Revenue Per Recipient (RPR): Why It Matters + How to Increase It

Revenue Per Recipient (RPR): Why It Matters + How to Increase It
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  • RPR Explained: Revenue Per Recipient (RPR) calculates average revenue from each invitation sent, demonstrated through a lemonade stand example.
  • Importance of RPR: It's vital for evaluating eCommerce email marketing campaign success, indicating the effectiveness of promotional efforts.
  • Factors Affecting RPR: Includes the quality of the email list, offer attractiveness, email deliverability, and the specific goals of campaigns.
  • Improving RPR: Strategies include maintaining a clean email list, adhering to best practices in email design and copywriting, selecting the right campaigns, and offering compelling incentives.
  • Beyond RPR: While important, RPR isn't the sole metric for success. Other crucial metrics include email deliverability, list growth, and click-through rates.
  • Comprehensive Evaluation: Success in email marketing demands a mix of campaign types and a broader metric-based evaluation beyond just RPR.

What is revenue per recipient in eCommerce?

Think about revenue per recipient in eCommerce with this lemonade example. Let's say you have a lemonade stand and you send out 10 invitations to your friends to come taste your lemonade and eventually buy it as well, right?

At the end of the day, let's assume you made from those lemonades $50. Now, you want to find out how successful was your sale.

So what you'd do is you would take the total revenue generated, i.e., $50  and you'd divide it by the numbers of invitations you sent. That is $5 per invitation or per friend.

Voilà! You just learnt Revenue Per Recipient (RPR) - it shows you the average revenue generated. By dividing the total revenue by total number of emails or messages sent to your audience.  Some experts in the eCommerce industry refer to it as Revenue Per Email too.

Why is revenue per recipient important in eCommerce campaign success?

Revenue per recipient is important to assess your eCommerce email marketing campaign success. It shows you how successful your email campaigns or your flows were. Think about it. Let's say you run a 10% campaign discount on your email campaign. Now, you want to find out how successful it was and if you hit the mark on your profit margins.

If your RPR was lower than your profit margins, you need to find another incentive. Or, another promotion to send out to your recipients. You need to start measuring RPR when you're trying to figure out what campaigns hit the mark and which ones did not.

Remember - Each campaign type will have a different revenue per recipient. So you need to be mindful when looking at that metric.

For example, if you send out an educational campaign where you don't necessarily want your people to buy your product. But, you'd like to drive them down the funnel and you want to teach them about how to use the product. These types of campaigns will have a lower revenue per recipient.

 So make sure that when you look at the revenue per recipient, you also look at the email campaigns you've set up. Remember to ask yourself what was the goal for our email campaign and assess it against your business goals.

But, there is something to ponder here - Is RPR the right metric to measure your email marketing efforts? We'll answer that query towards the end of this blog. So, stay with us.

What is the formula for revenue per recipient?/How do I calculate RPR for email?

 The formula to find out your revenue per recipient in Klaviyo or in general is the following: You take the total amount of revenue your email your campaign or your flow has generated. Then, you divide it by the total amount of deliveries. But, remember failed deliveries in Klaviyo will not account for the total amount of deliveries.

Why is our revenue per recipient low for some campaigns?

Revenue per recipient can be low for some campaigns due to various and many reasons. Here are a few of them.

  1. Clean email lists: One of them, you didn't clean your list. You send out your email campaign to unengaged subscribers. In other words, to people who haven't opened or engaged at all with your brand or with your emails in months. These audiences have not made a purchase.
  2. Unattractive offer: The second one can be an offer that wasn't attractive enough. Let's say you set out a 10% discount in your most recent campaign.
    But, one month ago, you sent out a promotion with 25% off. Obviously, your subscribers won't purchase again because the difference between your earlier offer and your present offer is quite big. Therefore, it is not attractive enough.
  3. Email deliverability: The third thing is email deliverability. A lot of your emails might not have hit the inbox of your target auddience. Your subscribers may not have actually seen the emails. Therefore, there are fewer eyeballs on your emails and so you get a lower RPR.​
  4. Goal of your campaign: The fourth reason is the goal of your campaign.  You might send a promotion that would naturally have a high RPR because that was the original goal. But if you send out an educational campaign, it is most likely going to have a low RPR because the goal of this campaign is to educate your subscribers. It is to make sure that they are aware of your product, how to use it etc. They know about your brand, but not necessarily to buy from that particular email.

The most crucial question: How do you increase revenue per recipient? /How do we optimize our email campaign strategy for RPR?

There are a number of ways to increase RPR. Let's go over it one by one.

  1. Clean list: The first way to increase your revenue per recipient, and the most important one, in our opinion, is to ensure that you have a clean list. Make sure that you send out your campaigns to your most engaged customer segments.
    Remember to use the appropriate customer segmentation and you don't end up sending out your email campaigns to subscribers who haven't interacted with your brand. Subscribers who have not interacted with your emails are most likely not going to open your emails or make a purchase eventually. Result? It is going to hurt your RPR.
  2. Best practices: The next thing that is important when it comes to increasing revenue per recipient is to ensure that you follow the best practices. What do we mean  by that?
    Best practices for email include great email designs and email copywriting. Make sure that your copywriting is concise, your Call to Action (CTAs) and subject lines urge people to take action. This improves your click through rate which in turn has a bearing on your email marketing success.
    So, make sure to make it easy for your subscribers to engage with your email and give them the appropriate information they need to find in order to make them interested in your product.
  3. Using the right email marketing campaigns:  The third way to increase your revenue per recipient is to find out which email campaigns work best (i.e., the ones where your conversion rates were high). Use your Klaviyo dashboard or the CRM you use to do an analysis on the previous email campaigns you have sent out. Look for high RPR campaigns and try to analyze what worked there. Then, try to replicate it in a different way to make sure that you don't repeat yourself.
  4. Incentives that work: The last thing on how to increase your revenue per recipient is to make sure that your incentives are working well for your business and they don't cause harm. For example, if a 10% discount will yield low profit margins, it doesn't make sense to offer it again. Instead, you might want to use a bundle or a different type of offer that can actually increase your profitability. 

Don't Miss: 9 Pillars of Email Marketing Success

Is revenue per recipient the right metric to track in email marketing?

Let's get to some hard truths - Revenue per recipient is NOT necessarily the most important metric to track when it comes to email marketing. Why? Because it does not necessarily show you how profitable or successful your email campaigns were.
Let's understand it this way - In reality, all eCommerce brands will run a mix of email marketing campaigns. Some of them might be promotions, some might be announcements. But, not all of their goals is to make money for your eCommerce business. This is also why it is not a great idea to measure individual email campaign RPR all the time.
Therefore, it's going to always be a mix of high revenue per recipient campaigns with low revenue recipient  campaign. That means RPR is not necessarily the right metric to measure your email marketing efforts.

Obviously, that brings us to the next question which is what are the right metrics to measure email marketing.

Don't Miss: 3 Retention Metrics You're Not Measuring Correctly + Strategies to Improve Them

What are the metrics to ensure eCommerce email marketing success?

Now, let us look at the important metrics to measure your email marketing efforts.

  1. Email deliverability: First of all, we have the email deliverability. Like we said before the more eyeballs on your emails, the more people will see your emails. As a result, there are more chances of your email actually making money. This is very simple logic.
    Some people think that Klaviyo is just a plug and play email platform and your development deliverability is assured (i.e., you're able to get all your emails delivered). In reality, you actually need to make some technical changes. Reach us at Magnet Monster and we can send you the technical aspects.
  2. Less growth: The next thing is less growth, more scale to your program. So, the more people you have on your list, the more actually eyeballs to your emails. The more chances to send your emails to more people, therefore actually higher chances of RPR.
    You can't scale your email or SMS program unless you continuously acquire new customers. This is why the whole Acquisition vs. retention argument is absolute nonsense. Acquisition and retention are inextricably linked. You cannot retain a customer before you acquire them. Besides, people change interests, buy from your competitors, pass away and churn for innumerable reasons, many of which are outside of your control.
    So why is this metric is important? Because the more people you have on your list, the more people you can actually send emails to. Therefore, you increase the chances of generating more revenue with your emails, with your regular campaigns or throughout your automated flows.
  3. Clicks: The last metric that you should be paying attention to is 'Clicks' - more revenue for your brand. The more traffic you send back to your web website, the more conversions you'll drive. We recommend you start data driven decision making for your business.
    If you go into Google Analytics for any eCommerce store, you'll normally find in 9 out of 10 instances that traffic from email drives more conversions at a higher Average Order Value (AOV) than other channels. For example, it could be Paid Social.
    Why is it so? Quite simply because in email marketing, your subscribers are already aware of your brand. They are familiar with your value proposition and more likely to convert If they browse your website.
    Therefore, the goal should be to increase your clicks  your unique clicks throughout your campaign. So, make sure that you follow good practices when it comes to email design. Make sure that your message is authentic and your copywriting is on point.

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