The Guide to Email Marketing KPIs: How to Measure and Optimize Your Email Campaigns
Like most marketing channels, growing your email revenue is a process of continual growth and optimization. Once you’re regularly sending out email campaigns, your email marketing KPIs will tell you where there is room to optimize, try new campaign ideas,...
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Like most marketing channels, growing your email revenue is a process of continual growth and optimization. Once you’re regularly sending out email campaigns, your email marketing KPIs will tell you where there is room to optimize, try new campaign ideas, and run A/B tests. E-commerce brands often leave thousands of dollars of revenue on the table because they don’t regularly review their performance & optimize their email marketing strategy based on their insights. Sometimes, something as simple as a different send time or a change in the email layout can create 15-20% more lift in revenue. Sometimes, your email marketing KPIs will help you identify new types of email marketing campaigns that your subscribers engage with more.
Another common mistake e-commerce brands make is sending out the same few email marketing campaigns each month, which eventually end up feeling repetitive to subscribers. Regularly measuring & optimizing your campaigns includes coming up with new ideas to test.
To make the most out of your email marketing efforts, every e-commerce brand should follow this process:
- Send Email Campaigns
- Update A Weekly Reporting Dashboard
- Analyze the data at least once a month (ideally weekly!)
- Identify opportunities for A/B tests, segmentation, and other campaign ideas
- Deploy new tests & ideas on upcoming email campaigns
- Repeat!
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Essential Email Marketing KPIs (Key Performance Indicators)
Open rates
Your open rate measures the percentage of email recipients who open your email. To calculate open rates, divide the number of emails opened by the number of emails delivered.
- Why It’s Important: Your open rate tells you how effective your subject lines are at getting your subscribers’ attention in their inbox. If subscribers don’t open the email, then they won’t be converting!
- What To Look For: You want an average open rate of 20-35%+. With the new Apple Mail Privacy, open rates tend to get inflated, but the higher the better!
Click-through rates
Your click-through rate measurez the percentage of email openers who click on a link within your email. To calculate click-through rates, divide the number of clicks by the number of emails delivered.
- Why It’s Important: Your click through rate shows how engaged your subscribers are with your email content. If subscribers aren’t clicking on the email, it likely means that the messaging, content or product doesn’t feel relevant to them.
- What To Look For: You want an email campaign click through rate of 2-4%. The higher the better!
Conversion rates
Your conversion rate measure the percentage of subscribers who make a purchase from your email. To calculate conversion rates, divide the number of conversions by the number of email recipients.
- Why It’s Important: Your conversion rate shows how effective your email is at convincing your subscribers to make a purchase — whether it’s through educating them, recommending relevant products, or with a promotional offer.
- What To Look For: You want an email campaign conversion rate of 1-3%. The higher the better!
Average order value (AOV)
Your average order value measures the average value of each purchase made from the email. To calculate average order value, divide the total revenue by the number of conversions.
- Why It’s Important: Your average order value shows how much your customers are spending with you. You should expect your AOV of your email subscriber list to be higher than your typical on-site AOV since these customers are nurtured.
- What To Look For: You want to have an email AOV that’s 10-20% higher than your on-site AOV. The higher the better!
Bounce rates
Your bounce rate measures the percentage of emails that were undeliverable. There are two types of bounces – soft bounces and hard bounces.
- Why It’s Important: If your emails don’t land in your recipient’s inbox, it doesn’t matter how great the subject line or email content is… because they won’t see it!
- What To Look For: You want to have a bounce rate of < 2%. The lower the better!
Unsubscribe rates
Your unsubscribe rate measures the percentage of subscribers who choose to unsubscribe from your email list.
- Why It’s Important: If your unsubscribe rate is high, it’s a sign that either your subscriber list doesn’t find your emails relevant or your email list isn’t your target audience
- What To Look For: You want to have an unsubscribe rate of < 0.5%. The lower the better!
Advanced Email Marketing KPIs
ROI
You ROI measures the return on investment on your email marketing. To calculate ROI, divide the total revenue generated from email by the total cost of your email marketing efforts (such as the cost of your email marketing platform & team).
Why It’s Important: You want to make sure that the time & money you’re investing into email marketing is effective at growing your business. Using a tool like Backbone can help increase your email marketing ROI by allowing you manage your email marketing at a fraction of the cost.
Average Revenue Per Email
Your average revenue per email measures the average revenue generated by each email. To calculate revenue per email, divide the total revenue generated from email by the total number of emails sent.
Why It’s Important: This email marketing metric helps you predict & set goals for how much revenue should come from each email campaign you send.
List Growth Rate
Your list growth rate measures the growth of your email list. To calculate list growth rate, divide the number of new subscribers by the total number of subscribers at the beginning of the period.
Why It’s Important: Your email subscriber list will naturally disengage over a long period of time, so it’s important to continually add new subscribers to your email list to continue growing your email marketing revenue.
Forward Rate
Your forward rate measures how often subscribers forward your emails. To track forward rates, use unique tracking links within your emails and monitor the number of times these links are clicked.
Why It’s Important: If your subscribers are forwarding your emails to their friends, it means you’re doing something right! It helps generate word of mouth for your business & can be a great indicator of what email campaigns are most relevant & engaging to your email list.
Spam Complaint Rate
Your Spam Complaint Rate measures the percentage of subscribers who mark your emails as spam.
Why It’s Important: If your subscribers are marking spam complaints on your emails too often, this will hurt your deliverability & inbox placement rate meaning even your best subscribers won’t see your emails.
Tools for Measuring Email Marketing KPIs
Google Analytics can track email metrics, such as clicks and conversions, by setting up custom UTM parameters in your email links. Most ESPs like Klaviyo allow you to easily tag all your emails with UTMs within the platform.
Email service provider (ESP) analytics all offer built-in tools to automatically track email KPIs, such as open rates, click-through rates, and bounce rates, and often include user-friendly dashboards to see your metrics at a glance.
Third-party email analytics tools, such as Looker & other business intelligence platforms can provide additional insights and help you measure email KPIs beyond what your ESP offers.
How to Use Email Marketing KPIs to Optimize Your Campaigns
Setting Goals
Setting target revenue, engagement, and conversion goals for each of your email marketing campaigns is essential for tracking progress and optimizing performance. You can set these goals based on industry benchmarks or, preferably, your rolling 6-month average. To set goals based on your rolling 6-month average, simply calculate the average performance of a specific metric over the last 6 months.
A/B Testing
A/B testing is a crucial part of any email marketing strategy to improve performance. Begin by identifying key metrics that are lower than your goals or trending downwards.
- If open rates are low, run A/B tests on subject lines and preview text.
- If click rates are low, run A/B tests on email layout, CTA buttons, or email content.
- If conversion rates are low, run A/B tests on email layout, messaging, or link URLs.
Segmentation
Segmentation involves sending different emails to different customers based on their characteristics or behavior. As your email list grows, you’ll have various audience segments that need different content and offers. Typically, you can segment based on purchase behavior, engagement, types of products purchased, or subscriber interests. Start by identifying different customer segments and sending the same campaign to them. Analyze how different subscribers engage differently with the same campaign to identify opportunities for A/B testing. Segmentation can improve open, click, and conversion rates because the email is more relevant to the subscriber.
Personalization
Personalization is the process of customizing what someone sees in an email based on their profile or behavior. You can personalize emails with subscriber information such as first name, birthday, or location. Additionally, you can personalize with dynamic product recommendations based on a subscriber’s browsing or purchase history. Personalization can improve open rates by making the subject line feel more personal and can improve click and conversion rates by recommending more relevant products.
Automation
An effective email marketing strategy consists of both a well-planned campaign strategy and automated flow strategy. Campaigns are sent manually, at a specific time and day, to the whole audience or a segmented group. Flows, on the other hand, are sent automatically when an individual subscriber completes an action, such as joining the list or adding a product to their cart. By leveraging automation, you can send timely, relevant content to your subscribers which leads to flows typically having a higher engagement & conversion rate than campaign emails.
Best Practices for Email Marketing KPIs
Frequency
To stay on top of your email marketing performance, track your email KPIs every week and update your dashboard accordingly. Review and analyze your data at least once a month, but ideally, aim for a weekly analysis. During big promotions and product launches, you’ll want to monitor your metrics daily to ensure everything runs smoothly and address any issues that may arise.
Benchmarks
When it comes to benchmarking your email marketing performance, consider three types: Red Zone, Industry, and 6-Month Average.
- Red Zone benchmarking involves monitoring key metrics such as open rates, spam rates, and unsubscribe rates to ensure they don’t dip too low, causing deliverability issues.
- Industry benchmarking compares your performance against similar companies in your industry, providing insights into how you’re performing relative to your competition.
- 6-Month Average benchmarking involves comparing your current performance to your own account’s average performance over the past six months.
Data Quality
Most Email Service Providers (ESPs) like Klaviyo, Sendlane, and others offer high-quality reporting on email marketing metrics. Using a platform like Triple Whale can also improve the quality of your data & understanding how your email marketing KPIs fit into your broader marketing strategy.
It’s also important to pay attention to attribution windows. Aim for an email attribution window of 5 days or less. For example, if you have a 3-day attribution window, a sale is only attributed to email marketing if someone opens or clicks an email and makes a purchase within 3 days.
Analysis
To analyze your email KPI data and make data-driven decisions, consider three types of analysis: Trend, Comparative, and Benchmarking.
- Trend analysis involves identifying metrics that are trending up or down.
- Comparative analysis focuses on metrics that have changed significantly week-over-week (WOW), month-over-month (MOM), and year-over-year (YOY).
- Benchmarking analysis identifies metrics that are significantly above or below established benchmarks.
Optimization
For campaigns that generate significantly more revenue than average, consider incorporating them into your upcoming email marketing strategy and brainstorm similar campaign topics that may perform well. If metrics are trending downwards, identify A/B tests to run on upcoming campaigns to improve performance. By consistently analyzing and optimizing your email campaigns, you’ll drive better results and maximize the return on your email marketing efforts.
In conclusion, tracking and optimizing email marketing KPIs is essential for maximizing the success of your email campaigns and growing your e-commerce business. This guide has provided insights into essential and advanced KPIs, as well as best practices for setting goals, A/B testing, segmentation, personalization, and automation.
The key takeaway is that continuously monitoring, analyzing, and optimizing your email marketing performance will lead to improved engagement, conversions, and revenue. By understanding and leveraging these KPIs effectively, you can make informed, data-driven decisions to elevate your email marketing strategy and achieve better results for your brand.
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