Making Money On-line: Understanding Marketing Metrics: Email Open Rates

Marketing metrics are more than just numbers. Without the proper understanding and context, you can’t turn these numbers into the valuable insights you need to make better tactical and strategic decisions.

In this series of posts, we’ll look at a variety of marketing metrics. We’ll discuss how to measure each one, use each one, and how to benchmark your performance. In this post, we’re examining email open rates, which are easily the most misunderstood email marketing metric—by a long shot. We’ll begin by explaining...

How open rates are measured

Let’s start with opens, which are primarily measured using an invisible one-by-one tracking pixel. When images are enabled in an email, that tracking pixel renders when the email is read by a subscriber and is subsequently counted as an open. To ensure that the tracking pixel renders, we recommend placing it at the top of your email. Absolutely avoid placing it at the bottom, because it can get clipped in Gmail, or never activated if a subscriber doesn’t scroll to the very bottom of your email.

You might be wondering, “What happens if images are not enabled?” This is where opens can be measured differently by individual email service providers and brands. When an open isn’t registered, some like to count instances where there are one or more clicks in an email as an open. Obviously you can’t click in an email without opening it. It’s nice to know how your ESP handles these instances.

For the record, Oracle doesn’t add subscribers who click without opening as opens. Ultimately, consistency is more important than how your ESP calculates an open. Even if you do account for these instances, it’s impossible to account for those cases where subscribers open emails with images blocked and don’t click. No matter what, your opens won’t be perfectly accurate.

To calculate open rates, divide your opens by the number of emails delivered, which is the number of emails you sent for a campaign minus the number of emails that either soft bounced or were undeliverable and hard bounced.

Open Rate = (Opens / Delivered) * 100%

When subscribers open the same email multiple times, it’s a signal of deeper engagement on the part of those subscribers. For example, welcome emails, transactional emails, and some other triggered emails, often see multiple opens. However, this behavior can obscure how you’re doing with individual subscribers.

To get a better view of the engagement of individuals, many senders measure their unique opens, which is the number of subscribers who opened the email at least once. This calculation doesn’t count multiple opens by a subscriber. Using that, you can then calculate the unique open rate (UOR) by dividing the number of unique opens by the number of delivered emails.

Unique Open Rate = (Unique Opens / Delivered) * 100%

Now that we’ve explained how open rates are measured, let’s discuss…

How to best to use open rates

Here are some truths about how open rates should be used and how they shouldn’t.

Open rates aren’t a good business impact metric.

While opens can be an indicator of the awareness you’ve generated around a particular message, they don’t necessarily correlate to bottom-of-the-funnel business metrics like conversions and revenue. They don’t do a great job of telling you if your subscribers are getting value out of your emails. Clicks and conversions do a much better job of measuring that.

Open rates are best used as an email marketing program health metric.

Opens are an important metric that inbox providers use in filtering decisions, so it’s critical for marketers to track opens to determine subscriber inactivity.

“We use open rates as a proxy for inbox placement, and as an indicator of overall list health,” says Clea Moore, Director of Deliverability Strategy at Oracle CX Marketing Consulting. “Open rates of 4% to 10% point to poor segmentation practices, where too many inactives are being included in targeting. Very low open rates of 3% or less indicate spam folder placement at an inbox provider.”

Our Email Deliverability Services team routinely uses open rate data to inform better segmentation that can be used to improve deliverability, she says. “By using open (or click) recency,” says Moore, “we can remove some of the dead weight of inactive subscribers that aren't boosting revenue and are hurting performance."

Another way to use opens to monitor list health is to track open reach. This is the percentage of your subscribers who have opened at least one of your emails during a period of time. For instance, your 180-day open reach would be the percentage of your subscribers who have received at least one of your emails and opened at least one of them in the past 180 days. This is a useful metric of how much of your list you’re engaging over time. Pair this with click reach and track their trending.

Open rates shouldn’t be used to measure subject line success.

As I say in my book, Email Marketing Rules, “The goal of subject lines isn’t to generate opens. It’s to generate openers who are likely to convert.” So, it’s best to use clicks to determine the winner of an A/B subject line test.

If you use open rates, you’ll likely find that you gravitate toward intriguing, clever, vague, and otherwise “open-baity” subject lines that attract curious subscribers instead of ones that are actually interested in the content of a particular email. Engaging in this approach will lead to higher levels of email fatigue and opt-outs, and lower levels of trust. This can be a serious failing of AI-powered subject line writing tools.

The sender name has the biggest impact on open rates than subject lines.

Because email marketing is based on permission and relationships, who is sending an email is actually more important than what they’re saying in the subject line.

“I still periodically see brands—particularly nonprofits—use a person’s name instead of the more recognizable brand name as the from name,” says Clint Kaiser, Head of Strategic & Analytic Services, Oracle CX Marketing Consulting. “While we’ve seen brands have success using from name extension strategies to differentiate some of their emails, you always want to be building off your brand name, not replacing it with a name that’s going to be a lot less recognizable to your subscribers.”

Open rates can vary wildly from sender to sender.

How a brand manages their inactive subscribers can have a huge effect on their open rates. Lax management inflates the total subscribers mailed, depressing your open rates, while aggressively suppressing your inactive subscribers boosts your open rates. This means that two brands with exactly the same number of openers could have open rates that different by 10 percentage points or more if they have significantly different approaches to managing their inactives. This mathematical reality makes benchmarking open rates against other brands tricky and potentially misleading.

“The biggest issue is that open rates shouldn’t be evaluated in a vacuum,” says Moore. “It can be useful as long as you are benchmarking other metrics alongside opens, and comparing similar emails at companies in similar industries.”

Open rates are not perfectly accurate.

In addition to image blocking, measuring opens accurately can be undermined by email bots and by the caching and prefetching of emails. The former can worsen over time, so try to identify bots on your list and remove them. However, the latter should be fairly consistent over time, so it shouldn’t affect month-to-month or year-over-year comparisons—and it’s those change-over-time metrics that are the most useful in revealing trends.

If you decide that you want the most accurate open data possible, some inbox providers are now supplying performance data directly to senders for a fee.

What is a good open rate?

In general, our consultants see 10% or better as a good open rate. However, that comes with a few caveats.

First, don’t get overly focused on individual campaigns, says Nick Cantu, Senior Art Director for Creative Services at Oracle CX Marketing Consulting. “We’ve told clients not to get focused on the results until we get a few months of results to create our baseline. Then, we start to see fluctuations over time.”

Second, from a deliverability perspective, you want to see 10% or better at each inbox provider, not just on average across all inboxes. “Below that level, then they likely have segmentation and inbox placement issues,” says Moore.

Third, a good open rate varies by type of email. “For example, we’d expect lower open rates for reactivation campaigns,” she says. “Four percent is a good, unique open rate for those.”

Meanwhile, you’d expect to see much higher open rates for a welcome email or a shopping cart abandonment email. Among our clients, we typically see welcome email open rates of 25% to 65%, and cart abandonment email open rates of 25% to 45%.

Fourth, open rates can vary by audience. “For example,” says Moore, “we’d expect higher than 10% open rates on re-sends to contacts that have recently opened a campaign.” And if you manage your inactive subscribers more aggressively, then we’d expect your open rates to be higher across the board.

“That’s a lot of caveats. for sure. But that’s how you can get the most insights out of your email open rates” says JT Capps, Director of Strategic & Analytic Services at Oracle CX Marketing Consulting.

“It’s necessary for brands to establish their own internal benchmarks by email type, audience, and messaging strategy to evaluate open rate performance for similar campaigns that can be reasonably compared,” he says. “From there, goals for open rates can be established and a performance index can be created to measure how campaigns are meeting their defined goal vs. actual.”

Want more advice on how to calculate and use email metrics? Check out these related posts:

(coming soon) Understanding Marketing Metrics: Email Click Rates
(coming soon) Understanding Marketing Metrics: Conversion Rates
(coming soon) Understanding Marketing Metrics: Email Deliverability

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Need help with your email marketing analytics or reporting? Oracle Marketing Cloud Consulting has more than 500 of the leading marketing minds ready to help you to achieve more with the leading marketing cloud, including Strategic & Analytic Services and Performance Reporting Services teams that can help you get new analytic insights and improve your visibility into performance.