By EJ McGowan, Senior Director and GM of Campaigner
Today's marketers have multiple channels in which they can allocate marketing spend, so it is critical to measure the return on investment (ROI) of each (email, online advertising, trade shows, etc.) in order to develop an appropriate overall budget.
How do you properly measure the ROI of email marketing to gain these insights? Many make the mistake of relying solely on open and click-through rates to measure email success. While this measurement is a strong starting point, taking a holistic view is far more effective.
The process of building and analyzing an overall return on investment and tracking it back to a specific email marketing campaign is a complicated process. However, by following these three steps, you'll be headed in the right direction:
The first step before beginning any campaign is to understand the brand's marketing strategy and options. With multiple marketing and advertising channels available, it is important to have a clear vision and objective for what the campaign will look like. Which channels will be used? What should be measured? This can vary significantly given the specific message and the goals a brand aims to achieve (e.g. brand awareness, social interaction, driving traffic, etc.). By understanding the different opportunities, marketers can choose the appropriate channel(s) with a better sense of assurance, knowing they will reap the greatest rewards.
Once the campaign objectives and marketing channels are determined and outlined, it is necessary to have an honest and realistic discussion about measuring success. Be sure to look at the big picture and understand that a majority of website visits and online sales resulting from email marketing may not be reflected in the metrics available. Despite one's best efforts, much of the traffic received will continue to come from untrackable sources. For example, say a marketer is trying to increase the sales of sweaters this season through a targeted email campaign; traffic on the sweaters' Web page should not only be attributed to directly connected opens or click-throughs, but should also be considered in the context of wider brand awareness for the campaign (e.g. word of mouth, well-timed advertisements, promotional or PPC campaigns that correlated with the email campaign, etc.).
While the most recognizable and frequently used metrics from email marketing are opens and click-through rates, they are often difficult to tie back to the marketing goal of revenue generation. True, we want to believe that driving traffic to the site with increased click-through rates will drive sales, but it's difficult to make that connection. For a more effective understanding of ROI, there needs to be a larger system.
Since opens and click-throughs will not provide the holistic view required, it is imperative to use these initial metrics to bolster an overall chain of data that begins and ends with email marketing. Connect the dots and incorporate email marketing data with other metrics to track the full picture. For example, use email marketing to its fullest potential by connecting email campaigns with Google Analytics to track opens and click-throughs and integrate that information to shopping cart use and point-of-sale systems. More specifically, think of tracking the entire process: email marketing > opens > click-throughs > pages views > calls-to-action > shopping cart > fulfillment systems > email marketing.
Lastly, go full circle and push this information back into email marketing software to tailor the success of future campaigns. It starts with an effective email strategy, but also requires data from other systems to gain a comprehensive understanding of ROI. Taking these steps will create a closed system that will continuously generate key data to leverage moving forward.
Measuring the ROI of email marketing is no easy feat. Try not to fall into the common open/click-through trap and realize that while these metrics provide a basic understanding of your campaign, you need a big-picture view to truly understand total success.