Most of the time I spent in accounting was as an auditor. I know, not very sexy. The job required me to look at various financial reports and audit (or prove) the numbers. Imagine if email marketers were required to audit the numbers we track on a regular basis. At the CMA event, we walked through an example of auditing a simple metric: deliverability. I asked the audience if they tracked deliverability of email campaigns, and most of the hands in the room went up. Then I asked if anyone "audited" the deliverability number. I am not suggesting an audit to prove the number false, but rather an audit to better understand what the number is telling us.
So, I asked the audience about auditing the deliverability percentage: "How many of you look at your deliverability numbers and determine the percentage of mail that goes to the inbox vs. the spam folder?" Not one hand went up -- yikes! So, as any good (or "bad" in my case) auditor would do, I pushed the issue further and asked "Who has determined what percentage of emails actually delivered to the inbox arrive with images on vs. images off?".... Silence!
I was surprised by the lack of investment the group had made in auditing delivery statistics, so I walked them through a simple scenario that looked at email revenue contribution and the impact of moderate swings of deliverability. A retailer that sends 2.8 million promotional emails per month with an average revenue per order of $89 could improve its top-line revenue by hundreds of thousands of dollars with just a 10% lift in deliverability. Auditing financial statements and email marketing stats takes some time and investment, but only by understanding the numbers can marketers take action to enhance program effectiveness and overall ROI.
Debits and Credits
Financial accounting is based on a system of accounts that need to remain in balance (thus the term balance sheet). As an auditor, I was always conscious of the impact of transactions: as one account is debited, another must be credited. This same approach needs to be used more when calculating overall ROI in the email channel, because the success or failure of an email campaign can have a significant impact across an organization.
Email marketers need to have a solid understanding of how email communications impact other areas of the business, and include this info in their ROI analysis. Let's look at deliverability again. Assume that an organization is having issues with delivery of critical customer-facing emails, e.g. purchase confirmations or shipping notices. These emails could be blocked or they could be landing in the recipient's junk folder. Either way, the result is the same: customers aren't getting a critical message. If we assume that just 20% of these customers call the company "looking" for their confirmations, an organization sending 50,000 transactional emails a months could drive call center costs UP tens of thousands of dollars with poor email delivery.
Goodwill was originally used to reflect the fact that an ongoing business had some "intrinsic value" beyond its assets. I think this is a great way for a business to look at its email subscribers. Think about it. A business may only be able to attribute a small percentage of monthly top-line revenue directly to the email channel. But what about the overall contribution of those businesses' entire email subscriber files? Research shows that consumers who opt-in to communicate with a brand through multiple channels (store, email, Web, etc.) are worth more than consumers who participate with your brand via a single channel.
So, as you look at the overall ROI of the email channel, attempt to calculate the overall value of the subscribers within your email file -- or, better yet, try to calculate the overall value of the email subscriber base as compared to the balance of your entire base. You may find out that your email subscribers are responsible for a significant amount more revenue than previously expected.
So, put your auditor's hat on, mind your debits and credits, and do your best to determine goodwill. All of the above will help to establish a more accurate view of your programs -- and, if you're good (and a little lucky), a very compelling email ROI.