Email is the lowest cost channel for marketers to reach customers, so there’s good reason that marketers want to understand how customers interact with emails and what drives whether or not they convert. Using an incremental revenue model, there are several ways to measure the success of email, each answering a different question about customer behavior.
There are four general measurement models to consider for email ROI:
However, each of these numbers without any context have limited value, so marketers must compare two to see what the difference is and what implications that has for their email strategy. When marketers compare last channel clicked with last email clicked, they are answering the question, "How much of my revenue could be attributed to the email channel versus being overridden by another channel?" Comparing email click versus email open pinpoints how people are converting but not clicking through the email to the site. Perhaps they are typing in the retailer’s URL or clicking on a bookmark after opening the email. Lastly, measuring email opened against email received answers what the true value of an email sitting in the inbox is and driving impressions. This taps into the behavior of people seeing the email, not opening it and going to the site to make a purchase.
Marketers are constantly looking for more conversions through email because of its lower cost. The more conversions a marketer can send directly through email instead of investing in a more expensive channel like search, the better. In a cross-channel, multi-screen marketing world, no marketer is going to use just email to reach his or her customers; it’s all about using multiple channels in orchestration with each other.
These metric comparisons start to solve the conundrum of customer behavior and challenge marketers to think more critically about how email works in concert with other channels. Incremental revenue attribution opens a marketer’s eye to the fact that, for example, half of the revenue is coming from people who are subscribed to the emails. While the model helps for understanding the significance of email, it also has important channel and cross-channel implications since customers may see an email but decide to find the site doing a Google search, boosting search volume.
Proving the value of incremental revenue analysis
Yet many marketers fail to adopt an incremental revenue strategy to compare email metrics and reveal where customers convert in the email channel. Some marketers don’t want to rock the boat and challenge the status quo. Others are on autopilot and don’t take the time to think more critically about how attribution should be assigned and analyzed.
Proving the value that companies get from adopting this model may convince marketers to change their ways. For example, one of Responsys’ clients did a first click versus last click attribution analysis and saw that half of the revenue moved from the email channel to other channels by the time the conversion was complete. That insight is gold to marketers since it proves the channel’s value, and when marketers get “credit” for a sale, they’re more likely to have the resources and budget to grow their team.
While the incremental model is relatively new in the modern marketing world, it’s based on old school methodology that was used to show the business value of direct mail. Historically, direct mail marketers justified their budgets by doing incremental revenue analysis. Modern-day digital marketers must understand that this model is a justified scientific approach to showing ROI.
To flip the switch and convert to an incremental revenue model, marketers should take these two steps:
After this, marketers can next look at last open, then last received, and eventually graduate to an incremental model with an untreated holdout group, even if it’s just 2 percent of customers, to test the value of an email campaign. Don’t be surprised if an executive says, “That’s 2 percent of revenue I could have made.” It always comes back to the saying that testing is investing. The kind of intelligence and insights you get from incremental revenue reporting far outweigh the costs.
When marketers challenge the status quo and convert to an incremental attribution model, they’re making an investment to better understand their marketing efforts and deliver messages that align with customer behaviors and increase conversions.