The 6 Key Metrics to Track in Your Email Marketing

Email marketing can be powerful and far-reaching -- more people use email than Facebook and Twitter combined -- but you won't get far if you're going in blind.

Email marketing is like any other form of online marketing -- you'll only succeed if you optimize, and optimizing requires data. But which data should you track to learn the most about your campaigns?

The answer to that question depends on the goals of each of your email campaigns. If you're optimizing an email meant to generate sales, you'll look at different data than you would for an email meant to bring visitors to your blog. Keeping these goals in mind will eventually help you optimize more efficiently.

So where to begin?

In this post, I'll review 6 key metrics to track in your email marketing campaigns. I'll also explain how each metric can help to optimize emails with different goals.

Before Getting Started...

You can't collect the data you'll need until you create special tracking URLs through a Web analytics platform. I recommend Google Analytics, a powerful (and free) analytics tool.

In order to track traffic to your website from email campaigns, you'll need to use the URL Builder to create special tracking URLs.

With these tracking URLs installed, you'll see how email recipients react to your campaigns and interact with your website. Then you can really get your hands dirty.

Metric #1: Clickthrough Rate

Clickthrough rate, or CTR, is perhaps the most universally important metric worth tracking. Whether you're promoting a sale or registering subscribers for a webinar, you'll always want recipients to click on links or share buttons in your emails. Engaging email campaigns earn more clicks from recipients. If your CTR is unusually low, then you'll know your messaging needs work.

To calculate CTR, divide your total clicks by the number of emails that reached their destination. Then multiply the answer by 100.

Don't be surprised if your CTR seems low. A study by Hubspot.com found companies that send 16 to 30 emails per month see median clickthroughs of 6.5 percent (and that's twice the CTR of companies that launch just one or two email campaigns per month).

Metric #2: Conversion Rate

If CTR measures engagement, then conversions measure effectiveness.

If the goal of your campaign is to entice people to complete an action -- such as requesting a quote, downloading an e-book or making an online purchase -- then anyone who follows through counts as a conversion.  These actions can be tracked in Google Analytics by setting up Goals.

To calculate your conversion rate, divide the number of email recipients who completed their desired action by the total number of emails that reached their destination. Multiple the answer by 100.

Conversion rates will always be smaller than CTR. However, a strong CTR with a weak conversion rate usually means your offer or your landing page needs some TLC.

Metric 3: Email Sharing/Forwarding Rate

If the goal of your email campaign is to get people talking about your business, then you'll want to pay close attention to your email sharing and forwarding rate. This is a measurement of how many people click on "forward" or "share" buttons embedded in your email. Shares and forwards can help raise awareness of blogs and social media profiles, and they're great for organically advertising compelling services and sales.

To calculate this rate, divide the total number of clicks on share/forward buttons by the total number of emails you've delivered. Multiply the answer by 100.

Shares and forwards also usually bring new people to your email list. Also, this metric can help you understand which campaigns your customers find to be most compelling.

Metric #4: Bounce Rate

Are your emails reaching their intended targets? Although email marketing isn't as engaging as social media marketing, it's still powerful because emails reach their intended targets and have tremendous staying power.

Emails remain in inboxes until they're deleted, creating opportunities for reengagement.

Unless, of course, those emails bounce, meaning they can't be delivered to recipients' inboxes. These can be "soft" bounces -- temporary problems usually resulting from server problems -- or they can be "hard" bounces from email addresses no longer being valid. Too many hard bounces can cause your ISP to flag you as a spammer, which can harm your marketing efforts. Delete invalid email addresses from your lists as soon as you're made aware of them.

To calculate your bounce rate, divide the number of bounced emails by the total number of emails you've sent. Multiply the answer by 100.

Check your bounce rate if an email campaign surprisingly underperforms. You might find that a hardware issue, not a marketing issue, is impeding your efforts.

Metric #5: Growth Rate

Even with stellar CTRs and conversions, your efforts will eventually fizzle out if you're not adding new emails to your list. That's because your list will shrink over time as people get new email accounts, unsubscribe or flag your messages as spam. Your growth rate is the no-nonsense answer to whether you need to more urgently grow your list.

To calculate your growth rate, subtract the number of emails you've lost from your total new subscribers. Divide the answer by the total number of email addresses on your list, then multiply that answer by 100. Positive numbers are good; negative numbers, not so much.

Metric 6: ROI

Is your email marketing campaign profitable, or are you spinning your wheels? Calculating your ROI gives you the answer. You'll definitely need to outfit your emails with analytics tracking URLs in order to learn your overall ROI.

To calculate this metric, divide the amount of money earned by your campaign by the money you've invested in your campaign. Multiply the answer by 100 to get your return on investment. Don't expect all of your campaigns to be profitable right off the bat, especially if you don't have a sizeable email list. But keeping track of your ROI will help you stay within your email marketing budget.

Conclusion

Email marketing is powerful and effective, but only if you know how to optimize. The six metrics reviewed in this article are a great start. Become proficient in monitoring these metrics, and you can rest easier knowing whether your campaigns are hitting their targets.

Marketing 101: Why Conversion is Key to Your Success

Your conversion rate is hands-down the most important metric in digital marketing.

 

Everything you do in online marketing is designed to convert visitors to your website into paying customers for your business.  And conversion rates don't just include sales -- people who make appointments, fill out contact forms, call you, and request free quotes also count as conversions. A conversion can be any desired action that brings your business closer to making a sale.

 

It's easy to get overwhelmed by metrics when getting started in digital marketing. You must watch click-through rates (CTRs) and cost-per-click (CPC) while always considering your return on investment (ROI). But the whole point of digital marketing is to maximize conversions for the cheapest-possible price.

 

In this article, we'll help you understand why conversions are crucial to your success.

 

 

Why Conversions Matter

Increasing the conversion rates of your online marketing campaigns is usually the cheapest way to boost your profits.

 

Think of it this way -- would you rather get more customers from Google AdWords by doubling your ad budget or by optimizing your advertising approach? Optimizing for a higher conversion rate means more bang for the buck. That's a big reason why conversion rates are so important.

 

That's not all - here are three other reasons why conversion rates matter:

#1: Conversion rates can predict success or failure.

Want to know whether your business is on the right track? Conversion rates give a pretty honest assessment, especially once you've optimized your campaigns.

 

With help from analytics reports, you can see which parts of your business get the strongest conversions, and you can predict which audiences are likely to become your best customers. Likewise, weaker conversion rates indicate where your business strategy needs work.

#2: Better conversion rates can save you money.

Campaigns with better conversion rates are generally more efficient than campaigns with weaker conversion rates. A higher conversion rate lets you cover more ground without increasing your ad budget, or you can reduce your ad budget and have cash leftover for testing new marketing tactics.

#3: Focusing on conversion rates will improve your website.

Creating an air-tight sales funnel is the key to boosting conversion rates. Your campaigns, your website and your sales processes need to be as in-sync as possible. As you learn which factors are most important for driving conversions on your website, you'll eventually discover how to make your site more valuable for visitors and customers -- and the benefits of this extend far beyond short-term profits.

How to Boost Conversion Rates

Now that we've reviewed the importance of conversions, the next step is taking action to boost your rates. Here are six easy tips to take your conversion rates to new heights.

 

#1: Sharpen your ads. The first step toward increasing conversions is nailing your ad copy to stand out from the competition.

 

#2: Optimize your landing pages. Deliver on promises made in your ad copy, and use concise, catchy headlines that immediately engage visitors.

 

#3: Test new ad funnels. Create new ads and variations of your landing pages. See how conversion rates change with different advertising approaches.

 

#4: Pare down your audience. Sometimes casting a wider net is better, but tightening your focus to specific consumer groups is an easy way to boost conversion rates.

 

#5: Use FOMO to your advantage. That's the fear of missing out. If you're advertising a sale, say in your ads or on your landing pages that time is running out -- and you can even use countdown clocks for added urgency.

 

#6: Grow your social media. Urge visitors to follow you on Facebook, Twitter and other accounts. Install social media login buttons on your website if it requires a member sign-in; people are much more likely to register using social logins. And if you have a strong social following, display the number of followers or shares on your pages for increased social proof.

 

Conversion Rates Aren't Always Reliable

Conversion rates may be the most universally important metrics in digital marketing. However, any data viewed out of context can be incredibly deceiving. Never be blinded by a high or low conversion rate without carefully evaluating all the data at your disposal.

 

Here are a few ways in which conversion rates can be deceiving:

#1: Higher conversion rates may hide poor performance.

Strong conversion rates are generally positive -- that's what you want. However, you might have a high conversion rate paired with a low sales volume. Or, despite your favorable conversion rate, perhaps high advertising costs are wiping out your ROI. Never assume your campaigns are profitable based on conversion rates alone.

#2: Some of your visitors aren't there to buy.

If you focus too much on conversion rates, you may overlook the multitude of other reasons why people visit your website. Some people may be researching products, and perhaps they'll eventually return to become paying customers. Some may already be customers and they're seeking support or checking on their orders. Do you maintain a blog? You may be building an audience. Don't become so fixated on conversion rates that you forget all the other ways your website is valuable.

#3: Conversion rates can fluctuate with different audiences.

Is your online marketing causing a large influx of new visits? If so, your conversion rates may seem unusually low. That's because new visitors are less likely to buy goods and services than established customers. Also, visitors from different traffic sources tend to convert at different rates. Using Google Analytics reports can help you determine your true conversion rates among different types of visitors.

Conclusion

Conversion rates are immensely important when optimizing your campaigns. Not only do they indicate whether your marketing is profitable, but they also reveal how visitors engage with your website. Conversions aren't all that matter -- you still need to watch your click-through rates, overall spend and numerous other metrics -- but driving conversion rates is generally the key for successful campaigns.

 

 

Quality Score Explained by former Google Employee

With the continuing expansion of ad space at the top of the page (from ad extensions like sitelinks with descriptions), it’s more important than ever to make sure your ads have a great ad rank. But CPCs are on the rise – so unless you can improve your conversion rate so you can increase bids, Quality Score (QS) optimization may be your only way to maintain a high rank without breaking the bank.
While I’ve been a panelist representing Google in Quality Score sessions at more conferences than I can remember, I’ve been meaning to put together some of my insights on the topic for a broader audience. So, here goes….

The Evolution Of Quality Score

Even if you don’t care much for a history lesson, it may help paint a picture of why QS exists in the first place, and the evolution of factors may give you some insight into what Google cares about.
When I started working at Google in 2002, Quality Score didn’t exist. But what set Google apart from the other PPC ad systems at the time was how they determined if ads were relevant enough to warrant an impression. In addition to having a team of humans reviewing all ads, the system was also monitoring the click-through rate (CTR) of every keyword — if a keyword’s CTR fell below 0.5%, it would become disabled for poor relevance. Google was using the wisdom of the crowds to let its users determine which ads should show and which shouldn’t.
The problem with disabling keywords at an arbitrary CTR level was that advertisers were unhappy to see some of their keywords disabled forever (unless, of course, they knew of the workaround to resubmit the same keyword with different capitalization). So, we started to evolve the system. Instead of disabling keywords, we came up with new statuses like “slowed,” “in trial” and “on hold.”
The idea was to give advertisers a way to fix low-relevance keywords by giving them a small allowance to run ads that were considered poor quality so that they might prove otherwise. We also gave the system more flexibility so there wasn’t a hard cutoff at the 0.5% CTR level. Ultimately, though, most advertisers still saw keywords they really wanted to advertise on get disabled, and they remained displeased.
Google addressed this with the introduction of the minimum bid. Rather than flat out disabling keywords, they asked advertisers to pay more for keywords that had low relevance — the idea being that eventually, it would make no sense for an advertiser to keep paying the high cost-per-click (CPC), and they’d either optimize the relevance or delete the keyword.
In today’s system, the minimum bid has been engulfed by the first page bid, which also takes into account competition. It’s a little harder to see the direct correlation between what you pay and the quality score, but the connection’s definitely there.
Below is an example of where we see the correlation between the average CPC and the QS in our Quality Score Tracker tool.

As the Quality Score starts to increase, the average CPC in this campaign starts to drop.

Quality Score’s Impact On Ad Rank

When Google launched AdWords Select and started to shift from CPM-based pricing to CPC-based pricing, they couldn’t afford to lose all the revenue from their CPM program (which was called AdWords at the time). They were still a pretty small company, and Yahoo/Overture was a formidable competitor. So, to ensure revenue was maximized, they ranked ads in the CPC program according to a very simple rule:
Ad Rank = Max CPC * CTR
If you take a minute to look at this more closely, you’ll quickly see that ad rank is, in fact, equal to CPM or dollars-per-impression. This was the simple but brilliant insight that made AdWords so powerful — advertisers only had to pay when they got clicks, users would see more relevant ads because ads with high CTRs were more likely to appear high in the results, and Google was making as much money as possible from these ads.
The equation for ad rank is a whole lot more complicated these days and now includes thresholds for appearing at the top of the page, landing page factors, and more. But at the heart of it, the original principle still applies: if Google can show more relevant ads, they will get more clicks, have happier users and make more money. And, the key component for achieving this is CTR.
The importance of CTR to Quality Score is a bit like the importance of TF-IDF to SEO. While there are hundreds of factors that go into ranking in paid or organic search, these long-established principles are still some of the most important ones. In the 80/20 rule, these are your 80 percent factors and the first ones you should pay attention to.

Factors Of QS

While I’ve explained that CTR is a main driver in QS, it’s useful to understand how Google thinks about CTR. After all, there are many things that influence the CTR you see in your account such as the device, the network, or the position of your ad on the page. Thus, the average CTR you see in your account is not the CTR Google uses to determine Quality Score.
To make sure advertisers have a level playing field, they evaluate small slices of CTR.
For example, they look at different CTRs by device type so that your performance on mobile won’t affect your performance on desktops. They also have a different CTR they look at for the Display Network and Google Search — a good thing, since CTR on Display is usually much lower, and you wouldn’t want that to hurt your QS for search.
Where possible, they also favor looking at the CTR when the keyword in your account matches the search query exactly (don’t confuse this with the “exact match” keyword match type), and they normalize the CTR based on the number of ads on the page and your ad’s position amongst them.
Furthermore, Google has to make some guesses before they have a statistically significant amount of CTR data for new accounts, new keywords and new ads, and they do this by evaluating the CTR at different levels as explained in the diagram below.

The various levels at which Google evaluates CTR to determine Quality Score.

As you can see, there are 3 levels of CTR evaluation: the account, the keyword and the ad. These CTR elements are all combined into a secret formula and out comes your keyword-level Quality Score and the corresponding number between 1 and 10 that you can see in your account.

How Quality Score Is Set For New Keywords

When a keyword is new in an account, there is not a strong historical element for how the keyword performs with its ad text (factor 3), so the QS is mostly based on system-wide data for that keyword in all other accounts. That gets combined with data for how this particular account and its ads have performed historically. If these elements have good QS, the new keyword is likely to also start off with a better QS.
To give an example, if you have 2 accounts, you should see a lower starting min bid in the account with the better account-level QS. If you have 2 domains, you will see a lower starting min bid when using the domain that has a better QS.
After the system gets enough data about more specific things, like how the keyword performs with the ad you wrote for it, it will rely much more on this to determine the Quality Score. This is why it’s so important to have great account structure and split up your ad groups in a way that allows you to create great performing ad texts for each grouping of tightly related keywords.

Other Relevance Factors

According to Hal Varian, Google’s Chief Economist, QS also considers “relevance” in addition to CTR. But what does that mean? The easiest way to think about this is once again based on click-through rate — but, rather than using CTR to generate the QS number between 1 and 10 that you see for each keyword in your account, it’s used at the time a user does a search to determine if there are any correlations between that user’s search and your ad that could predict the CTR (Google’s Quality Score is a predictive system that tries to predict CTR for each ad and each query). Some examples:

1. Did the user’s search include some additional words, and do those correlate with your ad’s expected chance of getting clicked? E.g., if you have a job website and want to advertise on the keyword [jobs], your ad is probably not relevant when someone searches for “Steve Jobs.”
2. Does the location of the user have any correlation to your predicted CTR? E.g., if your business is in the US and the searcher is in Belgium, perhaps it’s less likely your ad will get the click because the users may prefer a business closer to them.
3. Does the time or day of week influence your predicted CTR? E.g., Google may know that users are less likely to click on your ad on a Tuesday.

These factors let Google assign you a real-time quality score which they can use to better rank your ad for that particular query. There could be many other “relevance factors,” but just know they’re all based on the same principle of trying to predict the likelihood of your ad getting a click based on something Google knows about that specific query.
While the lack of transparency into the factors may be annoying, this relevance component has helped advertisers by automatically giving them more good clicks and fewer bad ones.

Landing Page Quality Score

The landing page is one of the newer factors used for QS. Landing Page Quality (LPQ) started as a way to counteract bad sites that duped users into clicking their ads and hence had a good CTR but a lousy user experience. Now that LPQ can also improve your QS, it’s getting a lot more attention from advertisers (probably more than it warrants).
Remember, the CTR of your ads is still the bigger QS factor and probably the better thing for most advertisers to focus on optimizing. Every now and then, I hear of advertisers who are spending a ton of time creating one landing page per keyword so that the keyword will appear on the page and score a better LPQ. That’s probably overkill — Google is very good at understanding how words are related, so it’s unnecessary to include every variation on the page.
My personal recommendation is to also keep a close eye on bounce rates and time on site, two metrics you can see directly in AdWords when you link it with Analytics. A high bounce rate or very short time on site both provide a great way for you to find keywords that are not relevant in the minds of users.

Optimizing The Right Elements Of Your Account

If you haven’t guessed by now, optimizing Quality Score is really all about optimizing for CTR. The challenge is to optimize for the right CTR. For example, because Google uses position normalization when determining how your CTR impacts your QS, it could very well be that your ad with a 15% CTR in the top position on Google is actually worse than your 3% CTR ad in the last place on the right side of the page.
You should also look at the impression-weighted Quality Score to determine which keywords and ad groups are most in need of an optimization. I shared a script for automating the calculation with AdWords Scripts.

Google Adds Enhanced Campaigns Bid Adjustment Reporting To Google Analytics

Google announced today that Bid Adjustments reports for AdWords enhanced campaigns are now included in Google Analytics.
The reporting, found in the Advertising section under Traffic Sources in Analytics, are designed to help advertisers analyze the performance of each bid adjustment within a campaign — by device, location and time of day.
You’ll notice in the Google-provided screenshot example above, there are columns for Revenue and Ecommerce Conversion Rate in the Summary view. These metrics are available when Ecommerce tracking is enabled in Google Analtyics, allowing you to analyze bid adjustment performance by ROI. However, when you look at your own reporting, you may see that the Summary view only shows goal results and that the columns for Revenue and Ecommerce Conversion Rate appear under the Ecommerce view instead.

The Most Important KPI For A Performance Marketer

Many performance marketers continue to consider click-through rate (CTR) as a key performance indicator of their search campaigns’ effectiveness and evolve their PPC optimization strategy around that.
At the end of the day, what matters most is achieving the best ROI given your business objectives and budget, and you might optimize directly to CTR or ROI or a combination of success metrics to achieve that.
In order to have the best optimization strategy for your SEM campaigns, it is important to understand and quantify the influencers of ROI.

The Two Extreme Optimization Strategies

There are two types of strategies performance marketers consistently use as their campaign optimization strategy:
1)    Optimizing To A CTR Goal
One of the main factors influencing Quality Score (QS) is CTR, which affects your cost-per-click (CPC) and in turn affects your ROI. An increase in QS due to a boost in CTR would lower CPC and improve ROI.

2)  Optimizing To An ROI Goal (Revenue-Per-Click & Cost-Per-Click)
Direct optimization to revenue or a conversion metric is a common strategy amongst performance marketers. Making sure an intelligent bid management is in use will be crucial to your campaign’s success.

While perhaps no marketer purely optimizes to CTR or ROI, they tend to skew towards one of these camps. Each method has its pros and cons. A CTR strategy will get you more clicks but does not guarantee the highest ROI. A purely ROI approach will get you the highest ROI but you potentially lose out on customers early in the sales funnel who might eventually convert.

ROI Breakdown

ROI equals Revenue-Per-Click (RPC) over Cost-Per-Click (CPC). Data analyzed from over two dozen advertisers using econometric methods (a simplified version of the equation is shown below) shows that 34% of ROI is influenced by RPC and 66% by CPC.
Bid management is by far the most important influencer of ROI. Forty-nine percent (49%) of ROI is influenced by bid management, 13% by other factors (i.e., marketplace, seasonality, etc.), and 4% by CTR. The data show the importance of having an intelligent bid management strategy in place for your SEM campaigns. But, does this mean a CTR maximizing strategy is a wasted effort?

A Deeper Dive Into The Relationship Between ROI & CTR

Previous studies have looked at the relationship between CTR & ROI by purely relying on correlations. A correlation analysis alone cannot determine the effects of CTR on ROI, and a more robust statistical technique is required to answer that question. These techniques enable us to control for all the factors that can potentially influence ROI.
From the chart below, we do see a relationship between the CTR & ROI — but not a very strong one.


Applying statistical modeling techniques will allow us to quantify any statistically significant relationship between the two if it exists.
In this model, I control for position, CPC, industry, and bid management differences across the different advertisers in the data in addition to CTR.
The results show that there is a statistically significant relationship between CTR and ROI; but in terms of impact, it’s quite small. For a 10% increase in CTR, expect to see a 1.2% increase in ROI. This means that if you increase your CTR from 10% to 11% for a campaign with an average ROI of $5, the ROI will increase to $5.06 due to the improvements made in CTR.

Key Takeaways For Performance Marketers

• Campaign managers should utilize both strategies above in optimizing their campaigns; main focus should be on ROI but do not completely ignore CTR
• 49% of ROI is influenced by bid management; intelligent bidding is integral to a campaign’s success
• CTR does have a small but statistically significant impact on ROI; a 10% change in CTR affects ROI by 1.2%

In Summary

Focus on optimizing your SEM campaigns for ROI but keep an eye on CTR. There is no need to purely optimize to CTR as it influences only 4% of ROI; but, it is important to account for it in your longer term strategy and make sure healthy CTR rates are met and maintained.
Intelligent bid management heavily influences ROI and is absolutely necessary to ensure your ROI goals are met.