One of email marketing's greatest strengths is the ability to measure performance to the utmost level of detail. But what about the big picture? How do you prove to management or a client that an email marketing program is successful? How do you define success beyond open and click-through rates (CTR) and similar "process" measures. In a nutshell, how do you measure return on investment (ROI)?

Depending on your situation, a number of variables such as list quality, open rates, CTR and conversion, can each mean something different for your business, making it difficult to understand how to relate the metrics back to the bottom line - the ultimate measure of whether your email program is successful or not.

Clients and management look for clearly measurable results, including resources versus improved return, actual results versus potential results, impact on the organization and competitive benchmarks. So how do you determine these and other broader measures of success? In this article, we'll cover the seven steps to build an email marketing program and how to develop metrics along the way that will ensure you'll understand your bottom line success.

Step 1: Plan

Determine your Objectives and Goals. Whether your marketing objectives are to generate leads, acquire customers, create more transactions and revenue or build company awareness and enhance your brand, understanding your objective first will allow you to build a plan that adheres to that goal. Every step of your email campaign process should reflect that goal and further the result that you are looking for.

Make a hypothesis. To build a complete picture of your campaign results, you need to have something to measure those results against. Build a hypothesis about what you expect to achieve with your campaign. For instance, if your marketing objective is to create more transactions and revenue, how many transactions will result from your campaign? From those transactions, how much additional revenue will you earn? Make an educated guess on the results you should be able to achieve. You can then use that hypothesis later to determine the ROI and where you have room for improvement.

Draw from off line experiences. Though the avenue of marketing has changed, the concept has not. You can apply many of your direct marketing rules to email marketing, including:

• Ask for what you want. Though the medium has changed, you still need to give them a compelling offer. If you don't ask them to take action, they probably won't.
• You don't need to reinvent the wheel. Direct marketing works for a reason.
• Try, try again. While you want to adhere to their delivery preferences, be sure you are testing your theories, and testing them again...and again.

Step 2: Create

You know what your goals and objectives are and what you hope to accomplish. With those metrics in mind, it's time to create your email campaign.

Leverage what you have. Don't try to recreate your company image. Utilize the creative and concepts you already have (from your website, from your direct marketing efforts and your collateral) to build your overall ideas from. Your emails are a key means of reinforcing on your brand image and a way to capitalize on the exposure.

Treat it Like Valuable Real Estate. You have only a few seconds to gain your recipients attention…and keep it. Utilize every ounce of your email to provide the most clear cut avenues for your clients to take the action you want them to take - whether that's to purchase, to register or simply to recognize your name and company brand.

Integrate it with your website. An email should never stand alone. One of the worst mistakes that email marketers make is spending hours crafting an email only to lead their customers back to wallow on the home page, trying to decipher where they are supposed to go. Build a landing page to match your email and give your recipients a clear path to purchase or the desired action.

Step 3: Target

Leverage existing segmentation knowledge. If you've already utilized other forms of direct marketing, activity/behavioral based data can provide valuable insight into the best way to segment your list. Use the knowledge you've gained to tailor your emails based on recipient history. Even the most general segmentation of who responded to previous results (and who didn't) can provide a significant opportunity for greater results.

Segment based on frequency. If you've given your customers the ability to choose their preferences, segment your list by their preference on how often they want to hear from you and adhere to their requests. Don't alienate customers by over-mailing, but also don't mail too infrequently and miss opportunities to generate greater revenue and brand affinity

Step 4: Test

Test one element at a time. Once you've built the creative, your work is far from done. Now that you have a solid offer, a solid look and a clear path to action, you need to test the elements. Let's say that your offer is 10% off next purchase. Test that offer against an offer that gives $20.00 off the next purchase, for example. Once you've determined which performs better, try another test - perhaps building a secondary landing page with a stronger path to purchase or a lead-in to another product. Trust the numbers that you gather. You can learn valuable information about your mailing list by their actions - including motivating factors, likes and dislikes.

Random groupings. The best results for unbiased testing are achieved through random groups, or split testing. By splitting your mailing list in equal parts (halves, thirds, etc) you can test on randomized groups in your mailing list to get a more accurate response. Random groups eliminate any demographic or action-based bias that could alter your results.

Demographic breakdowns for post campaign analysis. Take your testing analysis even further by determining results on demographic level. Your demographic breakdowns can offer even more insight into your mailing list. Did more females or males respond to your call to action? Did more recipients who live on the West Coast respond than those who lived on the East Coast? Gathering deeper, more targeted information on your list can help you when it comes time to improve on your metrics.

Step 5: Deliver

Consider your delivery options for optimal performance. The time that you deliver your email can have a large impact on how well the email performs overall. Are you sending to mostly consumer addresses, such as the free accounts or more to business email addresses? Knowing some basic breakdowns of your list can help you to determine a good time to send. For instance, if you are sending mostly to business email addresses, a late Sunday delivery would put your email right into the large grouping of spam emails that deliver over the weekends. Come Monday morning, your recipient might accidentally (or intentionally) delete your email along with the spam, in interest of time. On the reverse, personal email addresses are more likely to be checked on the weekends than during the work day.

Format for specific audiences. Are you creating a format for everyone? With a large percentage of Americans on AOL or other free email accounts, you cannot afford to ignore their specific needs. Learn and understand the details of how the different accounts measure email - from AOL to Outlook, and plan accordingly.

Step 6: Measure

Be a stats hound. Once all is said and done, it's time to sit back and watch the stats roll in. Keep a close eye on your stats, from opens and click-throughs to email forwards and unsubscribes. Keeping tabs on your stats will give you immediate benefits in gathering your metrics, as well as learning information about the timing of how people respond as your stats update.

Setup Action Capturing. Track your recipients actions, from emails to website to purchase. By setting up action capturing, you can define clear paths that your recipients take to action.

Notice time delay to actions and results. Gain a better understanding of your mailing list by watching when the majority read, and take action on, your emails. This will help you improve your offers or test offers that have a time limit if you are looking for a quicker response. For instance, if the offer in your email is good only for a few days, but a large percentage of your readers don't check your email until a few days after that, you will have lost potential conversions before they even open the email.

Step 7: Improve

Check results vs. hypothesis. Back in Step 1, you laid out a hypothesis for your email campaign. Now that numbers are in, check your actual results versus your original hypothesis. Let's say that you estimated a 50% open rate, a 12% click through rate and 200 purchases? Once you tally the total numbers, you learn that you had a 30% open rate, a 5% click through rate and 90 purchases. By comparing against your hypothesis, you have a place to start on how to improve those numbers. Rather than starting over in your next campaign, you take what you've learned and improve on the previous campaigns.

Find the weaknesses and bottlenecks. There is always room for improvement, even if your numbers were close or exceeded your expectations. Look for areas of weakness in your campaign. Was the call to action clear and displayed enough? Was there an error on your email or website? Was it too difficult for recipients to take action once they arrived on your website? Review every step of the process, to look for the areas where recipients stopped taking action so that you can change and improve on them.

Determine Key ROI Drivers

An ROI Driver is an element in your campaign that affects the bottom line, your ROI. These drivers are areas that can be improved on to build a more successful return. Once you've begun deciphering the weaknesses and strengths in your campaign, you can build on your ROI Drivers to make them stronger. These drivers can include:

• List Quality. The quality of your list will directly affect how high your return is. Make sure your list is opt-in or double opt-in. Change any pre-checked boxes to unchecked. Clean your list of bad email addresses and bounces. For older lists and/or long time list members that have become inactive, consider asking them to re opt-in or make them an offer compelling them to take action.


• Conversion rates (clicks to action). If your conversion rates are low, there are a number of steps to consider. Look at the calls to action on your email. Ensure that the path from email to action is a clear one. Check for any bottlenecks on your website that could distract or sway your customer from completing the action.


• The Quick Glance. It's generally said that you have 3 seconds to catch their attention (that may be generous) - make those seconds count. Get your point across in the From Line, Subject Line and that first glance at your email. It may be the only glance you get.


• Timing. Consider how people read their email, and choose your times and days wisely. The types of email addresses you have - the consumer to business ratio - should directly impact when you send your emails for the best results. If you're uncertain about what works best, test and test it again.


• Spam. Though we may not like the inevitability of spam, it's here for now. And more and more, it's becoming a hindrance to permission-based email. However, you can't afford to ignore it. Rather, understand it. Know the most common times spam are sent and send your email at alternate times. Avoid spammy-sounding subject and from lines. Always respond to challenge-response emails.

One of the greatest benefits of email marketing is the ability to measure campaign results in great detail. That ability puts you in control of the return you receive. It's just as important to understand that even if your campaign met your goals, there is always room for improvement. Having a clear plan will help you identify your key metrics along the way and ensure you are maximizing your email marketing ROI.