Inability to measure/prove return on investment (ROI) represents a major obstacle to securing digital investment.1 Unfortunately, almost half of all email program owners are not confident about their ability to measure (ROI).1 In a recent webinar we polled the audience with this question and their responses were consistent with broader industry research:
In this article, I’ll summarize a range of great recent research that validates email’s continued #1 ranking when it comes to delivering ROI. I’ll also explain some of the challenges that increasingly make measuring email ROI tougher than expected!
For program owners defending the effectiveness of email as a direct marketing channel, here are some good news numbers from recent benchmark reports:
So there’s a really strong case for brands to critically evaluate their lower performing direct marketing channels (mobile, telephone, social, PPC, direct email, etc.) and re-direct more budget to their email programs—which are clearly most effective when it comes to delivering ROI.
However, while these stats are great for email in general, program owners must also be able to prove the same holds true for their own activity, and this is where things can start to get a bit more difficult!
Email has always been highly valued by its practitioners for measurability, and this still holds true—only PPC/paid Search ranks better in this regard.1 However, the increasingly multi-channel behavior of consumers makes measurement a more complex task. Here are some reasons why:
It’s clear the most commonly monitored email metrics are becoming less reliable indicators of effectiveness. Merely being present in the inbox may be enough to create awareness, subscribers may take multiple routes to purchase and external factors – which program owners can’t control – exert influence over subscriber behavior.
The missing measurement piece is usually the ability to map a financial value against each key performance indicator. What is the value of a delivered email? An open? A click-through? What is the value of an email address? This was another question we posed:
This highlights the value of a metric like Experian’s “revenue per email” ($0.08). From a number like this, “revenue per open”, “revenue per click”, and “lifetime value” can all be calculated. Most major email platforms will offer some form of “track to purchase” reporting, and we highly recommend implementing this functionality if possible.
But while this is easy to talk about in theory, it’s often harder to achieve in practice and we regularly work with our customers to help them measure and prove the value of their email activities. Watch for part 2 of this series where we’ll consider how to build an email ROI model, what to do if there isn’t a direct relationship between email effectiveness and sales revenue, and the challenges that are posed by attribution.