Email Conversion Rates

How much are your email newsletter subscribers worth to you?

To know how much your email newsletter subscribers are worth you must know their conversion rate. Once you know how much your email newsletter subscribers are worth to you you also know how much you can spend to acquire more.

Most email services or off-the-shelf software solutions allow users to track open and click rates. But your most important tracking metric for email promotions is actually your conversion rate. Knowing how many opens and clicks you generated is “nice to have” but knowing your conversion rate is “must know”.

Most of us are not sending out emails for the fun of it. No, we send out emails with the intent of getting the recipients to perform a specific action or set of actions. These desired actions lead toward what is commonly called a goal or a conversion. Examples might include: making a purchase, contacting a sales rep for a quote, downloading collateral material and so forth.

Your open rate is an indicator of how effective your subject line is. To determine this rate you use the following equation: Number of emails sent/number of emails opened.
Your click through rate is an indicator of how effective your email content, offer and call to action is. To determine this rate you use the following equation: Number of emails opened/number of emails clicked.
Your conversion rate is an indicator of how effective your website is and how effective your promotion is overall. To determine this rate you use the following equation: Number of emails sent/number of goals completed on the website.

Use your web analytics package to track email conversions

To track what your email subscribers do once they get to your website you can add information to the links you put in the emails you send. This information works with your web analytics package to track what your email subscribers are doing on your site.

Let’s take a look at how this is done using Google Analytics, a very popular (and free) web analytics tool.

Here is an example of your link without tracking:
http://www.yourdomain/landing-page.html

Here is what your link would look like with the added tracking tags:
http://www.yourdomain.com/landing-page.html?utm_source=newsletter&utm_medium=email&utm_campaign=july__09

Google Analytics gives you a total of 5 parameters for tracking activity on your website (we are only using three in the above example).

utm_source newsletter
utm_medium email
utm_term open variable for testing
utm_content open variable for testing
utm_campaign July_09

Now you will be able to use the Google Analytics package to see how much of the traffic to your site is coming from your emails and how successful you are at getting that email generated traffic to make additional purchases, request quotes, download collateral material or perhaps some other goal unique to your site.

Knowing your conversion rate tells you how much your email subscribers are worth to you in real terms. And once you know how much your email subscribers are worth you also know how much you can afford to spend trying to get new subscribers.

Here’s an example:

emails sent 1,000
click throughs 50
conversions 10
conversion rate 1.00%

Now let’s say your average profit on each conversion was $150. This would give you a total profit of $1,500 for the entire email promotion.

emails sent 1,000
click throughs 50
conversions 10
conversion rate 1.00%
Profit/conversion 150
Total Profit $1,500

If you then divide you total profit by the number of emails sent you know your profit per subscriber is $1.50.

emails sent 1,000
click throughs 50
conversions 10
conversion rate 1.00%
Profit/conversion 150
Total Profit $1,500
Profit per subscriber $1.50

If each email subscriber is worth $1.50 to you then you know how much you can afford to spend advertising in order to get more email subscribers. For example: if you spend $500 on advertising to get more email subscribers you would need to get a minimum of 333 subscribers for your advertising to be successful. Anything less than 333 and you are losing money.

Advertising spending $500
Value of subscriber $1.50
Target 333

To get that target of 333 new subscribers simply divide 500 by 1.50.

When you know your target for getting new email subscribers you have opened up a whole new world of marketing opportunities.

Other articles you may want to read include:

Email Segmentation Strategy
Falling Email Marketing Response Rates

By: Craig Scott

Article Directory: http://www.articledashboard.com

GDM Interactive -- Internet Marketing Serice for Cary NC I am a passionate Texas Deer Hunting fan which some of my close friends fined amusing. It all started when I entered a contest and won a free hunting trip to Texas with a friend and I've never looked back since.