When is a Lower Email Conversion Rate Better?

email conversion rate

A full 90 percent of retailers see email as important for achieving their goals – no surprise, since email accounted for nearly 20 percent of all online transactions in 2017. And since they’re spending so much time and budget on email, it makes sense that they’re always on the lookout for ways to maximize the effectiveness of their email outreach.

When it comes to optimizing an email campaign, one statistic that most marketers focus is their campaign’s conversion rate — the rate at which subscribers click to make a purchase within each email.

A higher email conversion rate might seem like a clear-cut indicator to focus on a particular customer segment – but this isn’t always so. It’s true that a high percentage of conversions means more customers will click and convert within your emails. But all those conversions may not mean customers are spending more, or that they’re buying products that yield a stronger profit margin.

Why conversion gets so much attention

Many marketers treat their email marketing conversion rate as a crucial metric. And conversion is important: studies show that it’s cheaper to increase conversion rates than it is to increase targeted traffic and that higher conversion rates result in saved revenue, freeing up more money to invest in future campaigns.

But conversion rate alone doesn’t provide the whole story on an email campaign. It doesn’t tell you how engaged your customers are, or how likely they’ll be to purchase. And that’s crucial information when you’re evaluating the success of an email or deciding where to focus your campaign investments.

The impact of a lower conversion rate

In many cases, more engaged customers generate more revenue than less engaged ones, even if their conversion rate is lower.

Say you’re an office supply retailer, for example, and you’ve got a group of 200,000 email subscribers – 100,000 warehouse owners, and 100,000 office managers. Both groups have expressed interested in the same product—metal shelving units—and both have the same email open rate.

But there’s one all-important difference between these two segments: their behavior. While the office managers have a 2 percent conversion rate,  the warehouse owners average 5 percent less and have a 1.9 percent conversion rate.

Given these stats, it might seem obvious which group should get the bulk of your attention. Focus on the office managers with the higher conversion and you’d expect to generate 5 percent more orders, resulting in 5 percent greater revenue.

But not so fast. If you take a closer look at the stats on each group, you notice that, although your warehouse owners convert less frequently, they click more often. The warehouse owners have a higher engagement rate, 7 percent, generating 7,000 clicks – while the office managers only have a 5 percent engagement rate, with 5,000 clicks.

As a result, with an average order value of $100, the warehouse owners generate $13,300, whereas the office managers with a higher conversion rate only generate $10,000. By engaging 40 percent more customers, the warehouse owner group provides more revenue.

office supply retailer email conversion rate

The power of stronger engagement

What does this example demonstrate? That more engaging emails add up to stronger returns. While conversion rate does matter, keeping your email subscribers engaged is the key to driving profitable purchases. Engaged customers have been shown to buy 90 percent more frequently, and spend 60 percent more per transaction than non-engaged ones do. That means engaged customers add up to triple the value of non-engaged ones, every single year.

So how do you turn non-engaged customers into engaged ones? With personalized emails that cater to each individual customer’s interests and desires. Emails with more personalized offers help drive deeper relationships with your customers, building long-term loyalty that’ll keep them coming back to your brand, time and again.

If you’re interested in learning more about how to increase customer engagement and get the most out of your email program, request an invite to join an upcoming event in our Retail Peer Forum Series.

 

 

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