Open Rate 101: The Metrics that Can Change Your Email Marketing

Email marketing KPIs vary widely between customer lifecycle stages. A new Optimove research sets out to disprove a myth

Posted in , , , on 14 September 2017 by:

20%. Ask anyone dealing with online marketing what’s the question to which this number is the obvious answer, and they will swiftly response: “ah, it’s the old email open rate.”

It does seem simple, almost automatic nowadays – get the content writer on the agenda, some touches from the graphic designer, bring up your ESP, and voila! click the send button. 20%.

A research into Open and Click rates, however, suggests that reality is more nuanced than that, and may require a change in the automatic approach to Email Marketing.

New data that was gathered by Optimove using 45 million emails sent by 22 brands over the last eight months, sheds new light on the role of the customer’s lifecycle stage in determining the prospective Open and Click rates of an email campaign. Does a new customer have the same probability of opening a marketing email compared to a churned one? The answer is a clear-cut no. Customers in different lifecycle stages react differently to email campaigns, and their campaign KPIs reflect that.

Breaking the Lines

The magic number of 20% didn’t come out of nowhere. According to the data, active customers do have a 19.4% open rate, very close to the familiar benchmark. On the other hand, new customers – those in the first two weeks following their first purchase or deposit – have only a 13% probability of opening the email.

Going further down the customer journey, churned customers have an open rate of 9%, and registered customers who have signed up for the newsletter but are yet to make a purchase or deposit, will open company emails at a rate of only 6%. Dormant customers, who were absent from the company’s site for at least a year, have of course the lowest probability to open their email – 2.4%.

Open-Rate-inner (002)

Two in a Hundred

CTR also varies according to segment. 3% is a well-known benchmark, but again – it’s applicable only to active customers. New customers have a Click rate of only 1.8%. Let’s put that into words: when a newsletter is sent to 100 new customers, only two will click the email. The CTR for churned customers is only 2.2%: interestingly, it is a little bit higher than that of new customers.

This data is crucial when analyzing and assessing email marketing campaigns. If you hold all your campaigns to the 20% Open rate benchmark, you are bound to get disheartened by the performance of campaigns targeted at concrete segments or at your complete customer database. You may mistakenly judge a campaign as unsuccessful even though it reaches good KPIs for its target segment. Measuring a campaign against an unrealistic benchmark can have even more destructive results when using more expensive channels, such as SMS, where a wrong notion regarding the correct Open rate and CTR can really defeat the perceived ROI.

To sum it all up: the data shows how crucial it is to understand the differences between customer behavior in the different lifecycle stages and to tailor the campaign expectations accordingly. A realistic metric for each campaign will help brands optimize their campaigns according to segments and to get a healthy reality check as to the effectiveness of each marketing message.

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  • Vanessa P 17 September 2017

    Few comments:
    -In the grand scheme of things, 45 million emails is not *that* many to have analyzed.
    (My company sends out an average of 1 million a month).
    -22 companies: This is really a low number and now hyper specific to your customer segment only
    -Your customers are *primarily* working in the field of gambling/binary and Forex (bread and butter customers). Again making this research extremely skewed and representative of these business models only.

    This is all ok – but this should have been expressly stated in your blog post from the **beginning**, bc I know I’m going to read this information hashed back out to me in some ‘best practices’ guide for email open rates when these are very industry specific numbers.

    • Omer Liss
      Omer Liss 18 September 2017

      Hi Vanessa,

      Thanks for your feedback.

      The 45M samples from 22 brands (both e-commerce and gaming) showed statistically significant results in terms of both open rate and CTR. It’s true that a higher number of emails sent for more brands could make our case even stronger, but statistically, these results are significant.

      Furthermore, the analysis between brands (average and variance) showed no significant difference between e-commerce and gaming brands. Where we did see statistically significant results were the differences between open rate and CTR between the different customer lifecycle stages within each brand.

      I hope this clarifies things. 🙂
      Cheers,
      Omer

  • Alberto Caceres 4 November 2017

    Why are talking about CTR when click to open rate is a more interesting metric? Which rate would you say is ok for new players, actives, churning, inactives and dormant?

    • Omer Liss
      Omer Liss 5 November 2017

      Hi Alberto, thank you for your comment.

      As you probably know, open rate and click through rate (CTR) are the most commonly used KPIs in the realm of email marketing. With these two metrics, a marketer can easily calculate click to open rate (CTOR) = unique clicks divided by unique opens. This works well for rates as well (as both have the same denominator, delivered): divide open rate by CTR.

      In general, I think that the most interesting metric for inactive customer stages (typically named dormant or churn) is CTR. This is because we want to drive these customers to perform an actual action.

      For active customers, including new customers, we can also focus our marketing campaigns on achieving different goals, perhaps brand awareness or re-order reminders. In these situations, the most interesting KPI may be open rate, because we want to know that our customers are reading our communications to them.

      I would like to add that even though the most interesting KPIs may differ for different stages in the customer lifecycle and for measuring marketing campaigns with different goals, I believe that all KPIs matter. It is always important to be looking at the whole picture in order to fully understand how well campaigns are resonating with customers.

      Cheers,
      Omer

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