How We Measure Success For eCommerce Email?
Engagement-based, performance-based, and value-based metrics are excellent indicators to measure the success of email marketing in an e-commerce business. By controlling and working on these, you can get the most out of your business.
As a marketer, I get asked all the time, ‘how do you measure success?’ or, ‘how do you ensure that the business is moving in the right direction?’. And, if things don’t seem well, how can you pinpoint the place of trouble and figure it out?
The answer is that we mainly focus on how much revenue the business is bringing in (instead of getting into the fuzzy metrics) and also understanding what your business goals are and aligning those with the desired outcome.
So, in this blog, I’m going to take you behind the scenes, let you in on how we get it done, and share tips and tricks for tracking your email performance and ensuring your business generates maximum dollars.
- Why Is It Important & How Often Should You Track Performance?
- What do we measure?
- Performance-based Metrics
- Seasonality and How to Utilize it
- Value-based Metrics
- Final Takeaways – What Makes Our Process Unique?
Why Is It Important & How Often Should You Track Performance?
Though revenue is the biggest indicator of a business’s performance, it is important to track which strategy and aspect of the company bring how much revenue into the business. That’s why marketers use different KPIs or other important success measurements to evaluate how much revenue email marketing generates in a company.
For more information on measuring and tracking KPIs, we have a blog that goes into more depth.
Moreover, measuring the email performance of the business and tracking its progress also assists you in setting future goals and expectations regarding your business.
This check on performance can be done monthly, quarterly, and yearly to ensure that everybody in the business has full transparency and understanding of what they should know regarding specific aspects of the company and their marketing in general.
Let’s view some behind-the-scenes things in marketing that will give you a high-level view of things, which should give you some great insights into how to go about this whole process of measuring your marketing success and then how you can incorporate something like this into the work you’re already doing.
What do we measure?
To understand this concept more clearly, let me show you what this process looks like and walk you through one of the documents we customize for every client we work with. This will help you understand how we start to break things down monthly and give you a high-level view of our strategies to increase our email revenue and enhance our overall marketing performance.
So to break things down and have a holistic view of business performance, we use and focus on our measurement hierarchy, in which we have different layers of things that ensure we’re measuring the right things.
Our measuring hierarchy has three main measures that help view things from email revenue’s perspective. These three things are value-based metrics, performance-based metrics, and engagement-based metrics.
These metrics help us understand each piece’s performance so we can know how the implementation of email impacts the business outcome we want to drive.
Before we get into the details of these metrics, you should briefly know what each metric does.
- The value-based metrics can also be called the North Star metric for a business, focusing on the value a company brings to the life of customers.
- From there, we look at our performance-based metrics, which give us a view of how we perform on the team and individual levels.
- And then, we’ll be looking at the engagement-based metrics to see how we’re winning and losing daily, weekly, and monthly.
Performance-based metrics give you a holistic view of business in terms of its outcome, i.e., revenue. It helps you understand how your business is moving forward by focusing on how much revenue it generates through the campaign and flow of emails. These metrics also help you figure out what needs to be done to move that business outcome forward.
The insert below shows one of the document sheets we customize for each client to keep a check on their performance-based metrics.
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As shown in the figure above, performance-based metrics include certain items you need to look at. First, you have email revenue for the month and then the email revenue as a percentage of the total e-commerce revenue. Then you have campaign revenue and flow revenue, understanding how much ratio of the total revenue these two bring in.
These numbers help you understand how they impact your business and its outcome. So suppose, if for whatever reason, you see a change in the performance and a change in these metrics, it can be used as an indication to dive in, figure out the problem and adjust it.
For example, if one of your flows or API connections stops performing well, you get to know that through these metrics. You address the issue and ensure they are adjusted as quickly as possible.
This is an excellent high-level view of email performance. When you’re an email marketing manager, you get to focus on these metrics to get a high-level view of performance through your emails, but for somebody in an upper position in your organization, such as in the finance team, they aren’t going to care about these metrics. They wouldn’t know anything about the open and click rates for your campaign and flow emails. They’re only going to watch how much revenue it will drive.
So these metrics are for you, an indicator that the company is moving in the right direction and is seeing an upward trajectory. Of course, there is some seasonality to this, but overall, you want an improvement month over month. And even with seasonality aside, this is about seeing positive momentum here.
Seasonality and How to Utilize it
Talking about seasonality, looking at things on a seasonal basis is crucial too. It prepares you for all sorts of situations and helps you understand what to expect at what time of the year. It tells you how you’re going to drive peaks into revenue projections and also gives an insight into how well it is working for you to get customers in the door, first to get them purchasing for the first time and then keeping them coming back.
If you can retain many customers and keep them engaged through your content, it will validate a lot of the work you’re doing on the email side. It will prove that you are successful in building effective automations and flows. You will see both of those growing in conjunction with each other, guaranteeing successful marketing performance.
The graphic below is taken directly from Klaviyo, showing the overall performance of the flow and campaign emails for a whole year depicting revenue collected from both on a seasonal basis.
As you can see, every business has some seasonality, so you should be prepared for every kind of season in your industry. For instance, as shown, February is a slow month for this business, and if you’d be aware of that beforehand, you should not lose your mind worrying over low performance this month. Instead, you should be using slow months experimenting and exploring new ideas and content, then using insights from those works and incorporating them into the things you are doing in the busy months.
We like to think of marketers as farmers; you will plant and grow in the slower months and then harvest during the busy seasons.
The value-based metric is mostly about the value your customers find in your brand, which leads them back to your company for more purchases. Hence this metric is a holistic view of returning customers and the revenue they drive.
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As seen in the insert, it looks at the number of orders from returning customers, the revenue from returning customers, and AOV from returning customers. These are measured monthly.
If you start getting more orders from returning customers and can increase their AOV, that would be the exact outcome you want to drive to bump up the value-based metrics.
Besides this, it can also give you a high-level view of performance-based metrics, looking at how much revenue we drive from those repeat customers and how much we can expect each month.
For instance, if you look at the numbers from last year’s September and compare those to this year’s September, it would give you a good idea of how you performed last year relative to this September. And that’s what helps you assess whether you’re moving in the right direction.
To be able to grow, you would want to be moving these numbers. One way to do that successfully is through email and SMS. These are the strongest levers you have for actually doing those two things.
After that, we will look at flow revenue month over month. This does not include all the automations we use, but typically some of the high revenue-driving automations we use for different clients.
As we discussed earlier, these metrics also indicate trouble for us, for instance, if one of the flows starts to fall off, such as if, for whatever reason, our back-in-stock automation isn’t working properly or there is a problem in code so that back in stock automation isn’t even showing, you’re going to know, and that’s going to give you a good insight into how it must be adjusted and changed.
So this ensures that you don’t go months and months without addressing these issues in emails, and it helps to keep your finger on the business’s pulse and understand what automations are and how they are performing. Moreover, you’ll be experimenting with these to incorporate new insights and create value from them into what you’ll be doing in the next round.
However, there will be some seasonality in this again, but overall, you should see these numbers going up. And it helps understand how these things can be leveraged and incorporated into your marketing.
There would also be some customization to these depending on the business. Like many businesses, we focus on the range of performance-based metrics and look at the number of subscribers and the list growth for the company.
For instance, if you have a subscription-based product like coffee or tea, you will look at the number of subscribers added because that will be a more holistic view of the business outcome. After all, the reoccurring monthly revenue from those subscribers is really strong.
You don’t need to see open and click here; instead, you will use more directional indicators. A client or group won’t need to know every little thing’s nuts and bolts. They need to focus on higher-level goals and think strategically about how to move those goals forward. They would need insights to know that things are going well, which is a green light to keep moving forward.
Final Takeaways – What Makes Our Process Unique?
What’s unique about this process is that it would become easy and accessible for many of your team members so they can understand and understand the direction they’re going into. And again, it gives you a full-depth insight into the progress of each specific business you’re working with and what goals you would be driving forward.
This helps to understand how to unpack an e-commerce business and create the outcomes you want to drive because you want to move this e-commerce business forward, especially regarding email marketing.
I hope you find this blog helpful, and if there’s anything you want to talk to us about, please feel free to reach out!
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