Why you should care about revenue per recipient

coins falling in water to denote revenue per recipient

Open rate, click through rate, unsubscribe rate. Metrics you should be tracking but metrics that don’t tell you much other than that people are interacting with your emails. Good to know but not super helpful.

What you really want to know is how much money each email is making you. Hard numbers that you can take to your boss and say, “BOOM, I just made us a ton of money.” Alright, you might not want to say that, but you get what I mean.

This can be done in a number of ways. You can track your return on investment (ROI) and your revenue per recipient (RPR). Today we’ll be talking about the latter.

How do I calculate RPR?

You might be asking yourself, why not just measure your return on investment (ROI)? Good question. ROI is a great metric to track but it’s very difficult to calculate. To calculate ROI, you have to have a complete knowledge of all your costs which may be tough task for a lot of organizations.

RPR is a million times easier to calculate.

Just take the amount of revenue your email send generated and divide it by the number of emails delivered. When doing this, remember to take out the emails that bounced.

Here’s an example.

Let’s use Phil’s Fake Company (PFC). Let’s say PFC sent 250,000 emails and 2000 bounced. That leaves 248,000 successfully delivered emails. The revenue generated from that send is around $60,000. The bolded amounts are the numbers that we need to calculate RPR.

So let’s do the math.

60,000 / 248,000 = $0.24 RPR

Now that’s a pretty good figure.

Having a tool, like Klaviyo, that does this for you will save you a ton of time. And as we all know, time is money.

So why is RPR important?

Revenue per recipient tells you how much spendable revenue you’re getting from each email on your list. This helps you find out what’s working and what might need to change.

The higher your RPR, the more each member of your list is worth.

It will also help you get better. Ecommerce stores are always looking for ways to better their email performance. Once you can successfully calculate RPR, you’ll have a new tool in your belt that will help you quickly evaluate and optimize each email send.

How do I optimize my strategy?

Easy. Be more targeted.

Blasting your entire list with the same email will give you zero information on how that email is performing.

Dprism wrote a great article that analyzed Scholastic’s email marketing strategy over a 2 year span. They found that the more emails they sent, the faster their RPR dropped.

Alarming, but very common.

Many companies try to increase revenue by sending more email. This might work in the short run, but it’s rarely sustainable.

The best way to boost your RPR and get the most out of your list is to treat each of your recipients as human beings.

There are two sure fire ways to do this. You can send triggered emails (flows) and you can segment your list based on what you know about each recipient.

Let’s talk a little about each.

Triggered emails

Flows are triggered emails based on a recipient’s behavior or actions. These emails tend to drive the highest RPR because they’re almost always relevant.

Here are two series that every ecommerce store should send.

  • Welcome series: By far the most commonly used triggered email series. If someone joins your newsletter, send them a series of welcome emails. MarketingCharts did a study that showed these emails achieved more than double the average open rate, triple the average click-to-open rate, and 6 times the average click rate.
  • Abandoned cart series: This series will send when someone starts the checkout process but falls short of purchasing. One of our writers, Aaron, wrote an awesome article about abandoned cart emails and the best strategy to rescue ecommerce sales. One stat that popped out to me is  the one he found from Business Insider Intelligence:, “Approximately $4 trillion worth of merchandise will be abandoned in online shopping carts”. That’s 4 trillion dollars in possible revenue.There could be any number of reasons why someone would abandon their cart – you’ll never know that reason unless you reach out to them.

Segmentation

Segmentation is another way to get the most out of your list and is an easy way to raise your RPR. It’s being more targeted by breaking your customers into groups based on shared characteristics.

Sending targeted email will help grab people’s attention. You’re more likely to open an email if it’s something you’re interested in.

Smarter Insights wrote a great article called 7 email campaign segmentation techniques. These 7 techniques will help you target each customer based on their needs, interests, and behaviors.

Again, sending the same email to everyone will only hurt your business. By sending targeted and relevant email, you’ll be able to maximize your email list’s potential.

Do this and you’ll be increasing your RNR in no time.

 

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