What Does Conversion Rate Mean in Email Marketing?

You have certainly come across the term "conversion rate" in the context of email marketing. But what exactly does this term mean and how can you optimize the conversion rate in email marketing? In this article, our expert Simon Bühl explains everything you need to know about the topic of conversion rate in email marketing.

What is a conversion rate in email marketing?

The conversion rate in email marketing indicates how many recipients of a newsletter or an email campaign have clicked on the included Call-to-Action (CTA) and subsequently performed a specific action. This action can be, for example, the purchase of a product, the completion of a form, or the subscription to a newsletter.

A conversion rate therefore requires an action by the recipients in a mostly follow-up medium such as an online shop or landing page. In order to be able to calculate this key figure, it requires a measurement of the corresponding data in your mailing software, but also in a follow-up medium. In practice, this means: If you use a tool for email marketing, it should ideally be able to “talk” directly with your online shop or your landing page via an interface so that all data is available to you to calculate your conversion rate.

This is where the conversion rate differs significantly, for example, from key figures such as the click-through rate, i.e. the key figure that indicates the clicks made within your mailing campaign in relation to the mail recipients. As a rule, these can be measured autonomously in the mailing software used, without needing a connection to another medium such as a website.

How is the conversion rate for newsletters calculated?

Unfortunately, one must be careful here, as there are sometimes different definitions and calculations of the conversion rate in circulation. So if you want to have a conversion rate reported, you should always ask for a definition of the calculation so that you make your decisions based on the correct values.

To calculate a conversion rate, of course, you need the number of conversions. A different approach is however found in the key figure by which this conversion number is divided: It is a huge difference whether the number of all mail recipients in the distribution, only the recipients who have opened the mail, or only the recipients who clicked on the CTA are used for the calculation.

The method we believe is common is a calculation as follows:

Conversion rate = (number of conversions ÷ number of emails in circulation) × 100

To calculate the conversion rate for a newsletter, you have to divide the number of recipients who clicked on the CTA and then performed an action by the total number of emails in circulation and multiply the result by 100. This results in a percentage value that we call the conversion rate in email marketing, regardless of whether we are in a B2C or B2B environment.

Let's make it very concrete with an example:

Suppose you send a newsletter to 25,000 recipients and 700 recipients have clicked on the CTA and then performed an action, for example, made a purchase in your online shop. Then your conversion rate is:

Conversion rate = (700 ÷ 25,000) × 100 = 2.8 %

What is a good conversion rate in email marketing?

There is no blanket answer to this question as the conversion rate depends heavily on the industry and the specific goal of the email campaign. However, average conversion rates can be used as a guide, which are published regularly by the various software manufacturers for email marketing tools.

Mailchimp writes, for example, in her glossary that a “good” conversion rate for email campaigns across all industries is between 2 and 5 %.

A major influence on the conversion rate is the correct handling of segmentations, i.e. the classification of your email distribution list into different target groups, along their customer journey. A mail campaign that goes exclusively to recipients who have already bought products from your brand and have had good experiences with them will be significantly higher than a “blind” shipment to all your newsletter subscribers.

In the end, you have to define what success means for you in terms of the conversion rate, as countless factors make a blanket answer impossible. Small test: Would a conversion rate of 1% be bad with 10,000 recipients? If your goal was to sell as many pens as possible for 1 EUR each, then the effort won't have paid off. However, if you work for a company in the space tourism sector and have just sold 100 space flights for 5 million euros each with a single email, then you can now pat yourself on the back.

You see: Please don't be disturbed or intimidated by any values on the internet. Just think about your individual goals and see how you can continuously improve.

What tips can I use to optimize the conversion rate in email marketing?

There are various tips you should consider to optimize the conversion rate in email marketing:

• Define and segment target group: In order to send as relevant content and offers as possible, it is important to know the target group exactly and to take their needs and interests into account. You should also pay attention to this later during the analysis and not accidentally compare apples with pears, for example the conversion rates of a so-called after-sales campaign (contact has already bought from you) and a reactivation campaign (contacts without activity for x days).
• Optimize subject line: Consider your email marketing holistically and pay attention to every intermediate step, starting with the subject line: An appealing subject line is the key to attracting the attention of the recipients and motivating them to open the email.
• Highlight Call-to-Action: The next step on your analysis journey is the call-to-action (CTA). The CTA should be easily visible and attractively designed to motivate the recipients to make the desired click and thus bring them a big step closer to the ultimate goal of the conversion.
• Use personalization: Personalized emails, for example with the name of the contact or his interests, can increase the conversion rate, as the recipients feel more addressed.
• Mobile Optimization: More and more people are reading their emails on their smartphones. Therefore, emails should be responsive and easy to read even on small screens.
• Conduct A/B Tests: A/B tests should be conducted regularly to test the effectiveness of different elements of the email campaign. A version of the email is sent to a subgroup of recipients and a slightly varying version to another subgroup. The results can then be compared to see which version worked better. But always limit yourself to one aspect and don't test dozens of things at the same time, otherwise you won't be able to draw any conclusions about how exactly which change was brought about.

Which tools support me in conversion optimization?

There are numerous conversion rate optimization tools, which seek to achieve more conversions in all sales channels. Here are some examples:

• GetResponse
• EASY2
• ABlyft
• Heyflow
• Varify.io
• Amplitude
• ODOSCOPE
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Conclusion

The conversion rate in email marketing is an important indicator of the success of email campaigns. However, be aware that different definitions of calculation and interpretations of which conversion rates are good and which are bad are unfortunately circulating on the internet. This article is therefore intended to serve as a guide and encourage you to set your own goals and continuously improve your results with our tips. So, have fun converting!