By Zach Labenberg, VP of Client Strategy

Recently, we published a blog on recognizing the right time to start a paid email acquisition campaign, goals to strive for and pitfalls to avoid. We keep the recommendations coming here, where we will dive into:

• Segmenting new subscribers by early engagement key performance indicators (KPIs); and
• Establishing an estimated cost per action (eCPA) for engaged subscribers.

Segmenting New Subscribers by Early Engagement KPIs Don’t let great be the enemy of good. Starting a campaign with estimated KPIs is always better than delaying a campaign due to not having dead certain KPIs, particularly if you are not reaching your growth goals. These metrics can easily be adjusted when data takes shape and dictates performance targets.

A common KPI for a paid acquisition campaign is “X opens in the first Y sends” (e.g., six out of 12 emails sent are opened). Many of our clients start – and continue to use – an approach as simple as whether a recipient opened an email within the first week. Is it the most sophisticated KPI? No, but it does the job and is certainly better than nothing. The alternative – no engagement KPI – means treating every paid acquisition subscriber like an organic subscriber, placing them into your regular flow and emailing them indefinitely. This is a scenario best avoided.

An organic subscriber journey is a linear experience, with an ongoing cadence of contact through content like newsletters, preference center emails and promotional pieces. Acquisition subscribers brought onto your list from a paid campaign will start on a similar journey. Whatever early engager threshold you set (e.g., first week of emails, first 12 sends, etc.), they are treated like a normal subscriber but for a limited period of time.

Once the early engager threshold is reached, recipients who meet your criteria are placed into Bucket A. These recipients can maintain this cadence and be contacted at the same rate as organic subscribers. Recipients who fail to meet the benchmarks should be treated as non-engagers and placed into Bucket B, where they receive far fewer messages or no messages at all (although they should be targeted for reactivation campaigns).

Over time, the success of the paid acquisition campaign is measured by the activity of Bucket A. If the two groups were lumped together the campaign data would paint a skewed picture and perform far worse than a normal organic subscriber campaign.

The proportion of recipients moving to Bucket A can vary dramatically based on the threshold criteria and quality of content, with results ranging anywhere between 20% to 70%. Even the best-case scenario of 70% of recipients qualifying as early engagers means a 30% reduction of volume, significantly trimming the results of a paid campaign.

Establishing an eCPA for Engaged Subscribers Optimizing towards the KPIs is half the battle when building a sustainable campaign. An estimated cost per action (eCPA) value for engaged subscribers will accomplish the second half.

Setting eCPA goals can be difficult to accomplish blindly, but working with a partner like DMi can help guide expectations. For most channels, the standard cost for [acquisition subscribers (before segmenting into Buckets A and B) is less than a dollar (sometimes as low as 40 cents). Our goal is to quantify the engagement KPI related to getting recipients into Bucket A. For most of our clients, that cost falls into the $1.50 to $3.00 range

Similar to our advice with KPI’s, don’t let paralysis set-in. Attempting to determine the exact eCPA will result in waiting indefinitely. Whether looking 90 days or two years downstream to ascertain the real value of a paid subscriber, by the time you reach a conclusion, countless other variables will need to be considered. Rather than shooting for perfection, bolster a fluid optimization process by choosing a reasonable number that fits within your budget, measuring towards it and optimizing quickly. Over time you can improve it based on your learnings from monitoring long-term KPIs and ensuring that they correspond with the early engager KPIs.

We regularly build campaigns for our clients and then evaluate and adjust the eCPA quarterly. Perhaps the early engagers that we have been measuring towards are doing well, but it looks like they are not worth the predicted $2.00, but rather $1.88. That is now the eCPA and we begin managing the front of the data acquisition campaign to achieve that number.

Similarly, perhaps the KPI changes. Let’s say that you enter a campaign designating a metric using six of the first 12 emails opened and as the data takes shape it demonstrates that this is not a quality indicator for success. Instead, recipients opening only three emails in the first week have established themselves as model subscribers over the period of a year. Armed with these long-term learnings we can revisit the early engagement KPI and adjust the criteria determining who enters Bucket A.

Fine-tuning KPIs and the eCPA is a continuous process of observations and optimizations – the end result is a robust, high performance paid acquisition campaign. If we can be of service in answering any of your questions on how to best plan and execute such a campaign, please don’t hesitate to contact us today at info@dmipartners.com.