Step 5: Measure Your Results
The key to measuring your success is to understand your CPA for an e-mail marketing campaign. Determine your target CPA before the campaign begins, and measure it against your actual CPA when you get the results of the test campaign. You can then work backward in terms of figuring out what CPM rate will generate the best return for you.
One important thing to understand: If your test campaign is not successful—if you feel as if your CPA was too high—it doesn’t mean e-mail marketing is a bad channel for you. The next time you rent the list you used in the campaign, you need to negotiate a lower price. A list doesn’t need to have the highest-performing conversion rate if the CPM is low enough. As I explained in the previous chapter, CPMs for various lists are often negotiable. So, for example, if your target CPA is $40, you might spend $1,000 to rent a list of 10,000 names and e-mail addresses at $100 CPM. If you get only 12 or 13 purchases from customers on that list, your actual CPA for that campaign is $80, which is double your target CPA.
But you can then go back to the list owner and negotiate a lower CPM for a list of new names with the same targeting criteria. If your price for renting the original list was $100 CPM, you can negotiate for a $50 CPM to rent a list of new names from the same vendor. When you use that list in your next e-mail marketing campaign, your actual CPA should be closer to your target CPA of $40, and you should meet your ROMI.
Also, you need to be aware of the average open rates, CTRs, and conversion rates for e-mail marketing. For B2C campaigns, open rates are usually 2–10%. For example, if you send out 1 million e-mails, between 20,000 and 100,000 recipients will open it. For B2B campaigns, open rates are usually 5–15%.
For B2C campaigns, your average CTR is usually 0.5–2%. If you send 1 million e-mails, between 5,000 and 20,000 recipients might actually click through. B2B campaigns usually have a CTR of 2–5%.
The other component is your conversion rate. In other words, calculated from your CTR, how many people take the desired action once they get to the landing page? A 15% conversion rate is a good rate. That means 15 out of every 100 people who visit the landing page after clicking on your e-mail convert to a lead or sale. If your conversion rate is lower than 15%, you might want to think about changing your offer or optimizing the text on your landing page. If your conversion rate is higher than 15%, you have a very good campaign going.
For B2B campaigns, the average CTR can be as high as 2%. A conversion rate can be as high as 25% if your product and offer are properly targeted and if you have a good landing page.
› › › What You Should Know ‹ ‹ ‹
To review, here is what you should know about e-mail marketing:
E-mail marketing is an active form of marketing that involves reaching out to your potential customer. Although it has something of a bad reputation due to spam, many marketers have a high success rate with it.
To avoid your e-mail creative being identified as spam, follow the guidelines for effective e-mails, as outlined in the CAN-SPAM Act of 2003. Your e-mail must clearly identify your company, have sufficient contact information, and have an opt-out for customers who no longer wish to receive your e-mails.
You should also use a permission-based e-mail mailing list, where the recipients have opted in to receive e-mails from you.
You can buy or rent an e-mail address list. Purchased lists are usually cheaper, but the demographic targeting and contact information is not as accurate. Rented lists are usually more expensive, but more targeted to your target customers, and therefore usually more cost-effective in the long run.
When you buy or rent a list, you should give the list owner a set of demographic filters for your target audience. The list owner will give you a targeted list of e-mail addresses for potential customers who fit your audience.
Your e-mail should have a 70/30 mix of text and graphics. You should have both an HTML version and a plain text version of the e-mail. Your e-mail should include your brand, a call-to-action, a subject header that prompts the recipient to open the e-mail, and a “From” line that is transparent, legitimate, and brand-worthy.
You should also create a landing page on your website that reinforces the e-mail offer and allows the customer to take action (e.g., to make a purchase, sign up for a webinar, etc.).
You should identify a portion of your list to use as a testing audience for your e-mail campaign. You should test your e-mail creatives at least four times, using a large number of recipients (e.g., 25,000 per test). You should test the response to your e-mail creatives. You should also test your schedule to see which days and times you get the best response to your e-mail.
When measuring your results, measure your target CPA against your actual CPA to determine the cost-effectiveness of your campaign. If your actual CPA is higher than your target CPA, you can often negotiate a lower CPM rate with the same list owner when you buy or rent a list for your next e-mail marketing campaign.