The Key Metrics of Email Marketing

After being asked repeatedly, "What exactly does Email Geniuses do?" - a very legitimate query which vexed me more than I’d care to admit (because, after all, I do everything!) - I created a framework to answer that question. I’d love to get your thoughts on it.

Focus on Outcomes

I started from "What" I know how to do, and asked myself which problems are solved by this know-how. I soon realized that the art of user list management - which I do master -? branches out really far into tactics that help with other tactics. I can abstract multiple times the reasons "Why" I do what I do before I hit the true sap in the proverbial tree: the actual business metrics that matter.

I think I’ve just been assuming everyone would spontaneously get why, for example, it is important to have a long welcome series that is responsive to user behavior. But why would that be obvious to anyone who doesn't do what I do on a day-to-day basis? It is my job to break down the “Why” of my craft to speak to the correct level of abstraction at which business decisions are made.?

Say “Why”, not “What” nor “How”

All this to say that I’ve decided to focus my services on the “Why” of what I do, and not the “What”, so that potential clients can immediately grasp what they stand to gain by investing in email marketing.?

I boiled down the “Why Email Marketing” to 4 distinct goals, which are deeply interconnected and are achieved by a host of shared tactics, but each require their own unique set of tools to fully maximize. They are all extremely easy to understand for business deciders, especially with a small primer such as this one.

The 4 KPI’s Most Companies Want To Improve

At the end of the day, any email marketing strategy aims to increase one of the following 4 metrics: Open rates, Conversion rates, Lifetime Value, and Retention rates. Clearly, increasing one of these metrics will help with the others. But I fail to see what is being left out, here. Any other metric is arguably a means to improve one or more of these 4 KPIs.

Let’s jump in and get a quick overview of these metrics and why they matter the most.

1. Open Rates

This may look and feel like a metric that is more of a means to an end, but it isn’t. On a fundamental, very real level, you can get nothing at all from an email campaign that isn’t opened by anybody. While I wouldn’t recommend most brands spend too much time agonizing over their open rates, they definitely should if those rates are below 10%, as most likely than not this means that a large proportion of their outbound emails are landing in the spam folder. And if they don't already, then they will soon, because open rates are a key indicator of list hygiene, an critical precursor to long-time success. As the saying goes: your deliverability strategy is your email marketing strategy.

As will be the case with the other 3 Key metrics, we will dive deeper into this in subsequent posts.

2. Conversion Rates

Notice how I did not choose “Click Rates”. Truthfully, click rates do not matter at all in over 99% of cases. They need to be more than 0.00%, but even then, maybe not if they reach their goal of driving user action, engagement, revenue, etc. True conversion rates from email can be something that is challenging to measure. But your best approximation of conversion rates from email is probably going to be a lot better than using email click rates as a proxy to conversion rates.

Most often, you can measure the before/after effect of an email test on the company’s key business metrics, like revenue, subscriptions, engagements, etc, and good software and setups will allow you to adequately A/B test results on conversion rates. But one thing is clear: improving your email marketing game can definitely help improve your conversion rates from email, something which will likely positively impact the next metric.

3. Lifetime Revenue

Yes, I thought of revenue from email as one of the key metrics. But, as my friend and distinguished email scholar Sean Duffy would point out, revenue from email is not only incredibly hard to measure, it’s often wildly inflated. Not only that, but what truly matters is incrementality. And trust me, the true end goal isn’t to boost incremental revenue from email. The goal is to increase incremental revenue, period. And, sure, maybe you just want a quick influx of cash now, but I can’t think of a scenario where you can realistically need a quick influx of cash now that won’t also have the side effect of increasing your LTV.

At the end of the day, LTV is a lifecycle KPI, it is a metric deeply connected to other crucial business considerations such as Unit Economics, ROAS, and CAC. I feel LTV is the correct end-goal for all revenue-driven considerations concerning email. If my work improves your LTV, we won’t need to worry about email attribution vs SMS attribution vs organic attribution. The proof will likely be in the pudding. But I’m happy to hear your thoughts about this one.?

4. Retention Rates

Once again, it’s hard to not see this goal as a means to the end of increasing LTV. But I feel that for some businesses, retention is so important it can become an end in itself. Like when 30-60% of your customers churn within the first month, as it was the case with a company I’ve worked closely with. There is hardly any way to scale such a business without first finding a way to curb that tide of early churns. We are in the presence of a logic similar to the one I described with the open rates: a customer can’t upsell, become a repeat customer, or produce revenue, if that customer is no longer there.

As they say in F1 racing: “To Finish First, First you have to Finish”.?

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I can’t wait to get into the intricacies of each of these KPIs with you, and also how the bulk of strategies I recommend end up improving all 4 of these key objectives at the same time. But that is for future posts.

For now, I would like to know, at first sight, do you believe I am correct in singling out these 4 goals? Will Email Geniuses be better positioned with this clear and simple service offering, which is focused on outcomes rather than processes? I’m eager to know what you think.

Drop a comment, and see you in the next one!