With the new year already started, it’s time to take a good look at the previous year and see how your email marketing strategy performed.
Did you launch a new product or service and want to know how well it did? Or perhaps you’re curious about the performance of a competitor and want to know how much market share they captured?
There are three basic steps you need to take in order to accurately measure your email marketing performance in 2011:
Step one: Review your account settings
Login to your account and navigate to ‘My settings’ where you’ll see a list of your subscribers and their metadata.
You can also find this information by going to ‘Subscribers’ in the top menu and then to ‘Edit’ next to the email address entry.
If you’re unable to find subscriber information in this area, then it means either you haven’t imported your subscriber list yet (in which case you can do so by clicking on the ‘Manage subscribers’ button) or that Amazon doesn’t provide this information to its third party sellers (in which case you should contact Amazon).
Regardless of the reason, this is the place to look as it contains all the information you need to accurately measure your email marketing performance in 2011.
Step two: Calculate the value of each segment
Each of your marketing segments (i.e. customers based on their actions within the store) will have a value associated with it. To calculate the value of a segment, you must first determine the ‘cost’ of acquiring that segment. To do this, simply divide the total value of everything in that segment (i.e. Cost of acquisition x Profit Margin x Monthly Recurring Revenue) by the number of subscribers in that segment.
For example, if you sold one product within a marketing segment and that product had a Cost of Acquisition (COA) of $100 and a Profit Margin (PM) of 30%, then the value of that segment would be (100 x 0.3 x $20) / 1,000 = $20 per month.
If you had 400 subscribers in that segment and you sold one product with a COA of $100 and a PM of 30%, then the value of that segment would be (400 x 0.3 x $20) / 1,600 = $13 per month.
Once you have the value of each segment, you can determine the Market Share of each marketing channel.
Step three: Determine your overall market share
This is the most straightforward step and is the same as calculating the value of each segment. To do this, simply add up the values of all your segments and then divide that sum by the total number of subscribers across all your marketing channels.
For example, if your total value is $100 and you have 500 subscribers in total, then your market share in this case would be 500 / 1000 = 0.5 (50%).
If you had 500 subscribers in total and you had two marketing segments, one with 200 subscribers and the other with 300, then your overall market share for this year would be ((200 + 300) / 500) x 100 = 40%
This percentage represents the amount of growth you had over the previous year (in this case, 100%) and also indicates how effective your strategy was in driving traffic to your website.
As you can see, this process is very time consuming and requires a lot of manual entry, especially if you’re doing this for a large list of subscribers (i.e. over 100,000). If you’re looking for a less manual way to get the numbers, then you can create a formula using software like Excel or Google Sheets and automate the process. This will save you a lot of time in the long run.
Now that you have a clear idea of how to measure your email marketing performance in 2011, let’s take a look at some key metrics that will give you a good idea of how things went.
Email open rates
The number of subscribers who opened your emails served as a good indication of the success of your marketing strategy this year. If the number of subscribers who opened your emails is bigger than the number of those who didn’t open any of your emails, then you can conclude that your strategy was successful and encouraged more people to subscribe to your list.
You can also use the number of subscribers who opened your emails as a benchmark for comparison. For example, if you’re wondering whether or not you should reopen your email marketing campaign, then you can use your current open rate as a basis for comparison (i.e. if it’s under 20% then you most likely shouldn’t).
However, it’s important to note that not all opened emails will convert into paying customers and still require a lot of manual validation. In some cases, subscribers will hit ‘Unsubscribe’ without even having read your email. This makes it very difficult to gauge the true success of your email marketing campaign.
The number of people who converted into paying customers once they were on your list is also a good reflection of the effectiveness of your email marketing campaign. To calculate this number, you’ll need to manually go through each of your opened emails and determine whether or not they ended up becoming a paying customer. This process is very time consuming and can be very tricky unless you’ve got a lot of experience.
If you’re looking to significantly increase your conversions then you should consider testing different promotional techniques and using software which automates the validation process (e.g. drip campaigns and automated email follow-up).
However, it’s important to note that again, a lot of manual intervention is still required to get to this stage. If you’re looking for a quick way to increase your conversions, then you can consider using tools like Amazon Mechanical Turk to get inexpensive, yet high-quality, human evaluation of your marketing material.
Cost per acquisition (CPA)
The Cost per Acquisition (CPA) is the cost of getting a new subscriber / customer. To calculate this number, you’ll need to go back to the first step and determine the Cost of Acquisition (COA) for each of your marketing segments. The Cost of Acquisition (COA) is simply the sum of the cost of all the products and services used to attract that subscriber to your list.
For example, let’s say you run a clothing store and you decide to use both online and offline marketing to attract customers. For your online marketing campaign you spend $500 on Facebook ads with a Cost of Acquisition (COA) of $100 and a Net Profit (NP) of $400. So, the COA for your online campaign would be ($500 + $100) / 1,000 = $5.00.
Your offline marketing campaign also has a COA of $250 with a PM of $50 and so the total COA for your two-pronged approach would be ($500 + $250) / 1,000 = $8.75 (including the $5.00 from your online marketing campaign).
The key takeaway from this example is that the cost per acquisition can be dramatically reduced if you have a profitable business. Having a good profit margin means you can spend less money on attracting new customers and increase your conversion rate.
New subscriber acquisition cost (NSA)
The New Subscriber Acquisition cost (NSA) is similar to the Cost per Acquisition (CPA) and is calculated as the sum of all the costs associated with acquiring a new subscriber. The NSA calculation takes into consideration all the costs associated with getting that new subscriber on your list and into action – including email marketing costs, website traffic, paid social media campaigns, etc.
This metric can be very useful for estimating the total cost of getting that first customer and is used by marketers to determine the total profitability of an email marketing campaign. If your NSA is higher than your profit margin, then it means your cost of acquiring subscribers is more than your market value and you should consider decreasing the amount you’re paying for subscribers (or eliminating that cost all together).
Let’s say you run a clothing store and you decide to use email marketing to attract customers. For your email marketing campaign, you spend $500 on Facebook ads with a Cost of Acquisition (COA) of $100 and a Net Profit (NP) of $400. Your NSA for this email marketing campaign would be ($500 + $100) / 1,000 = $9.50.