Advanced Benchmarking Method for Email Open Rates – a method that can be used to benchmark many KPI’s
This article simpifies:
- Typical method used by marketers for benchmarking
- Advanced method of benchmarking
- Steps marketers need to take to ace the benchmarking process
- Few tips on how to improve email open rates
So what is a good email open rate for your hospitality company? The simplest way to benchmark your performance is to source an industry report or even better, a competitive set report and benchmark against it.
Hotel marketers typically compare their aggregate email open rate to the aggregate industry email open rate and if their aggregate open rate is higher than that of the industry then they go “Hurray!” :) But should we celebrate just because we are above average? I say, “It depends!”
Typical method used by marketers for benchmarking email open rates (or most marketing KPI’s)
Before benchmarking email open rates, it is essential for marketers to be clear with what is their company’s digital marketing positioning within the industry – is it positioned as one of the best digital marketing travel & leisure companies, an average company or a below average company. Based on your company’s digital marketing positioning within the industry, you may mark the ideal email open rate.
For example, you source the below data from common validated reports published online:
Seeing that your company’s average (16.3%) is higher to that of the travel industry average (13.6%) or even the median of your company (16.1%) is higher than the industry average (10.7%), most marketers will be delighted with their performance and stop there. But is that the complete story?
Advanced method of benchmarking email open rates (or most marketing KPI’s)
To really take marketing analytics to the next level, it’s important that you dig deeper. The below benchmarking technique can be used not only for email open rates but also for other marketing KPI’s. For the same data above, take a look at the quartiles:
Looking at the data above, the top quartile of your company (18.2%) is lower than the top quartile of the travel industry (38.5%) while the bottom quartile of your company (15.1%) is higher than the bottom quartile of the travel industry (7.9%). So what does this mean? Let me put this data on a graph to make it easier:
- The mean and the median of your company are higher than that of the travel industry. This means your average open rate performance is better and more consistent than the average performers of the travel industry.
- The bottom quartile of your company is higher than that of the travel industry. This means that the bottom 25% of your performance is better than the worst performers of the travel industry.
- The top quartile of your company is lower than that of the travel industry. This means that your top 25% open rates are worse than the best performers of the travel industry.
Given these 3 key insights from the sample data, we can derive the below:
- If your company’s digital marketing positioning within the industry is below average, average or just above average then you are doing a good job with your email open rates as the email open rate is above industry average.
- But if your company’s digital marketing positioning is to be in the top tier of the travel industry, then the current performance needs to be improved. The top 25% performers of the industry have an average open rate of 38.5% while that of your company is only 18.2%. Even the highest open rate of your company has not surpassed 22%. Given that, raising your email open rate to or above 38.5% straight away deserves to get into the marketing goals list of your digital marketer.
This is a classic example of why aggregate data is meaningless. An average marketer would just look at the average and the median email open rates and celebrate it for being above the industry average and median. But with the advanced benchmarking method i.e. mapping a KPI in relation to the company’s positioning plus looking at the quartile data, you truly understand where you are and where you need to be.
The above method of benchmarking can be used practically for any KPI within marketing. At a broad level, this method compares the positioning of a KPI to the positioning of the company within the industry – which in my opinion is a fair way to benchmark performance. If you are able to acquire your competitive set data, as industry data is a bit broad, then the benchmark and the insights from this method can be more precise.
What next steps you need to take to ace the benchmarking process?
- Identify your company’s positioning: If you don’t already know, ask the CEO, CMO or the Director of Marketing or General Manager (basically your Key Business Strategist) as to where does the company position itself in terms of marketing and/or digital marketing within the industry? Do you position yourselves as Market Leaders? Followers? Challengers? Nichers? Your company positioning then will help you determine your KPI benchmarks.
- Get comfortable with data and excel: If you need to brush up your statistical skills, here are some resources that can help you with some of the concepts discussed above –KPI, Mean, Median, Top Quartile, Bottom Quartile and how to build simple box plots on excel.
Few tips on how to improve email open rates
Whether your customers open an email primarily depends on:
- Sender Name: Customers value the sender name a lot to identify whether a mail is spam. Ensure you correctly use your brand or company name as the sender name.
- Subject Line: Majority customers decide within 2 seconds to open an email based on its subject line. Avoid flowery language, inform directly what the mail is about, include compelling promotions and try personalizing the subject line by adding the customer name. For example, “John, reserve Sunday Brunch for USD 50 only at ABC restaurant. Offer valid till Saturday” is likely to be opened more than “Exciting brunch promotion available at your favourite restaurant in town. We look forward to seeing you.”
- Day and Time of Delivery: Typically, the open rates of promotional emails are higher in the first half of the week, on working days and during day time/working hours.
Try A/B testing of the above 3 factors to evaluate what sender name, subject line and time of delivery works best for your hospitality company as available research does not provide more precise guidance than the 3 points mentioned above. Test, analyse and optimize your efforts to become a true hotel marketing ninja!
Do you think I missed any point? Do you use any benchmarking techniques? Or do you have a tip to share? Please share your insights, critique, stories or helpful guidance via comments. I would love to hear from you.