Oscar Wilde’s famous quote about the cynic who ‘knows the price of everything and the value of nothing’ is frequently trotted out  - but mostly by people desperate to cover up the fact that they have no idea of actually how to measure value. The issue of how to assess the impact of what we do is something that has bedevilled marketers since the discipline was first invented but it’s still vitally important now.

Every MBA student will tell you how important it is to set objectives before a company undertakes any kind of activity - and every text book business plan would be nowhere these days without a healthy dose of the ubiquitous acronym SMART (Specific, Measurable, Achievable, Realistic and Timely) against which to test how well those objectives are put together.

And in macro terms it’s easy to work out whether sales have increased by 5% over 3 years, or if a million more widgets have been churned out last month.

But when it comes to the micro level of setting objectives for online marketing, it seems that so often we have to resort to measuring activity rather than outcome - and, more to the point, in the realm of email it seems like we’re stuck using outdated measures rather than trying to dig any deeper into what effect our activity is actually having. The guru Jim Sterne suggested that there was a distinction between ‘metrics’  and ‘analytics’ - and I feel we’re still stuck in metrics land with email.

Take ‘open rate’ as an example. I believe it’s about as useful a statistic as ‘hits’ was in the early days of the web. (As someone pointed out, the only good definition of hits is ‘How Idiots Track Success’....) There are so many flaws in the way the open rate is calculated - especially these days when so many email clients have images disabled by default - that anyone who still uses it as their main performance indicator is not going to be giving themselves very much useful information.

Even measuring the number of people who click through on links isn’t actually that useful if you don’t know whether they left the website immediately or went on to spend $100 on your site.

A number of our customers in the UK have been experimenting with calculating things like ‘cost per click’ where they weigh up the cost of producing the mailing against the clickthrough rate. In an environment where you’re having to decide whether to invest in developing ever slicker dynamic content, for instance, this could be a great indicator of whether the extra effort is worth it for the final outcome.

In the spirit of sharing best practice, we’re aiming to compile a list of examples of the kinds of performance indicators that people use. What is everyone out there using?  I’ll post a summary of the good ones back here later!

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