One of the most undervalued marketing channels for entrepreneurs today is email marketing. The main reason for this is that the explosion of social media has made it easier for business owners who juggle marketing along with many other tasks to replace list building efforts with friending and following. This is a big mistake.
Without a doubt, there is a tremendous amount of value in social media. However, the fact remains that social media websites are proprietary and you don’t own the contact data or the means to contact your friends and followers. As a result, the social media game could be changed at any moment, without notice and you could lose access to those contacts without any recourse.
In a blog post I wrote just a couple weeks ago, I shared 9 little known fact that make email more important that Facebook and Twitter. If you have any doubts about email marketing, please read that post before going forward with this one.
With that said, over the coming months, I am going to use one or two blog post a week to help you learn more about email marketing best practices and the value it adds to your overall marketing program. Today let’s start with an important concept called the off-email multiplier.
The off-email multiplier is important because as stated by Arthur Middleton Hughes in his article in the Harvard Business Review named Why Email Marketing is King:
For every purchase in an email shopping cart, we can fairly assume that there are some number of other non-tracked profitable purchases that occur because of the arrival of the email — a number that quantifies all the non-tracked behaviors that email recipients engage in.
Thus, the off-email multiplier accounts for additional revenue you generate that is not tracked by the click-through analytics used by email marketing software. Furthermore, if you are not using email marketing software to track click-through rates, then your off-email multiplier is an even more important metric to manage because it will represent 100% of the revenue you generate from emails.
In order to track your off-email multiplier, you first have to collect data about each of your email campaigns. The best way to do this without using sophisticated marketing automation software is to email an offer that has a offer redemption code just for email marketing. Then every time a customer redeems the offer over the phone or face to face, you can track that the origin of the sale was from email.
Your off-email multiplier then becomes a math problem. You take the number of sales made face to face and over the phone (offline sales) as a result of the email redemption code and divide that by the number of sales on your website as a result of that email (email sales).
offline sales / email sales = off-email multiplier
Once you have the off-email multiplier as a baseline, you then can use it going forward to calculate the true value of your email marketing efforts. This example works great if you accept sales on both your website and through some other offline method. However, if you accept sales on your website only or offline only you will have to use slightly different formulas.
Website only alternatives to off-email multiplier:
Below are some alternative methods to the off-email multiplier that you can use to calculate the value of your email marketing when you take sales only on your website. These alternatives do not require the use of the off-email multiplier.
Alternative 1: Track the click-through of a campaign from the email and compare it to purchases made by those who access your website either directly by entering the URL or through another internet marketing link. This method requires that you use analytics software such as the free Google Analytics software to track the click-through funnel of the conversions on your website.
Alternative 2: Add a question to your website’s checkout forms requesting the user identify the channel where they first heard about the offer and give them a single-select choice of all the marketing channels you use such as: email, Facebook, Twitter, Radio, direct mail, etc.
Alternative 3: Compare the email addresses of those who make purchases with the email addresses in your email marketing database. Then make an assumption that anyone who makes a purchase within X number of days of you sending your email offer, made the purchase as a result of that campaign.
Offline only alternatives to off-email multiplier:
Below are some alternative methods to the off-email multiplier that you can use to calculate the value of your email marketing when you take sales face to face or over the phone only. These alternatives do not require the use of the off-email multiplier.
Alternative 1: Use multiple redemption codes for each of your marketing channels. Since email is the cheapest way to communicate with a customer, make the offer you send by email higher value. In doing this, you will be able to encourage customer who get multiple offers to use the email offer to help you understand your email reach better. For example, you may send a direct mail coupon with 10% off and an email coupon with 20% off. Then you can track the number of sales you generate from each channel to measure which one is more valuable.
Alternative 2: Each time a customer makes a purchase, ask if they are a subscriber to your email newsletter. If they answer yes, ask them if the information they received in your newsletter was an important factor in their purchase decision for that day. Track the yes vs. no responses in a spreadsheet. If you are able to have a more intimate conversation with the customer during your sales cycle, you should also discuss with them your other marketing channels so you can get a detailed picture of how your overall marketing mix is working.