Measuring Email’s Shifting ROI: From Performance Metrics to Quantitative Return

MarketingSherpa released an interesting piece of research this week from its Email Marketing Benchmark Report. According to a survey of 2,735 CMOs across a range of industries, the leading factor in helping to identify and communicate the value of an email program is its quantitative financial ROI (65%). The second most popular response was post-click metrics (62%) followed by performance metrics such as open and click rate (56%). The same question asked in last year’s survey saw post-click metrics (73%) and performance metrics (69%) at the top, with financial ROI trailing in next (57%). Here is the full chart of results:

Click to enlarge.

Why the shift from performance to financial ROI? According to MarketingSherpa, email’s relative maturity compared to social media is responsible. Now that CMOs are using both email and social, it is natural to expect more accountability from the email program they have been relying on for a decade, relative to the social channel they’re just getting off the ground. Whereas performance metrics used to be sufficient for identifying email’s value, MarketingSherpa says that CMOs now look at click and open rates as a measure of program health, but not value.

Benchmarking your own company against this research can be an alarming experience. Quantifying financial value from a marketing channel is exceedingly complex, and even post-click metrics attributable by channel often take resources beyond many organizations’ reach. As a result, what is perceived as “mission-critical” data in some marketing departments is categorized closer to “nice to have” for more thinly staffed marketing departments.

Don’t despair just yet. In research, context is king. When evaluating data like this, the nature of the question is important. Specifically MarketingSherpa asked, “As CMO or senior marketing executive in your organization, how important are the following factors in helping you determine and communicate the value of email marketing programs?” It is unclear how each responding CMO interpreted the question. Some may have read it as, “Which of these do you use?” though others might have gone with, “Which of these would you find the most valuable?” I suspect there were many of the latter perspectives in there. It seems unlikely that the usage of post-click and performance metrics – which decreased Year-over-Year in the survey, has decreased from a year ago, though certainly possible that their perceived importance relative to financial ROI has dipped. I read this chart more as a popularity contest than a catalog of existing best practices.

The key takeaway from the research, however, remains the same: the drive for increased accountability is on. Marketing budgets for email and social are on the rise, but after a few lean years in marketing departments it’s clear that no new spending will go unscrutinized. The scalability and low cost of email and social promise significant ROI, but more than ever CMOs are pressed to deliver on, measure and communicate ROI – promised or otherwise. And now more than ever, a measure of success for a marketing professional – at any level or functional responsibility – will be the ability to measure and communicate the value of marketing channels, in order to justify marketing spend.

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