversion process and improve those pages to facilitate higher rates. If visitors have made it this far, you don't want them turning around now.

4. Conversion Funnel

This is why you send e-mails in the first place - to make that final conversion. For a lot of e-commerce sites, that means a sale (2% of visitors is the standard rate - plus you can go even farther with analytics to look at purchase amounts and other metrics). It could just mean signing up for an online seminar, registering on your website, or printing off a coupon. Whatever it is, this is the end goal. Monitor the number of conversions and use this number to optimize and calculate the effectiveness of your E-Blast campaign.

Going Further with Optimization and ROI Calculation

As discussed, using several different versions anywhere along the way will help you to create more effective marketing campaigns. Whether it's testing different subjects, messages, landing pages, etc., compare the conversion rates to find out what works best for your target market. We create charts and optimize based on anything from time of day the E-Blast was sent to using different buttons on a landing page. The key is to keep testing.

Let's say you tested 5 different combinations of funnels and came up with these results? You can easily calculate ROI for each campaign by dividing by costs. Which model do you think you'll use as a starting point for your next project?

Let's hope you chose (4) (assuming costs are constant). That's about a 76% profit increase over the average of the 5 campaigns. When you can increase responses that much (which I assure you is very possible), it's crazy not to optimize.

For more information on Londes Creative Digital Marketing services, please check out the E-Mail Marketing Page and Optimization Page for more information specifically pertaining to this topic.

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