Move over, âopen rateâ: Why you should be measuring loyalty, value & engagement instead

As email marketing metrics go, open rate and click-through rate are the stars of the show. And for good reason - when it comes to measuring the success of an individual campaign, they’re useful (and tangible) indicators.

But what do they tell you about the health of your customer relationships? Probably not very much.

Open rate really only shows how effective your subject line was, which can be useful for optimisation purposes but doesn’t necessarily indicate an engaged and happy customer base. Other common metrics like click-through or click-to-open rates tell you a bit more about the effectiveness of your email content but don’t reveal much about the people on the other end of those clicks - or their relationship with your business.

Strong customer relationships are key to driving retention and value - but figuring out how to measure them isn’t always straightforward. They depend on valuable customers that are loyal and engaged with your brand. How do you measure things like engagement, loyalty and value in a way that’s meaningful?

Engagement

The trouble with many of the so-called vanity metrics - and open rate in particular - is that they’re actually quite vague. Let’s say your campaigns average a 30% open rate - generally considered quite high for most sectors. But what if it’s the same 30% of your customers engaging each time? Or what if they’re opening one of your emails for the first time all year? Neither of these scenarios represents a particularly engaged customer base, even though the open rate looks impressive.

So how do you measure engagement more accurately? It starts with focusing on the customer, rather than the campaign. Looking at each person’s interaction with your campaigns over time will give you a much clearer picture of how engaged they are. And remember to look beyond email for engagement - consider each customers’ interactions with you on social, in your app, etc.

Loyalty

A common way to measure and track loyalty is through customer feedback, using Net Promoter Score or other post-purchase feedback surveys. These ask key questions like:

- Would you recommend our brand / business to a friend?

- Would you shop with us (use our service, etc.) again?

This is a good starting point for measuring loyalty but, again, doesn’t necessarily paint a complete picture. You’ll also want to take into account things like the frequency with which customers shop with you, or how long they’ve been a customer. And if you have a loyalty programme in place, look at how many customers are signed up and how often they take advantage of it.

True loyalty is a tricky thing to measure, as there will always be customers who are driven by price more than anything else. Which is why value is also key...

Value

Determining which customers are the most valuable is essential in ensuring you’re focused on the relationships that really matter. And your most valuable customers aren’t necessarily those who have the highest total spend. Average order value is a far more useful metric - a customer who spends a lower amount but shops frequently may be more valuable in the long run than a one-off big spender.

It’s also important to consider which customers are the most profitable. Consider a customer who shops once or twice a week but only buys products with a low-profit margin. Although their purchase frequency and total spend might be high, they’re not actually contributing much in the way of profitability.

Loyalty, value and engagement paint a much better picture of the health of your customer base than opens and clicks - especially when you look at them together.

Let’s say you compare your most loyal customers with the most valuable ones. In a healthy database, you should see a high degree of overlap between these groups.

In other words, your high-value customers should (ideally) be your most loyal. If there are only a few people who fall into both groups, it suggests that your most valuable customers are liable to leave and your loyal customers aren’t bringing much value. Once you’ve identified this, you can start looking at ways to drive greater loyalty and value.

Comparing loyalty and engagement can also provide useful insight. If your most loyal customers are hardly engaging with your marketing comms, what might be the reason? Maybe the offers (or other content) you’re sending simply aren’t relevant or they prefer to interact on different channels. Perhaps exclusive content that makes them feel their loyalty is valued and rewarded would drive greater engagement.

You’ll need to test a few alternatives to find out what works, but comparing loyalty, value and engagement in this way opens the door to the right kinds of questions.

Vanity metrics like open rate and click-through rate may look impressive but monitoring the health of your customer relationships will give you a much better sense of how effective your marketing efforts are. Metrics like engagement, loyalty and value give you more insight into your customer relationships and where the problem areas might be - so you can work on improving these relationships before it’s too late.

Read more about building better customer relationships on the HTK blog.