Email Newsletter KPIs Part 1 - Delivery Rate, Open Rate, Growth Rate, Cost of Acquisition

NextStage did quite a bit of research on email newsletters and their related KPIs before starting our own. We've been at it a while and I thought it might be worthwhile to share some of the results so far. Some of the KPIs are standard and you can find them via a simple google search, some are based on NextStage's research.

Delivery Rate

Delivery Rate "...is the number of emails that are delivered (i.e. NOT hard- or soft-bounced), as a percentage of the total number of emails sent" and anything above 80% is good. So far NextStage is getting a delivery rate of 99.5% with bounces being due to people leaving their position. People who left a position -- hence have lost an email account -- and not directly notified us of a switch in email accounts are (to NextStage) the same as people who ask to unsubscribe. Both come off our email list. Delivery Rate is a purely mechanical metric, meaning it has nothing directly to do with the person's interaction with the newsletter, it just means your mailer program sent something to a valid email address. It tells you nothing about what happens once your newsletter gets into a subscriber's InBox.

Open Rate

The first interaction between subscriber and a newly distributed newsletter is determined by the Open Rate, "...a measure of how many people on an email list open (or view) a particular email campaign." There are various calculations for this and NextStage prefers the simplest:

Some folks subtract bounces from "emails sent" in the denominator. Don't and here's why; If 50% of your emails bounce and 50% of the addresses on your subscription list open the newsletter then you can end up believing your open rate is 100% -- technically accurate and completely misleading (my opinion). Leave "emails sent" alone in the denominator and you'd learn that your real open rate is 50% and that should be a warning that trouble's on the rise.

Growth Rate

Growth Rate is a NextStageish variant on subscription and unsubscription rates and, as always, is quite simple:

Get the number of new subscriptions -- subscribes -- since the last distribution. Subtract the number of people who've cancelled their subscription -- unsubscribes -- since your last distribution. Divide the difference by the total number of subscribers for your last distribution, that's your subscriber count. Multiply result by 100 and you have a percentage indicating if your subscriber list has grown or shrunk since your last distribution. Plot this over time and you learn if you're audience is growing, stagnant or leaving you -- important information, me thinks. What's a good growth rate? I can offer "that depends on the purpose of your newsletter" and while correct it's also not a very useful answer.

NextStage calculates two variants of growth rate -- New Conversions and Viral Capacity -- and a Cost of Acquisition calculation to add meaning to Growth Rate.

The rest of this column and a few future columns will deal with these and other metrics NextStage, clients and those who took part in our research find useful.

Cost of Acquisition

NextStage's email newsletter growth rate is strong (nice double digits) according to people we've talked with. This growth rate is of particular interest to us as we've done nothing to promote the newsletter after the initial invitations were sent out, thus our cost of acquisition -- what we pay for each new subscriber -- is US$0. Add to that that the original invitations came from email lists gathered from conferences, symposia, professional associations, etc., where we presented or sponsored, hence "dual purposed", and the cost of acquisition to date goes down dramatically.

Another technique to keep cost of acquisition down that NextStage strongly encourages is simply knowing your audience and only sending invitations to people you have a high surety of acquiring as subscribers. Could we purchase lists and such? Yes, and it might be a consideration if our growth rate was lower and we could be assured success metrics similar to those we're currently achieving.

NextStage does advertise its newsletter at the end of published articles, in email signature files and on our website. These are also low-cost/no-cost acquisition methods and vitally important because it goes directly into the Viral Capacity metric.

My next column will go into knowing where subscribers are coming from and determining each subscription's real value.

Please contact NextStage for information regarding presentations and trainings on this and other topics.

Links for this post:

• BizMediaScience Email Marketing blog posts
• How to Design an E-Mail Newsletter to Maximize Your ROI: Part 1 podcast
• How to Design an E-Mail Newsletter to Maximize Your ROI: Part 2
• Email Newsletters, Anyone?
• Make sure your email newsletter is working
• BizMediaScience SEND Glands Blog arc

• This is Your Brain on the Internet at Emetrics SF on 8 May 2008
• "Know How Someone Is Thinking in 10 Seconds or Less" Half-day training at the Fashion Institute of Technology in NYC, 13 June 08

• New Communications Forum 2008, 22-25 April 08 at The Vineyard Creek Inn & Spa, Sonoma County CA
• San Francisco Emetrics Marketing Optimzation Summit, 4-7 May 08
• International Communication Association's Communicating for Social Impact, the 58th Annual Conference of the International Communication Association at Le Centre Sheraton Hotel, Montreal, Quebec, Canada, May 22-26, 2008
• SUNY Marketing Professionals Conference at the Fashion Institute of Technology in NYC, 11-13 June 08

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