© Mailigen Ltd. All rights reserved 02/2012. Mailigen Email Marketing Solutions

Whitepaper FEBRUARY 2012

Best practices in email marketing

6 secrets to Unlocking email marketing roi

26 SecretS to Unlocking email marketing roi

© mailigen ltd. all rights reserved 02/2012. mailigen email marketing Solutions Phone: (+1) 718 303 1864

All successful marketing campaigns are based on numbers. ALL. This is a common mistake for novice marketers. Assessing the ROI for email marketing starts with understanding all marketing campaigns must ultimately deliver on reinforcing your sales strategy and busi-ness objectives. Email marketing is no different. Email is part of everyday business now, and email marketing is a critical tool for delivering marketing objectives.

So what is email marketing ROI? ROI is a measure of investment profitability; a percentage return based on investment not a measure of the investment size. Email marketing ROI is the same, a percentage return based on your investment in creating and managing email marketing campaigns. According to MarketingSherpa B2C marketers report an average 256% ROI from the email marketing chan-nel — pulling in $256 for every $1 invested. You can generate significant ROI in your marketing efforts through email campaigns. Using our simple calculations you can easily see the return on investment from your email campaigns, based on your expected costs and response lev-els.

Get the most our of your email campaigns with our 6 best practices to establishing an effective method for quantifying email marketing ROI.

list: 1. planning

2. Using third party tools

3. assessing the VariaBles

4. calcUlating roi

5. increasing roi

6. comparing resUlts

36 SecretS to Unlocking email marketing roi

© mailigen ltd. all rights reserved 02/2012. mailigen email marketing Solutions Phone: (+1) 718 303 1864

1. planning

When planning email marketing campaigns, it is important to carefully think through how you are going to measure your progress and how you will know if your email campaign is moving the needle closer to achieving your goals. The challenge in measuring email marketing ROI is in connecting the result to the goal and associating the costs involved. When optimized, email marketing outperforms most marketing tools with higher ROI. According to research conducted by the Direct Marketing Association, email marketing was ex-pected to generate an ROI of $42.08 for every dollar spent on it in 2010 and 72% of respondents to an Econsultancy survey in early 2011 described email’s ROI as excellent or good. Only organic SEO scored better in their survey.

For an extensive guide to planning your email marketing campaigns use our Framework:

Email Marketing Planning Guide

Learn more about Google Analytics tips for tracking email marketing campaigns

Planning is the key to seeing high returns from your campaigns. In planning your email campaigns, take these factors into con-

sideration for a high ROI outcome:

Craft a clear message with one call to action

Use a clean, permission based email list

Leverage your list segments for a highly

targeted audience

Create great content with a strong subject line

Test the message before you send it out

2. Using third party tools

You can use reports and tracking tools to better understand your campaign income and how you are spending your budget. Because email campaigns attract visitors to your site, you can use Google Analytics to tag email campaigns with campaign tags to track how well each email performs. Campaign tags are available through the Mailigen solution to automatically add information to apply campaign tags to links within the email. When clicked, the tag passes information to Google Analytics and you can analyze the performance of each email link. This allows you to optimize your campaign and track your ROI. Google Analytics offers several important capabilities you can use to increase your email performance.

Advanced Segmentation: Google Analytics provides precision tools to analyze specific data elements and gain a deeper un-derstanding of your customer. All advanced segment templates are associated with visits data and Google Analytics offers out of the box segmentation or customized segmentation. In cus-tomizing your segments start by thinking about the segment that you want to design and what kind of visits it will include. You can identify the appropriate dimensions or metrics for your segment. For example, if you only want to see visits with two or more unique purchases in your reports, you would choose the ‘Unique Purchases’ metric. Use the advanced segmentation fea-ture to identify key trends and behaviors to anticipate and react to your customers.

Goals: Goals are a page view - serving as conversions for your site, like a thank you page. Goals can be used to track newslet-ter signups, email list subscriptions and contact forms. Goals use

“funnels” to design a path you expect visitors to take on their journey toward converting to the goal. Funnels in an ecom-merce goal can include landing pages for the checkout process, or funneling a customer to your newsletter sign up form.

eCommerce: Google Analytics collects two categories of e-commerce data: transaction data and item data. The transaction data identifies the elements of the overall transaction. The item data specifies the items purchased in the transaction. This data compiles into Google Analytics reports. Using the data elements available, you can vastly increase your segmentation and tailor your email marketing messages based on the preferences of the

46 SecretS to Unlocking email marketing roi

3. assessing the VariaBles

ROI cannot be judged solely by performance clickthrough and conversion rates. For Marketing ROI, you need to determine what you view as the “return” in the equation. Is it total revenue generated, profit, new Fans, coupon redemption?

To prepare for calculating the ROI, there are several important variables to gather and define as they relate to your business model:

Each of these variables tells you something about how much your email campaigns are costing you and will enable you to calculate your ROI. If this is your first email marketing campaign, use it to obtain a baseline of these figures. Building your baseline will give you insight to how you are trending and improvement opportunities.

Creative development costs (templates, images)

Email Service Provider costs

Campaign management time

# of contacts

Average cost per contact

# of Responders

# of Buyers

Revenue Generated

Profit

Cost per Responder

Cost per Buyer

Campaign Audience Size

Campaign Cost

Response Rate (what % do you expect

based on prior performance)

Conversion Rate (what % of responders will buy

based on prior performance)

Average Buyer Purchase Amount (How much will

buyers spend based on prior performance)

Also, you may need to gather email specific variable data:

4. calcUlating roi

There are several third party tools on the market to calculate complex ROI equations using the variables we have suggested. However, here are some simple calculations we recommend:

Return on Investment: Net revenue / cost

Return on Investment: Gross Profit-Marketing

Investment/Marketing Investment

Revenue per email sent: Net revenue / # of emails sent

Customer Lifetime Value: CLV-Marketing

Investment/Marketing Investment

Customer Lifetime Value is a measure of the profit generated by a single customer or segment of customers over the lifetime of their engagement with your company. Using this equation will help determine customer segments and how you position offers to each segment. Since ROI is usually expressed as a per-centage, for each of these equations multiply the result by 100.

Any of these simple calculations will track the campaign level measures to reveal which campaigns brought an increase in sales rather than clicks.

56 SecretS to Unlocking email marketing roi

© mailigen ltd. all rights reserved 02/2012. mailigen email marketing Solutions Phone: (+1) 718 303 1864

SUMMARY

So why should you calculate email marketing ROI? Because all successful marketing campaigns are based on numbers. ALL. And your marketing campaigns need funding to implement. By clearly attributing revenue to email ROI, calculating the ROI will convince executives and you of the efficiency and cost benefits of delivering marketing through email campaigns.

Mailigen has the easy to use tools you need to generate action with powerful email messages and newsletters and robust analytics for measuring your ROI. If you want to learn more about Mailigen, take it for a test drive before choosing your email marketing solution, we offer a 30 day free trial!

5. increasing roi

Once you have assed the variable factors contributing to the overall ROI, you should be able to glean information related to increasing the ROI of your campaigns. Use this 10 step checklist toward increasing ROI:

6. comparing yoUr resUlts

Email is a huge part of interactive marketing and is very valuable compared to its more expensive marketing tools. Want to know how much ROI campaigns are generating for others? Comparing your results to industry best practices and averages will give you more insight to your campaign performance. Review industry performance on email conversions, revenue conversions, land-ing page conversions, retention and email marketing costs. The emailstatcenter.com is an authority on email marketing metrics and a valuable resource for campaign comparisons. Through this site and others, you can research important comparisons such as the average revenue per delivered message. Thoughtful com-parisons will provide a benchmark for your current ROI vs. your goal return for future campaigns.

Email marketing is a great way to increase your brand awareness, engage with customers, and remain top of mind. To ensure that the ROI on your marketing campaigns is high the more informa-tion you can gain from your customers, the better. Segmenting can be highly beneficial when setting up your campaigns and boosting your ROI.

As with any ongoing calculation, obtaining as many metrics and statistics as possible can help you see where opportunities and faults may lie. If you’re making changes to try to affect your ROI, ensure that you have a baseline to work off of. Try different avenues to see what your audience responds to, and your ROI should replicate those trends. Once you find a winning formula, don’t placate – things change, and you must always be willing to innovate.

For more information on boosting your email marketing ROI, visit the Mailigen Resource Center.

Review your analytics

Integrate (or review) Google Analytics to track conversions

Compare campaigns and levels of success

Optimize list segmentation

Consider customer re-engagement campaigns

Test new approaches

Test subject lines and call to action

Use more automation capability

Test email designs in different email clients and devices