Once Again: Email List Growth Doesn't Equal Revenue Growth

by Stephanie Miller, Sep 24, 2008, 9:45 AM

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A new set of engagement-focused metrics can be used to get the resources email marketers need to improve revenue from the email channel. In last month's column I implored email marketers to replace ineffective batch-and-blast methods blindly focused on list growth with more meaningful lifecycle-based approaches that improve how the email program actually resonates with subscribers. When you isolate what works and doesn't, this hard data helps you quickly make the case for doing more of the former -- and get the resources you need to automate and optimize.

Start with response measures, but understand that most open and click data reflect only averages. To improve your existing reports, measure response by subscriber profile segments. Then, measure and benchmark to these engagement metrics:

- First issue unsubscribe (the number of people who unsubscribe after the first message) - a measure of your permission/benefit statement at sign up, and program relevance.

- First 30-days complaint rate by profile (the number of subscribers in a given subscriber profile who report you as spam in the first 30 days of their subscription over the total number of subscribers in that profile set) -- a measure of how far from relevant your program is to each profile segment.

- Active subscriber rate (the number of subscribers who have opened, clicked or converted in the past six months, divided by the total number of subscribers) -- a measure of engagement for your file. These are the subscribers for whom your program is working. Aim to find more subscribers like these, and then to adjust the program to address the inverse of this metric, called the...

- Non-Responsive subscriber rate (the number of subscribers who have not opened, clicked or converted in the past six months, divided by the total number of subscribers) - a measure of the failure of your content and contact strategy. Typically, this group of subscribers is much larger than the active subscriber rate. Profile this segment to understand what changes can be made to win back and engage with new subscribers.

- Subscriber response rate (the number of times a subscriber responds (open, click, purchase) divided by the total number of messages sent in the time period) -- a measure of engagement by subscriber profile or vintage (length of subscription)

- Relevance boost ratio (the revenue/value per post-activity trigger message compared to the revenue/value per average message sent) -- a measure of the boost you receive in value from your segmentation/lifecycle marketing efforts. For example, most marketers earn 5x-30x on "relevant" messages (e.g.: browse/event triggered, customized, post purchase, etc). Apply this "boost" to the size of other segments of your file where custom messages can be sent in order to predict the value of automating more segments. It's a great way to make the case for more resources.

Earning consistent and predictable results might be enough to get executive support. But there are other benefits as well. Focusing on quality and not quantity protects your ability to reach the inbox at all. There is a rather shocking and quite severe drop in inbox deliverability from even a small number of complaints, one spam trap address or appearing on just one of the top nine blacklists (which are all about list quality). How about a drop of 20 points to your reputation score? Our benchmark study reviews the risks and dangers.

Doing the right thing by your subscribers does take a new commitment to a lifecycle approach. Automating and optimizing it takes resources -- human, knowledge, technology and IT. By changing the metrics (and the language) around email marketing in your organization -- and measuring success based on engagement at the subscriber level -- we can be sure to earn the resources we need.

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