Email success measures: the good, the bad and the irrelevant

The USA's DMA just released the results of its annual look at the economic impacts of direct marketing.

Ken Magill has the numbers for email here. The results show email is still top of the ROI tree compared to other forms of direct marketing.

But ROI is dropping from past highs, with a $48.56 return expected for every dollar spent on email marketing in 2007 (the figure was $57.25 in 2005 and $51.58 in 2006.)

Several points here:

1. Drops in ROI are inevitable given the law of diminishing marginal returns. As the low-hanging fruit gets eaten up, you inevitably have to work harder to generate more revenue.

2. It's important not to lose sight of the absolute figures. ROI is still excellent and still beating out other direct marketing channels.

3. ROI is just one of the measures you might judge email marketing with. Kevin Hillstrom, in particular, has many warnings on the implications of placing too much emphasis on the ROI figure (see, for example, this post or this one.)

Which brings us to another topic: which metrics to use to evaluate your efforts.

Loren McDonald tackles the issue in this new article. His argument is that traditional email metrics (like open rates) cut little ice with senior management. So you need to focus on business metrics as well.

Loren explains how you might define business targets and then relate them back to your email program to assess how you might change tactics and strategies.

As I interpret that, the key is to see email marketing metrics as reflecting a chain of events that cumulate in some business impact.

At its simplest, this chain is send, delivery, open, click, action, business impact (sale, download etc.)

The further along the chain you go, the more you move away from traditional email marketing metrics and more into business metrics. The important point here is that they are all linked.

So every point along the chain has an influence on later numbers. If you measure each point in the chain, then you can identify the weakest elements...so you know where to focus your efforts to get the maximum benefit to the eventual business impact you're trying to achieve.

As such, different metrics and measures may vary in usefulness if you're setting business targets or reporting numbers to senior management. But every one is a valuable measure when it comes to chasing practical improvements in your email marketing results.

More on statistics | Tags: email marketing, email roi, direct marketing, email marketing metrics, email marketing statistics

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