Defining the ROI and value of e-mail marketing: challenges and solutions

 
 

According to the fourth edition of the 'National Client Email Report' by the 'Email Marketing Council' of the British Direct Marketing Association, 46% of the questioned e-mail marketers are able to monitor the entire 'customer journey' from the opening of an e-mail to a purchase (in transactional and promotional e-mails mainly).

For all the others measuring this is a challenge. To know the total value of an e-mail address and e-mail marketing activities in general, insight in this complete customer journey is essential.

The challenge of tracking the customer journey and buying cycle

There are two reasons for the growing difficulty in tracing the complete customer journey in e-mail marketing:

  • "The clear and necessary trend to focus more on value driven or content driven e-mail instead of direct promotions and therefore the importance of the relevance for and interaction with the recipient. This is amongst others because of the increased pressure on conversion parameters and on avoiding 'list fatigue' in a world where there are more marketing messages and channels than ever before and content and relevance have become distinguishing parameters.
  • "A lack of the correct tools to trace the complex reality of the purchase of a product in a multi- and cross-channel world, where a purchase is never straight forward, but multi-dimensional whereby various factors and channels play a role. Think of the importance of word of mouth and "peer advice" and of the Increasing control of the buying cycle by the customer. But also think of simultaneously running a campaign over various channels.

How much is an e-mail address worth?

Mark Brownlow, the author of the report and, apart from being a respected colleague, also the founder of the well-known 'E-mail Marketing Reports' website, said in a comment that it appears as though the "revenue" generated by e-mail , is almost impossible to estimate.

He also states that these measurement issues influence the possibility for an organization to estimate the value of an e-mail address. 86% of the participants in the survey said that "they don't know how the value of an e-mail address can be measured".

E-mail marketing was considered as one of the most measurable forms of marketing for a long time and this is still the case. For a while now e-mail marketing has also been used for other forms of marketing than simply the promotional and transactional aspect. In the ambit of retention and loyalty programs, value-driven e-mail without expecting of an immediate response is not a novelty.

But it is true that the applications of e-mail marketing exceed the strict direct marketing context increasingly. Today more than ever.

E-mail marketing is not an island, but a component of a cross- and multi-channel approach whereby indirect effects and metrics are more important.

In a marketing reality where the attention shifts to the client and his buying journey, e-mail marketing forms a part of a broader strategy.

E-mail marketing metrics in a multi-channel world

Tactical metrics like the "click through rate" remain important for the e-mail marketers, just as managers have to know the sales impact, the lead conversion etc.

But there also have to be metrics that take into account the indirect marketing effects such as the number of forwards, the number of visits to physical shops as a result of an e-mail campaign (for example with e-coupons), the viral spread, the customer satisfaction and the brand reputation.

Of course all these parameters cannot be attributed perfectly to e-mail marketing campaigns. The communication and purchase cycle is much too complex and too multi-dimensional. This, for example, in contradiction to search engine advertising where the link between advertisement and conversion is more direct.

But if e-mail marketing forms a part of a global marketing automation, lead nurturing and client-oriented strategy and is also approached as such from the measurement viewpoint, the measurement is more accurate and holistic because the tools that are used, mostly also allow insight on the total customer journey.
The measurement of the ROI of a marketing campaign - and thus also e-mail marketing - is also more than the measurement of the metrics that are traditionally used in the area of conversion.

Marketing ROI: the micro- and macro-level

Marketing ROI, a financial parameter, should be measured on various levels: on every micro-level but also for the totality of a specific marketing technique, a marketing program and even the marketing strategy in its totality.

It is crucial to define the correct key performance indicators and to measure on the smallest possible level whereby everything is translated in function of ROI as a financial parameter.

It is however essential to realize that indirect effects like brand reputation should not be forgotten and that there will always be elements that can't be assigned entirely to specific activities. The use of marketing ROI as a financial parameter may not be an excuse to forget branding or to innovate in less predictable marketing campaigns. And it may definitely not be an excuse to reduce marketing to direct results, on the contrary!

The holistic e-mail marketing perspective: integration is key

Determining the ROI of e-mail marketing must however form a part of a global marketing ROI exercise. And for those wanting to know the full impact and value of their e-mail program, this marketing ROI is at least even important as tactical parameters.

Another question is whether it is still possible to achieve all this in e-mail marketing without connecting to CRM, web analytics, marketing automation processes, social media marketing, various databases etc.
Establishing marketing ROI is not simple and requires a lot of time, effort and transformational procedures within the company.

Just as a cross-channel and integrated marketing automation and lead nurturing approach and the accompanying platforms and procedures require more effort than the classical e-mail marketing approach.

But does a company that is seriously busy with e-mail marketing actually have any other choice?

A guest post by J-P De Clerck

 


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