'EmailGeekonomics': Time For Some New Email Metrics
How is email marketing like baseball? Both use a set of generally accepted statistics to measure player (campaign) performance and how it contributes to the team's (company's) success in meetings its goals (winning games/generating revenue).
However, baseball organizations and other major-league sports may be farther up the evolutionary ladder than many email marketing organizations, because they are using new metrics that provide better insights and more accurately measure and predict player performance.
Baseball Invents More Meaningful Statistics
I've been fascinated with sports statistics since I was a youth, opening the San Francisco Chronicle's daily Sporting Green section to see how Willie Mays ranked in Major League Baseball's various categories.
Today, teams and statisticians combine basic stats like hits, walks, runs scored, runs batted in, and more into new, more involved formulas that more precisely measure a player's individual performance and his actual value to the team's overall performance.
Why the OBP Beats the Batting Average
Like the open rate in email, the batting average is the classic measure of batter performance, but it doesn't adequately capture a batter's value. For example, power hitters often get walked intentionally. Walks, which are not reflected in batting average, often lead to runs scored.
A better metric is the on-base percentage (OBP), which measures all the ways a player can get on base, including hits, walks and hits by the pitcher (not including errors, interference or fielder's choice). These could advance another base runner or score a run. This more accurately represents the player's at-bat performance and his contribution to the game.
This new world of baseball statistics even has its own case study. "Moneyball: The Art of Winning an Unfair Game," by Michael M. Lewis (2003; W.W. Norton & Co., Inc.) documents how the Oakland Athletics used more empirical measurements of player performance to build a winning team with less money. (OK, the verdict may be out on the A's success.)
Time to Change the Email Stats Roster
More email professionals are realizing that many standard email metrics are flawed or misused as yardsticks of email performance. (See an explanation here: "Are You Using The Right Metrics?").
These lesser-known metrics could foster some discussion to develop more comprehensive and meaningful email metrics:
- ROEM (Return on Email Volume): Certain email programs, such as triggered emails, deliver much greater return or revenue than others based on volume sent. This analysis shows management that adding that recurring birthday email program may actually provide better ROI than simply sending another broadcast email.
- ARED (Average Revenue Per Email Delivered): Used by a fair number of ecommerce companies, ARED provides a simple way to measure the pure effectiveness of your emails in generating revenue. Calculated by dividing total revenue by number of emails delivered (not just sent).
- Percent Active: Measures how many subscribers (expressed as percentage of email list) have opened or clicked over a specific time period, such as six or 12 months.
- List Hurdle Rate: How many new subscribers you must attract not just to replace those lost to churn -- unsubscribes, spam complaints and inactivity -- but also to meet your annual (or other time frame) list-growth goal.
- Churn to Clicks Ratio: The ratio of unsubscribes and spam complaints per message to unique clicks. Benchmarked over many messages, this comparison allows you to understand the correlation between your positive call to action content and links and negative churn.
- Contact Deferral Rate: This traditional customer-service metric measures which alternative communication channels customers use instead of the call center (online communities, email, direct mail, FAQs, social media, etc.). With email, emails can be designed to educate and solve FAQs for customers, greatly reducing costly call center calls.
Reach/Brand Lift/Viral Effect
- SRV (Subscriber Referral Value): Measures subscriber value in terms of additional revenue generated from existing subscriber referrals via share-to-social and forward-to-a-friend links.
- Viral Reach: Calculation of a campaign's reach through subscriber postings in social networks, discussion groups, forwarded email and other online sources.
What Do You Want to Measure?
Like an ocean liner, the email industry can't reverse course instantly. However, groups like the Email Experience Council's Measurement Accuracy Roundtable is helping to steer the ship in the right direction.
The group will soon announce new standards and definitions for a number of core email metrics. As part of this standardization process, perhaps we can also create a new set of business-oriented metrics that will generate results that provide greater context for the C-suite as well as the marketing department.
Do you use a lesser-known email metric? Please share it and its value to your organization in the comments section below.
Until next time, take it up a notch!