The Hostway Blog

Three Tips to Build Conversion Rates and ROI from Email Marketing Campaigns

When measuring the effectiveness of your email marketing campaign, the true test of success is whether your recipients heed your call to action, providing a chance at revenue. So are low-single digit numbers really the best you can do? Or can you set the bar higher?

The answer is: It depends. Like email open rates, conversion rates can vary significantly between industries and companies, and even between different types of offers from the same company. Whether you're offering something for free or trying to sell it can also impact conversion rates, as can price points. Rates can also vary based on how you define a conversion, as a click-through, a download or a purchase – or something else entirely.

What's Realistic?

Most experts agree that 1 to 5 percent is a realistic conversion range, and that number has remained pretty steady over the past few years, according to recent research from the Epsilon Email Marketing Research Center. Customer benchmark data from email service provider MailChimp shows that open and click-through rates vary sharply by industry, with click-throughs ranging from 1.3 percent (gambling industry) to 5.5 percent (photo and video industry).

Based on how you define a conversion, some click-throughs have higher ROI than others. For example, if you have two email offers, with one converting at 2.5 percent and the other at one percent, you might assume that the 2.5 percent conversion is the better performer. But examining the average order value for the offers, you may see that the one converting at 2.5 percent is only $50, while the one converting at one percent is $250. In the end, ROI is the principal measure of campaign success.

Of course, it’s harder to measure the ROI for free information. For example, campaigns that offer free downloads are more about getting noticed and establishing thought leadership around your brand. To derive a measure of effectiveness from these, you may need to investigate whether there was increased interest in the product or topic of the campaign in the weeks immediately following it.

Here are three simple tips to generate strong ROI from your email marketing campaigns:

  1. Know your goal. Make sure your call to action reflects that goal. Whether it's getting people to sign up for a free webinar or buy your product, your email needs to tell the recipient what you want them to do and incite that specific behavior.
  2. Make that subject line sing, but don't oversell. Tell, don't sell, is a pretty common email marketing mantra. The first step in conversions is opening the email in the first place.
  3. Work that list regularly with different types of offers. If you are always "selling," without providing a value-add, you may see a growing rate of unsubscribes, bounces or spam reports. Remind recipients who you are and why they opted in.

Like open rates, conversion metrics are most valuable when compared with your own data over time. If a particular type of offer does not convert well for you, either drop it or test a variation to see if you can improve conversions. If your conversion numbers for similar types of offers begin to drop, find out what has changed, either with the product or in your customers’ minds.

Although a lot of buzz surrounds the "rates," the most important metric is not the absolute numbers, but rather how those numbers translate into profitability for your business. Statistics like conversion rates just help you to evaluate the overall ROI on your email marketing efforts.