A Complete Guide to Email Marketing Metrics
What is email marketing?
Email marketing is the process of sending emails to a group of recipients with the goal of driving a specific action. Most frequently, the email channel is used specifically to generate sales. However, emails are also used to build and strengthen customer relationships, or push customers through the marketing funnel.
The email channel is considered extremely valuable by marketers because of its ability to simultaneously reach many potential recipients and create a modest degree of engagement with potential customers. This blend of reach and engagement can be seen in the graph below.
Marketing tactics can be mapped to this reach-engagement curve. Some tactics are very good at reaching a lot of potential customers (i.e. digital ads). Other tactics are very engaging (in-person events). However, each tactic has a trade-off. High reach typically comes with lower customer engagement. High-engagement activities are generally difficult to scale to large quantities of customers. Email is important because it sits in the middle of this reach-engagement curve. It balances between reaching high quantities of customers and providing a moderate level of engagement.
Marketers use email in many ways. Some examples include:
Delivering content such as newsletters
Informing customers of important news and product updates
Sending customers promotional offers, sales, and discounts
Converting leads through targeted emails (i.e. abandoned shopping cart reminders)
Many incorrectly believe that consumers have largely grown numb to email marketing. Research, however, shows that consumers prefer to receive promotional offers by email compared to other forms of communication. Email marketing also complements other forms of digital advertising and has a proven track record of helping marketers to achieve high returns on their investments. It is increasingly more and more important for marketers to use email marketing KPIs to optimize the channel’s performance.
Email marketing key performance indicators (KPIs)
Email marketing can be viewed as a funnel process. Customers flow through a series of steps in order to reach a desired action. Similar to a marketing funnel, email marketers must measure, assess and optimize each step in the email funnel.
Here are some of the most important email marketing metrics:
Email list size
Email deliverability and email bounce rate
Email open rate
Email click through rate and email open-to-click rate
Email conversion rate and email click-to-conversion rate
Each of these email marketing metrics play a critical role in building a high-performing email program. Let’s look at each metric in more detail.
Email list size
Email marketing programs begin with a list of potential customers. Customer lists can be composed of previous customers, leads, and names from other list-building tactics. Regardless how the names are captured, the overall size of a mailing is a major driver of an email program’s revenue potential. Remember our reach-engagement curve—the greater the reach, the more impactful an email program can be.
Many large companies maintain emails lists with millions of recipients. Teams of email marketers are fully-devoted to complex email campaigns. They work daily to grow the total recipient list, segment groups of customers and tailor content for their preferences, and build automated email streams. Let’s look at an example of how marketers can grow their email list size.
How to grow the size of an email list
One major principle of growing an email list is to harvest contact information from every existing channel. Marketers store customers’ email addresses after every online transaction. They capture email addresses when customer sign up for loyalty programs. Websites incentivize customers to enter their email addresses for access special discounts. Think of opportunities to extract email addresses from existing tactics and customer interactions.
Let’s look at an example. Claire has started a new eCommerce website. She’s already launched a series of digital CPC ads, and has begun generating a modest amount of site traffic. How can she extract email addresses from this existing site traffic?
Claire can launch an email tool called an acquisition modal. An acquisition modal is a “pop-up” message on a website that asks customers to enter their email addresses. Most marketers incentivize customers to enter their email addresses by offering exclusive discounts.
This tactic is used extensively by retailers. Here’s an example from one of my favorite clothing brands (you can see I have several items in my cart).
Suppose Claire gets 10,000 website visitors each month. On average, 10% of those visitor will enter their email addresses via her acquisition modal. This means that Claire is generating 12,000 customer email addresses annually from this one tactic! Each of these names can then be included in her ongoing email marketing efforts.
Email deliverability rate and email bounce rate
Before recipients can engage with an email, marketers must ensure email messages are delivered to customers. Not every email in an email list gets delivered. Email addresses may have been incorrectly entered or customers may have switched to a new email account. Both of these situations result in emails not reaching marketers’ desired recipients. This is called “bouncing”. Email senders receive a “bounce back” message when an email is unable to be delivered.
Email deliverability rate represents the percentage of emails that are successfully delivered. Email deliverability rate is calculated by dividing the total number of successfully delivered emails by the total number of sent emails. See the full formula below.
Bounce rate represents the percentage of emails that “bounce back” and are not delivered. Bounce rate is calculated by dividing the total number of email bounces by the total number of send emails. See the full formula below.
Note that internet service providers often filter inbound emails with the goal of removing spam or junk messages before they reach consumers’ inboxes. An email can be blocked and removed by an internet service provider before a customer sees it. Many marketers categorize these blocked emails as undelivered emails, and incorporate these counts appropriately into the deliverability formula and bounce rate formula numerators. Including these filtered and blocked emails can often provide a better estimate of the overall rate at which emails reach customers’ inboxes.
What causes an email to be categorized as spam or junk?
Internet service providers block emails or categorize them as junk by using several different factors. The overarching principle is based on evaluating the reputation of an email sender. If a company has a reputation for sending unqualified, fraudulent, or unwanted messages, then its reputation will slowly erode and can become blocked. The IP address and domain from which emails are sent are tracked and associated with a reputation score.
Let’s look at some factors that help internet service providers determine the reputation of an email sender.
User engagement. Are customers opening the emails? Are they marking emails as junk or spam? Emails that have high open rates and user engagement improve the sender’s reputation. However, a sender’s reputation will decline if a high volume of recipients mark an email as spam or junk.
Email frequency. How frequently is a company sending emails? Sending a high quantity of emails to the same customers can indicate spamming practices, and will lower a sender’s reputation.
List quality. Email deployments that result in high bounce rates are a sign of poor list quality. Reputation can decline when continuing to send to emails to “dead” email addresses.
Email deliverability rate and email bounce rate benchmarks
As you would expect, deliverability rates and bounce rates vary by industry, company size and other factors. An email deliverability rate of 95% and above is generally considered good. An email bounce rate of 3%-5% or less is also considered good.
Email open rate
Email open rate measures the percentage of recipients who open an email. Open rate is an important metrics because users cannot take any further action until they open the email. Email open rate is calculated by dividing the total number of emails opened by the total number of emails delivered. See the full formula below.
How do you improve email open rate?
Open rate is primarily driven by an email’s subject line. This bit of text is marketers’ main chance to capture a recipient’s interest. It’s such an important part of the email funnel that marketers routinely test email subject lines on small groups before deploying the email to a full distribution list.
A typical subject line testing approach is called a 10-10-80. Marketers will write two versions of a subject line for an email. They will then send the email to 10% of their full distribution list using the first subject line. The marketers will then send the email to another 10% of their distribution list using the second subject line. Over the next several hours, recipients will begin opening emails, and marketers can compare which subject line is best grabbing customers’ attention—in other words, they can see which subject line has the higher open rate.
Once marketers determine the top performer, they send the email to the remaining 80% of the recipient list (who haven’t yet received the email) using the winning subject line.
Let’s look at real example of email subject line testing. Below are two subject lines we tested here at Free Marketing Metrics when sending our newsletter opt-in email.
Subject line option 1: Confirm you email address
Subject line option 2: Don’t miss out on more marketing resources
In option 1, we wrote a very standard subject line explaining the purpose of the email—users needed to confirm their email address. In option 2, we positioned the subject line in a way we thought would better capture recipients’ attention—don’t miss out. As expected, subject line 2 out-performed option 1, and we continued to use this option going forward.
Always think about ways to capture a recipient’s attention when composing subject lines.
Email open rate benchmarks
Similar to other email benchmarks, open rates can vary based on industry, email frequency and other factors. An email open rate of 20%-25% is generally considered good across most industries. Email open rates below 10% typically indicate there is opportunity to improve list hygiene or subject lines.
Email click through rate
At this point in our email funnel, customers have received an email (measured by the deliverability rate) and have opened the email (measured by the open rate). Convincing a recipient to click an email is the next major step. Remember, marketers like to sell things. Clicking an email and sending a customer directly to a website where they can purchase a product or service is extremely important.
Email click through rate measures the average percentage of customers who click at least one area of an email. Email click through rate is calculated by dividing the total number of customers who have clicked at least one email section by the total number of delivered emails. See the full formula below.
Note that a user who clicks one email several times is not double-counted in the formula’s numerator. Instead, our numerator counts at the customer level. Thus, a customer who clicks an email once and a customer who clicks an email several times are each counted as one customer who clicked.
Email open-to-click rate
While marketers like to know the rate at which delivered emails are clicked (via our email click through rate formula), this metrics does not isolate performance driven solely by content. Once a customers has opened an email, she or he reads the content and determines whether to click. Thus, the substance of the email content is the primary driver of whether a consumer clicks.
The email click through rate formula measures how frequently delivered emails are clicked. As we know, there are two funnel stages between a delivered email and a click—1) an email must be opened and 2) an opened email must be clicked. We must use a different formula to properly isolate only the impact of email content.
Email open-to-click rate measures the rate at which customers click an email after opening. It’s calculated by dividing the number of customers who clicked an email at least once by the total number of opened emails. See the full formula below.
Let’s look at an example of how the email open-to-click rate provides additional insight to email marketers.
In this example, both emails have the same click through rate—10%. However, email #1 has a significantly higher open-to-click rate. This means that email 1 was much more effective at compelling customer to click the email. Email #2, on the other hand, was much more successful in convincing customers to open the email, which indicates it had a strong subject line.
How to improve email open-to-click rate
The likelihood of a customer clicking an email is directly related to the content of an email. What is the substance of the email? Is there urgency? Is the topic relevant to a customer? Good email marketers work to create relevant and compelling content that will entice customers to click an email.
Email segmentation can also play a major role when optimizing open-to-click rates. Email marketers frequently break email lists into smaller customer groups with specific interests. Email content can then be tailored specifically to each of these interest segments. Open-to-click rates will increase because the email content is now more relevant for each customer.
Email click through rate and email open-to-click rate benchmarks
Email click through rates vary by industry, but rates above 4% are generally considered good. Additionally, email open-to-click rates above 15% are considered good.
Email conversion rate
Just as we reviewed two metrics associated with email click through—email click through rate and email open-to-click rate—we will again outline two ways to assess email conversions. An email conversion occurs when customers purchase a product or service, or take an action desired in an email. Let’s look at two ways to assess the conversion effectiveness of an email.
Email conversion rate
Email conversion rate measures the percentage of customers that took a desired action after receiving an email. We measure email conversion rate using the entire population of delivered emails in the denominator.
Email conversion rate is calculated by dividing the total number of email recipients who converted by the total number of delivered emails. See the full formula below.
This metric allows marketers to determine the percentage of customers who converted from the total delivered emails.
Email click-to-conversion rate
As we saw with email open-to-click rate, marketers often want to assess each stage of the email funnel. Specifically, marketers want to understand the rate at which customers convert after clicking an email. The email click-to-conversion formula provides marketers this information.
Once a customer clicks an email, they’re typically directed to a company website or landing page. The job of these web pages is to convert customers. Marketers can understand the effectiveness of a web page at converting customers by measuring email recipients’ behavior once they click.
Email click-to-conversion rate is calculated by dividing the total number of email recipients who converted by the total number of recipients who clicked an email at least once. See the full formula below.
How to improve email conversion rate
The web page on which a customer lands is the primary driver of email click-to-conversion rate. Efforts to improve this conversion rate should focus on optimizing these landing pages. Marketers use a variety of methodologies to test landing page content and layouts to maximize conversion rates.
Email conversion rate and email click-to-conversion rate benchmarks
An email conversion above 1% is generally considered good. Note that this benchmark varies by industry and the type of email sent. A good email click-to-conversion rate benchmark is around 15%-25%.
How do marketers improve email performance?
Now that we’ve reviewed key email metrics, let’s look at how they can be used to improve overall email performance. Suppose an email team can’t decide on an approach for an upcoming email sales announcement. Because of their disagreement, they decide to split their recipient list and send three different emails. The emails have different subject lines, email creative and content, and landing pages. After the emails are sent, the team reviews the performance results below.
As you can see, all three emails were delivered to 1,000,000 customers. Email #3 resulted in the highest number of conversions (i.e. sales). However, observe the rate at which customers progressed through each stage in the email funnel. Each email had success in one section of the email customer journey. The table below highlights the best-performing metric for each stage of the email funnel.
Email #1 had the highest open rate—22%. This resulted in over 70,000 more opened emails than the next best open rate performer. That is a big number! Think of all the extra sales the email marketing team could have attained if the other two emails achieved a 22% open rate. One hundred and sixty thousand incremental customers would have opened their emails and had an opportunity to click and convert.
Email #2 attained a 16% open-to-click rate—far better than the other two emails. Imagine how many more total customers would have clicked if email #1 and email #3 had similar open-to-click rates.
Email #3 was the click-to-conversion rate winner. It had the highest rate of all three emails.
These insights are important because email marketers can use them to improve the effectiveness of their campaigns. Suppose now that the conflicted email marketing team has another 1,000,000 customers that have not received the sale email. Using the insights above, the email team can piece together an optimal email.
As we discussed earlier, email subject lines drive open rate. Because our email team wants to use the insights from the initial three emails, they will use the subject line from email #1. Similarly, they will use the email creative—the driver of open-to-click rate—from email #2. Lastly, the landing page used for email #3 did the best job converting customers. Thus, our email marketing team will use its landing page for the final email deployment.
The table above outlines our optimal email. This email leverages the best parts of the three prior emails. As you can see, these optimizations result in 7,744 customer conversions. That’s more than double the conversions email #3 (the best performer of the initial three emails) received!
This example illustrates the power of testing each area of the email funnel. Email marketers spend a lot of time testing various subject lines, email creative layouts and landing pages with the goal of working toward an optimal email deployment. Email marketing metrics are the underlying set of tools that enable this process.