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If conversion is "king,” then click-through rates must be the "queen" of successful email marketing. Previously, we wrote about the importance of conversion and down played click-through rates (CTRs). In this article, I'll show you why click-through rates are indeed very powerful and a key determinant of your campaign's success - if you've mastered your conversion rates.
Open, click-through and conversion rates combine to drive the ROI and success of your email campaigns. And while all three are important, CTRs serve as the fulcrum of your conversion numbers. But even a high conversion rate won't deliver the results if your click-through rate is weak. Here are two examples that demonstrate how CTRs can determine whether your campaign costs or makes your company money.
Example 1
Say you mail to a list of 50,000 addresses at a cost of $300/1,000 for a total media cost of $15,000. We’ll use a fixed 10% conversion rate, an average product/service price of $1,000, 20% margins and a cost of $8,000 to produce the email and landing page, and manage the campaign. Using CTRs from 1% to 4%, here are the results: 
In the scenarios above, the difference between a 1% and 4% CTR is $150,000 in revenue and $30,000 in profits – with the 1% CTR campaign actually costing the company $13,000. With all other factors being equal, higher CTRs simply mean the difference between losing and making money.
Example 2
In this example, we'll look at a case where a company: a) Produces the email internally to save costs; b) Rents 200,000 email addresses at $150/1,000; and c) Generates a 1% CTR. We compare that against fewer emails rented (50,000), at a higher cost ($300/1,000), produced by an outside firm, and that generates a 4% CTR. 
This example demonstrates how a well executed campaign combined with a high quality list, can deliver an ROI and profit that is greater than mailing a higher quantity to a less expensive list.
What Drives Click-Through Rates
So if CTRs are declining overall, how do you get, for example, a 4% CTR on the same campaign, versus say 1%? Let's look at the four main components that drive click-through rates:
- List Quality: The biggest mistake we see companies making today is in renting inexpensive lists. Persuasive list sales people convince emarketers to rent their low-cost lists, with promises of guaranteed CTRs and make goods. But these inexpensive lists almost always pull less than 2% and typically under 1%. Our recommendation: rent only high-quality lists, test them first and refine your creative and list selection to achieve maximum CTRs.
- Compelling Offer: Whether value proposition/benefit or incentive driven, a strong and compelling offer is critical to driving high response rates. Always do an A/B split test to determine which approach works best for your target audience - then roll out the best offer to your bulk mailing. In many cases, the best producer may be some combination of both approaches.
- Audience Match: A great offer and strong list will fail miserably if your target audience is not an exact fit with the list demographics. To ensure high CTRs, choose as many list selects as are possible to match your target demographic. Secondly, understand the context of the list members and their relationship with the "list owner." The same CFO, for example, has a different relationship with BusinessWeek as she does with CFO Magazine, and may respond differently to emails from each list.
- Strong Creative: Many emarketers underestimate the intelligence and patience of their audience, by developing emails that are void of information. Remember, your copy and email design are developed for the 5% who will take action, not the other 95%. Provide recipients with enough information (text and graphics) so they can make a decision to go to the next step in the process.
When all of these elements of your email campaigns are working together, you are bound to see outstanding click-through rates. If not, or you try to cut corners to save a few bucks, your campaign is likely to end up costing, instead of making your company money.
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