MarketingSherpa Blog

After squinting at my screen for weeks trying to read the MarketingSherpa 2011 Email Marketing Benchmark Report PDF, I finally have a hard copy sitting on my desk — and it’s bursting with insight.

Having read the executive summary weeks earlier, I flipped through the chapters today and was struck by this stat:

Does your organization have a method for quantifying ROI from email marketing?

• No: 59%
• Yes: 41%

Email marketing can be amazingly efficient. B2C marketers report an average 256% ROI from the channel — pulling in $2.56 for every $1 invested — as mentioned later in the report.

What shocks me is that 59% of email marketers have not gauged their program’s efficiency. This means their company executives are likely unaware of the amazing job they’re doing. Even if executives have seen the clickthrough and conversion rates, they’re likely thinking about that line from Jerry Maguire.

Show me the money

At last week’s Email Marketing Summit, Jeanne Jennings, Independent Consultant and MarketingSherpa Trainer, shot holes in many of the excuses she’s heard for why companies can’t calculate email’s ROI.

Here are three she highlighted:

1. Our Web analytics software doesn’t provide this information
2. We can’t track online sales back to email
3. We don’t have an exact figure for costs

Taking these one at a time, Jennings noted that 1) most analytics solutions can provide the information. Google Analytics does and it’s free. 2) Setting up the tracking is simple. 3) You don’t need exact figures.

“As long as you can compare in an apples-to-apples fashion, that’s enough to get started,” Jennings said.

Judging performance by clickthrough and conversion rates is not enough — you should know the revenue generated, both on a campaign-level and a broader program-level.

Two simple calculations Jennings suggested:

• Return on investment: Net revenue / cost

• Revenue per email sent: Net revenue / # of emails sent

On a campaign-level, these metrics will reveal which campaigns pull in more money — not just more clicks. For your overall program, they quickly convey the importance of your work.

Also: The movers and shakers in your company are going to be much more impressed with figures that include dollar signs.

Show email’s potential

Another way to convince executives of email’s power is to point to success at other companies. Also at the Email Summit last week, Jeff Rohrs, VP, Marketing, ExactTarget, mentioned Groupon as a great example that email marketers could rally around.

Forbes recently dubbed the localized deal-of the-day website the fastest growing company ever, and its success is largely due to great email marketing.

The Wall Street Journal mentioned Groupon’s 50 million email subscribers as a competitive advantage and that some analysts estimate its value at $15 billion.

The executives will care

Once you can clearly attribute revenue and ROI to email, you might be surprised at how much attention you attract from company leaders.

At the Email Summit, Philippe Dore, Senior Director, Digital Marketing, ATP World Tour, presented his team’s email strategy to sell tickets to professional tennis events. A single email drove over $1 million in revenue, and several others brought in over $100,000 each.

The overall email campaign generated about $1.5 million in total. Suddenly, ATP’s executives were interested.

“We have our CMO talking about email marketing and subject lines,” Dore said.

Related resources

Email Marketing Summit 2011: 7 Takeaways to improve results

Email Marketing Awards 2011 Winners Gallery: Top campaigns and best results

Live Optimization with Dr. Flint McGlaughlin at Email Summit 2011

MarketingSherpa 2011 Email Marketing Benchmark Report

MarketingSherpa Email Essentials Workshop Training with Jeanne Jennings

Photo by: SqueakyMarmot

Social media continues to have a profound effect on marketing, and the use of this channel for marketing purposes is rapidly evolving. This week marks the fielding of our third annual Social Marketing Benchmark Survey to determine exactly how this important new marketing channel has evolved and which strategies will work best going forward.

Last year’s study revealed how social marketing was maturing, resulting in a shift from tactical to strategic thinking. However, we found that most organizations, even those in the strategic phase of social marketing maturity, had not yet figured out how to measure the return on their social marketing investment.

Without the ability to prove ROI, social marketing budgets were, and in most cases still are, being driven by perception. What is the perception? As this chart shows, only 7% of the 2300 social media marketers responding to our last study thought social media was producing ROI and, as a result, were willing to budget liberally. While 49% thought it was a promising tactic that will eventually produce ROI, nearly the same numbers (44%) are much more skeptical and unwilling to invest more.

But social marketing has evolved significantly in the past year and many marketers are not only promising ROI, they are proving it.

So, in our new survey we examine how organizations are overcoming the challenge of social media monetization, and which tactics are most effective for achieving this important objective, in addition to the comprehensive coverage of social marketing topics in general.

To share your insights on social media marketing, please take our third annual Social Marketing Benchmark Survey. This survey is being fielded now and will only remain open through Sunday, February 6, 2011.

Related resources

Social Media Marketing: Turning social media engagement into action at Threadless

Measuring Social Media’s Contribution to the Bottom Line: 5 tactics (Members’ Library)

Inbound Marketing newsletter – Free Case Studies and How To Articles from MarketingSherpa’s reporters

Social Marketing ROAD Map Handbook

Return on investment is top of mind for marketers these days as most marketing efforts come under the scrutiny of ROI justification.

Here are a few insights gleaned from an interview with Jim Lenskold, President of the Lenskold Group, about how to improve and optimize the measurement of marketing ROI:

1. The biggest challenge in improving marketing ROI is removing cultural barriers and instilling a sense of discipline in planning and assessing the financial contribution of marketing.

2. Marketing strategies that do a better job targeting higher value, higher converting segments have the greatest impact on ROI.

3. Measurements that use market testing and modeling are most conclusive and often under-utilized when measuring marketing effectiveness.

4. Choosing measurements that provide insight about how to improve future initiatives is the most important step in generating greater performance and profitability.

5. Using revenue instead of profits as the return is a basic financial error that marketers make. It must be corrected for accurate ROI calculations and credibility with executives.

Is there a way to measure the ROI of social media?

I ask this question all the time and rarely get a concrete answer because it’s just one of those tactics that’s difficult to measure.

Research from MarketingSherpa’s new Social Media Marketing & PR Benchmark Guide suggests that 43% of marketers rank the inability to measure ROI the most significant barrier to social media adoption.

I still don’t have the answer, but here’s one example of a way social media can impact an Internet marketing campaign:

Read more…

When the economy is down and your budget is slashed, you might be forced to prove every investment. Your CEO or manager might want to see the ROI of every effort — from direct mail to responding to comments.

And who can blame them, really? Times are tight. All signs are pointing south. They want to make sure that money isn’t being wasted. You might feel the same way: you don’t want to waste part of a shrinking budget on anything that’s not guaranteed to work.

But that might not be the best way to market. Alan Scott, CMO, Dow Jones certainly doesn’t think so. Scott’s strategy is to measure every investment and interaction with the customer that he can, and to make sure overall revenue numbers are solid, he says. Getting too granular in your ROI analysis can become a distraction.

“It’s very difficult to understand the cause and effect of every individual component and make a meaningful decision,” he says. “I heard at a conference not too long ago, someone said ‘What’s the ROI of putting on pants?’ Your probably could calculate it somehow. But you have to do it [anyway].”

That’s a great line: “What’s the ROI of putting on pants?” Remember it when you’re thinking of changing a successful marketing plan just because you cannot calculate the return on every portion of it. If it works overall, why change it? Granted, it’s worth the time and effort to tweak and test, but don’t slash and burn your pants because you’re not sure how much money they make.