The Direct Marketing Association found that “…email marketing returned a whopping $43.62 for every dollar spent on it in 2009.” That’s about $22 more than the next highest ROI marketing tool.

That is a ~4000% ROI!

ROI = [(Profit - Expense) / Expense] * 100

Now, I don’t think that kind of return is possible for every email campaign, but I’d sure settle for just a 400% return any day of the week.

Let’s assume you have a quality list of 1000 subscribers.  For every email you send, you get a 20% click-thru rate and a 5% close rate.  That’s is 10 orders for each email.

What is the average value of an order for you?

Is it $100? – that’s a $1000 is sales and an ROI of 400%

Is it $500?- that’s a $5000 is sales and an ROI of 2400%

If the email campaign costs you $200 to send, why wouldn’t you send that message?  You would be crazy not to!!

Okay, a 5% conversion is very optimistic.  How about a 2% conversion rate?  If an order is worth $100, that still generates $400 in sales.  With a cost of $200, you ROI is still %100!!

One hundred percent!!

This may be hard to understand, but there are a ton of businesses out there that still ignore email marketing as a sales tool.

It takes too much time.

It costs too much money.

They don’t ask for the emails of past customers and/or prospects.

Again….

The Direct Marketing Association found that “…email marketing returned a whopping $43.62 for every dollar spent on it in 2009.” That’s about $22 more than the next highest ROI marketing tool.

Even if you’re a service industry, sending regular emails to your past, current and future clients (prospects) is a must. You may not get a sale this month or the next, but 3 months from now, you may get a contract for $7500 project.  The $600 (3 emails at $200 apiece) you spent to have your name forefront in their mind when they were ready led to a $7500 project.

No more excuses, use email marketing.

Open Rates tell you the number of subscribers that opened your email. This is determined by putting an invisible image in the message and keeping track of how many times that image is requested. Because of this, open rates can only be calculated for HTML based emails, not plain text emails. It also means that subscribers that disable images or reading on a device (say a Blackberry) that doesn’t accept images, won’t count as opens either.

This number isn’t perfect, but it is still a number you should review and strive to increase with each message you send.

How do You do that?

There are four things that impact open rates.

• Sender Domain Name
• Sender Name / Email Address
• Subject Line
• Reputation

For sender domain, name and email address, make sure you use something that your subscribers will recognize. If a subscriber signed up for your email at my-domain.com but your message comes from some-other-domain.com, will they know who the message is from? If you normally use newsletter@my-domain.com but without notice change it to John.Smith@my-domain.com, it may also confuse them.

The best thing to do is tell them who to expect the message to come from when they sign up. On the confirmation page, tell them what name and email address your messages will use. Ask them to add your name/email address to their whitelist. You should also send them a confirmation email from that name/email address. You should again ask them to add your name/email address to their whitelist. Doing this multiple times will help them remember your name and email when the next email arrives.

The Subject Line

Once your message arrives and they recognize your name/email address, the next thing they look at is the subject line. The subject line should tell them what will be in the message.

• Don’t try to be fancy (“Speaking your language”)
• Don’t use spammy words (free, cheap, sale, money)
• Don’t use all CAPS
• Don’t use excessive punctuation!!!!!!

Not only will doing this trigger most spam filters, they won’t be impressed either. The subject line should also relate to the content the subscriber signed up for. If you promote your newsletter as a weekly update of car racing news but your subject line refers to getting “20% off your next order of Shamwow”, what are the odds they will open the message?

Your Reputation

Finally, there is reputation. Just as it impacts your delivery rate, it also impacts your open rates. Let’s say they signed up for your newsletter last year, but over time, they have found that your messages were less about car racing and more about selling car related products. Still car related, but not what they signed up for. Over time, they will open your messages less often or never.

They could unsubscribe, but they’re lazy and it is easy to just hit delete. Over time though, maybe they start hitting the “spam” button…

You need to protect your reputation to get more opens just like you do to get your message delivered.

If your subscribers aren’t opening your messages, what’s the point of sending the message to begin with? So look at your historical open rates and start thinking about ways to improve that. If you’re curious, check out this list of benchmarks for open rates and more.

Each one of these metrics requires a lengthily discussion, so today I’m going to start with Delivery Rate.

I will discuss Open Rate and Click-thru Rate in future posts.

Delivery Rate

Delivery rate is the percentage of subscribers that receive your message. This number is determined by the communication between your email marketing service provider (Constant Contact, Exact Target, MailChimp, etc..) and the service provider for your subscriber (Hotmail, Earthlink, AOL, your company’s Exchange server, etc..).

You may hear Bounce Rate in place of Delivery Rate. Each is looking at the same data but from a different perspective. If your Delivery rate is 95%, your Bounce Rate is 5%.

Say I send you an email from MailChimp to your Hotmail account. Based on a number of things, Hotmail will do one of 2 things:

• Accept the Message
• Bounce the Message

Hotmail could bounce my message for a variety of reasons, some that are my fault (i.e. hard bounces like a spammy message or bad email address), and many that aren’t (i.e.soft bounces like a full mailbox or an out of office reply).

If I send a message to 3,000 subscribers and have 500 bounces, I need to know why.

• Is Hotmail blocking my message because of MailChimp?
• Is the company’s Exchange server flagging my message as Spam?
• Did I acquire my subscriber list from a 3rd party that gave me a bunch of bad email addresses?

I can’t control soft bounces, but I can control hard bounces. If MailChimp’s servers are getting blocked by Hotmail, MailChimp needs to figure out why and fix it. If my email is getting flagged as spam, I need to understand why and fix it. If my subscriber list has bad email addresses (inactive, invalid, not opt-in, etc.), I need to remove them.

Some people get caught up on how big their list is regardless of the impact on their Delivery Rate (and Open and Click-thru Rates as you’ll see in future issues). Would you rather have a list of 5,000 subscribers and a Delivery Rate of 98% or a list of 30,000 subscribers and a Delivery Rate of 62%?

Simple math suggests 30,000 subscribers because that translates into 13,700 more people receiving your email.

In the short-term, this is great. In the long-term, you’re playing with fire. If your email service provider (i.e. MailChimp) is concerned about their business, they are going to do one of two things, stop letting you send to bad email addresses or deactivate your account (no joke, I’ve seen it happen).

If you’re doing something that causes a service like Hotmail or Yahoo to block all email from MailChimp’s servers, it impacts all of their customers, not just you. The same goes for spammy messages. If their own spam filters are triggered by your email, they aren’t going to let you send that email.

Finally, repeatedly sending spammy email or email to bad email addresses could get your own domain flagged as a spammer. If that happens, any email you send may not get delivered. Imagine that big proposal to Walmart never getting delivered because your company domain was flagged as a spammer by SpamHaus because of bad email practices.

What Does All This Mean?

To improve the effectiveness of your email marketing, you need a subscriber list that is made up of people that actually want your message. Strive for a 100% delivery rate. Protect your reputation above all else and don’t spam.

Next month I’ll talk about Open Rates and play some more with the numbers.

If email marketing isn’t something you currently use or you’re not seeing the type of return you want, give me a call at 317-513-0920.

Beyond being fast, easy and cheap, the Direct Marketing Association found that “…email marketing returned a whopping $43.62 for every dollar spent on it in 2009″ (DirectMag.com). That’s about $22 more than the next highest ROI marketing tool, search advertising.

Another article at Email Marketing Reports provides additional data on the benefits of email marketing.

After reading both articles, you’ll find that email marketing can be a very profitable way to promote your business.

If email marketing isn’t something you currently use or you’re not seeing the type of return you want, give me a call at 317-513-0920.

Open Rate

Open Rate is impacted by 4 primary things: sender name, sender email, subject and history.

The sender name and email are typically the first things recipients look at to determined whether to save or delete the email. After that, they look at the subject line. If they recognize that and the subject line looks interesting, chances are they either save the message or open the message immediately.

The big thing is history though (for those recipients that this isn’t their first message). If past emails have been beneficial, they tend to open and read the message. If they haven’t, they either delete, mark as spam or unsubscribe.

In the end, your history with the recipient is the most important part in increasing open rates. And this starts from the very beginning (when they first subscribe).

You might be wondering about those that don’t open. Why don’t they just unsubscribe? Generally, email applications make it easier to delete than mark as spam or unsubscribe.

Click-Thru Rate

Once the recipient opens the message, click-thrus are generally the primary goal.

Recipient’s click for a variety of reasons: they want more information, they want to buy/sign up for something or curiosity about something in the message.

If you provide all the information in the message, recipients have no need to click through. If the offer (call to action) isn’t compelling (to buy or sign up), they won’t click through. Sometimes it is as basic as the links don’t stand out or there aren’t enough links. Finally, the message content may be something they aren’t interested in so they don’t take further action.

Again, history is important in generating click-thrus. If past history tells the recipient that clicking the links don’t provide additional information, they generally won’t click. If past messages have few if any links, their mindset may be to just read the message.

If the goal is click-thru’s, you have to give recipients a reason to click or take some action (coupon flyers and infomercials for example). If you don’t, they won’t. It really is that simple.

If the goal is to provide information, promote the brand, create awareness for an upcoming promotion, etc.(most TV commercials for example), then the copy should be geared toward doing that and not generating click-thrus.

What Else Matters?

Another thing is consistency in delivery times and the overall look and feel of the message. These two things impact opens and clicks. If recipients normally receive your message at 10AM on Tuesday each week and you then send a message on Friday at 4pm, it is going to throw them off. Alternatively, if the message looks different every time, they may not know what they are looking at, not know where to find their favorite content or just not recognize the message and not read further or click.

Who are your Subscribers?

In general, open rates and click-thrus are directly related to your recipient lists. Given your delivery rate, it appears your lists are current. The question is, are the recipients in our target audience? If they aren’t in your target audience, no amount of changes in the message will improve the numbers.

Some Stats

Here is some historical data from Constant Contact (they have aggregated data from their client sends – over 200 million messages). It is broken down by business type. Here are a few:

Marketing/PR: Open Rate – 13.5%, Click-thru Rate – 13.5%
Personal Services: Open Rate – 18.0%, Click-thru Rate – 12.6%
Products & Services: Open Rate – 16.0%, Click-thru Rate – 12.2%
Professional Services: Open Rate – 15.4%, Click-thru Rate – 13.0%
Retail: Open Rate – 17.7%, Click-thru Rate – 15.7%
Salon/Spa: Open Rate – 15.0%, Click-thru Rate – 7.0%

In Conclusion

So, to improve the effectiveness of your email marketing, we should first look at your subscriber lists and then move on to improving open rates, click-thrus as wells as the layout, appearance and call to action on your landing pages.

Email conversion depends entirely on the subscriber.

• Yes, the proper sender name/email and subject line impact open rates.
• Yes, the message copy, layout and graphics impact click-thrus.
• Yes, landing page copy, layout and graphics impact conversion.

But in the end, if the subscriber doesn’t want or need your product or service right now, they are not going to click “Buy Now”. If the subscriber doesn’t see value in your offer, they are not going to fill out that form and click “Get More Information”.

Unless your name is Seth Godin or Malcolm Gladwell, your subscribers are not going to buy on the first announcement of your new book.

Email conversion depends more on the relationship you have with the subscriber than anything else. You have to cultivate that relationship every opportunity you can. You have to deliver on what you promise. You have to respect your subscribers has much as you want them to respect you. You have to become the “expert” in their eyes.

Once you do all that, conversion becomes a function of the offer and its’ presentation.

If you break that trust at any time though, you might as well remove that subscriber from your list (if they haven’t already). They will never care about your message or make a purchase again.

How good is your subscriber list? Do they trust you? Do you respect them?

Spend as much time developing, supporting and respecting your subscriber list as you do with landing page copy and image placement. The size of your subscriber list isn’t nearly as important as the qualiy of that subscriber list. It is better to have 500 subscribers that can’t wait until your next message than 15,000 subscribers who have your message filtered into their “To Read” folder in Outlook.

Remember, email conversion depends on your subscribers more than anything else. Keep that in mind with every message you send. If you’re not delivering valuable information that is timely and relevant to your subscribers, don’t click “Send”.