Email ROI

Email marketing ROI is a way for businesses to measure how effective their emails are at generating revenue or other results. The benefit of measuring one's email marketing ROI is that it allows companies to look into utilizing this form of advertising but are unsure what kind of results they can expect from their campaign. So, let's explore more about Email ROI and understand why it is an effective KPI for your marketing efforts.

TRACK YOUR EMAIL ROI

What is email marketing ROI?

It is no secret that email marketing campaigns are among the most popular and essential digital communication methods today. Companies use email to promote their products and social media, reach existing customers, keep in touch with partners, and draw new clients to their email list. There are many reasons anyone would want to get a decent grasp of email marketing. Understanding the Email Marketing ROI (Return on Investment) is an essential KPI to measure the success or failure of your email marketing strategy.

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How to calculate the ROI of email marketing

Let's discuss a basic formula to calculate your email marketing ROI metrics:

If you spend $100 to generate $200 in sales, your ROI is 100%. Conversely, if your email marketing strategy only brings in $50 in revenue for every $100 you spend, your ROI is -50%, which means you've lost money. Let's break this down.

Revenue

Revenue is the gross sales generated from the campaign. It's critical to note that this is not the same as profit. The difference between revenue and profit is the costs you have to account for to make that sale, such as warehousing, shipping and handling, and product costs.

Cost

Cost is the amount of money it took you to produce and send a campaign, including software, people, and other expenses associated with the campaign. By dividing your revenue by your cost, you get the ratio of how much revenue you received for every dollar spent on the campaign.

Email ROI formula

(total revenue generated by emails – costs to send the email) / total cost of emails = Email ROI

What is a good email return on investment?

Knowing whether you have a good email ROI will depend on the type of email, your industry, and how you optimize your marketing services. The best way to get a sense of how your emails are performing is by looking at the email marketing benchmarks. If you're seeing above-average open rates, click-through rates, and conversion rates and have an average return that resonates with your email subscribers, that is a win. CTAs are an easy way to improve click rates and increase the deliverability of your average email.

Every email service company will have different email marketing statistics that they showcase for the sender. Services like constant contact will also let you segment your email lists into target demographics based on how they interact with the email. In addition, CRM software like HubSpot includes marketing tools that allow you to use email automation and a/b testing. This is especially useful for eCommerce businesses with many transactional emails to send and may want to focus on SEO, pricing, products, and getting website traffic to their online stores.

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What is a bad email ROI?

Bad email ROI is a lackluster return on your investment of time and money when sending an email marketing campaign. It's a problem you don't want to have because it means that your email marketing efforts aren't engaging enough to inspire recipients to take action. This usually occurs when you have a low number of conversions, poorly designed templates, numerous unsubscribes, lack of optimization for mobile devices, and more. Email users generally will see through bad digital marketing because they receive so much every day. Subject lines filled with difficult-to-read words will also reduce your email open rate and make it difficult to have any success.

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Email ROI KPI examples & templates

Your email ROI can be added to our email report template :

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Email report template

Our email marketing report template has everything you need to get started quickly: it’s pre-built with the standard KPIs you need, and it’s fully customizable so that you can visualize the data you want, the way you want. Track metrics like open rates, unsubscribe rates, click-through rate, and deliverability rate.

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Email ROI best practices

To improve your email ROI, consider implementing the following tools and strategies:

Understand your business goals

Before sending email messages, make sure that you know what you want to achieve from using this marketing channel. For example, do you want to increase sales? Improve the brand awareness of your small business? Generate leads? Gain app downloads or followers? Send an email newsletter? Once you know what business goals you want to achieve, it will be easier to set up the right email campaign and measure its results.

Segment

One of the most important things you can do to maximize your email marketing ROI is to ensure that each of your subscribers is getting the content they want and need, when they want and need it. This requires you to segment your database into different groups based on their interests. This will also help you as you create your sales and marketing funnel. You should also consider segmenting based on a subscriber's demographics, such as age or location, and their relationship with your brand (if they've recently made a purchase, for example).

Use Email Marketing Automation

Automated emails allow you to keep in touch with customers who may not have purchased from you recently. This is especially true because people typically interact with content marketing on their smartphones.

One of the biggest mistakes I've seen businesses make is trying to manage their email marketing manually. This includes keeping a spreadsheet of contacts or sending welcome emails or individual emails through Gmail or Outlook. Don't try to do everything manually. Instead, use an email platform like Mailchimp, Constant Contact, or HubSpot, so you can automate your contact list and send pre-set emails based on triggers or actions taken by your contacts. As a result, you'll save time and have more resources to focus on optimizing your messaging.

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