What would you do if you found out that 1% of your email list was generating 20% of your revenue? You might target your big spenders in a different way or develop products aimed specifically at them; alternatively, you might look at ways of persuading the other 99% of subscribers to buy more.

Both of these options rely on knowing which customers are your most valuable – but with only the blunt instruments of open and click rates available to you, you simply can’t tell. When we rely on these metrics to measure success we end up with “one size fits all” communications: any serious knowledge of our audience begins and ends with the registration process.

By focusing on customer behaviour rather than campaign performance we have the potential to revolutionise our understanding of what customers do when they read our emails.

Informed planning = improved ROI

Let’s say your monthly newsletter has an average open rate of 25%. Are the same people opening your newsletter every month?

One month the open rate falls to 15%. Have you lost people who normally open every mail (a drop in open frequency), or just attracted fewer casual openers (a drop in reach)?
In fact, our research at Alchemy Worx has found that falling open rates are most likely to be the result of regular customers opening your mails less often – and the tactics demanded by a drop in frequency are very different from those required by a drop in reach.

This is the kind of insight that customer-based reporting can give you. It gives answers to crucial questions such as:

• which customers respond to pricing offers, and which to promises of added value?
• how long is it since a particular person opened one of your messages?
• what proportion of your audience opens every one of your messages, and how many never open a single one?

Answering these questions opens up exciting new strategic options for measurement, campaign planning and customer targeting – all leading to improved ROI for your email marketing.

I will be delivering a seminar at Internet World which will show you the metrics you should be tracking, strategies to help you implement them and the tactical responses that can turn your understanding into increased ROI. You’ll see your email marketing in a whole new light.

Dela Quist is CEO of Alchemy Worx. His seminar “Beyond Opens and Clicks: Using Customer Based Metrics to Drive Performance Improvement” is at Internet World on 1/5/08 in the Masterclass Theatre.