This article is dedicated to showing your ways of maximizing your email marketing ROI. You will find vital tips that will strengthen your email marketing ways, bringing you profits and audience engagement your business needs.
ROI is one of the most important metrics not only in commercial activities but also in email marketing. However, according to surveys, about 44% of email marketers have difficulties calculating the ROI of their email campaigns.
These difficulties can lead to the inability to deliver the best results with email campaigns. We decided to fix this problem. In this article, we’ll tell you everything you need to know about email marketing ROI — why it’s important, how to calculate it, and ways to boost it.
What is email ROI all about?
ROI stands for “return on investment.” If we talk about the field of email marketing, then ROI is the income from any form of email activity that you undertake to develop your brand. The better this indicator, the higher your income in relation to the cost of producing an email campaign.
Further below in the article, we’ll discuss in more detail all you need to calculate your ROI of email marketing, including calculation formulas.
Why is email marketing ROI important?
So, now you know what ROI is. However, why is it so important? And why should you monitor it closely? Let’s find out.
Assessing profitability
Measuring ROI is a vital step in the evaluation of the cost-effectiveness of your email campaigns. Proper assessment takes the guesswork out of the equation and gives you accurate answers about how each campaign is performing financially. Furthermore, by measuring ROI, you gain the foundation you need to make informed decisions about how your current marketing efforts fit into your broader financial and business plans.
Obtaining insights into smart adjustments to your email strategy
You may have an idea of ​​where to take your marketing strategies. However, if you don’t track metrics properly, you won’t know exactly where your decisions may lead. By studying ROI and conducting A/B testing, you can obtain valuable clues about where to steer the email marketing ship in the unpredictable seas of your industry.
Optimizing your resources
No marketer wants to waste time, money, and staff energy on emails that go unread in recipients’ spam folders. A low ROI may indicate low email deliverability and an urgent need to change your marketing strategy.
Properly measuring ROI will help you avoid wasting your efforts on ineffective email marketing campaigns and direct your resources to strategies that deliver high ROI.
Email marketing ROI is an extremely important indicator because it shows the effectiveness of the channel and the effectiveness of the marketer’s efforts. ROI allows marketers to understand whether it is worth investing resources (man-hours, money, etc.) in the development and scaling up of the marketing channel. A high ROI tells us that the money spent on the channel paid off and generated profits. It is also worth noting that ROI helps email marketers argue why it is worth developing that channel.
Oleksandr Dieiev,
Providing transparency to stakeholders regarding your marketing efforts
One of the tasks of businesses is to maintain transparency and the trust of shareholders. To do this, you need data to back up your claims and illustrate your successes. Sharing metrics such as ROI is a great way to demonstrate how your email marketing efforts are impacting your business goals, thereby demonstrating your openness to investors and securing their buy-in.
The average email ROI
Before calculating the ROI of your email newsletters and drawing any conclusions, it’s worth talking about the average ROI in the email marketing industry as a whole.
According to HubSpot, in email marketing, the average ROI is $36 for every dollar spent, which is an extremely clear indicator that email is a powerful and cost-effective marketing tool. As a result, any email campaign with a score around this level or higher can be considered a success.
Everything strongly depends on the niche and industry, as well as the specific tasks that are set before the email channel. It is believed that a good ROI is about 200%–300%, meaning that every dollar spent brings in between two and three dollars. However, there can be even higher results since everything depends on one’s niche and goals.
Oleksandr Dieiev,
How do you calculate your email ROI?
So, it’s time to start calculating your ROI, and we will go through all the necessary steps.
Step 1. Calculate your gain
The first thing to do is calculate your profit from an email campaign, and the easiest way to do this is to calculate the cost per lead. Using Google Analytics, you can track every conversion associated with your email campaign, including website traffic. You can then multiply the number of conversions by the value of the lead to get the total email marketing revenue generated from your campaign.
For example, you sell your online course via email to 250 people, and the price of the course is $35. As a result, your gain is 250 × $35 = $8,750.
Step 2. Calculate your spendings
The next thing to do is calculate the money you’re spending on an email campaign.
The first expense column is the ESP, which allows you to run email campaigns. Then, you need to calculate the time that each marketer spends on email marketing and convert it into an hourly rate.
Hence, your total spending is equal to ESP + team bandwidth.
Step 3. Calculate your email ROI
Now that you have all the necessary data, it’s time to calculate the ROI of your newsletter. To do this, use this simple formula:
If your business earned $2,000 from an email marketing campaign after spending $250, then the email campaign’s ROI is $7. This means that you earned $7 for every dollar you spent on the campaign.
To quickly calculate the profitability of your email marketing efforts, you can use our free ROI calculator.
Ways of improving email marketing ROI
Now that you know your ROI, the following question immediately arises: How can you make it even better? We have put together some tips that will help you get that precious boost.
Constantly grow your email list
The audience is the cornerstone of any email marketing effort, and it needs to be constantly expanded. It is vital that your content is sent to the right people. These are the people who are most likely to take action and ultimately make a purchase.
Encourage potential customers to join your email list with various promotional codes, loyalty programs, and other benefits that will inspire them to become subscribers.
Use personalized emails
Email personalization is a powerful tool for email marketers. It can increase the overall engagement of mailings, and it can lead to a six-fold increase in the number of transactions. This is an opportunity to increase ROI that should not be missed.
Provide personalized recommendations, offers, discounts, and other goodies created specifically for each subscriber. Doing so will show how important they are to you.
For personalization, look at your one-on-one life cycle programs. These automated programs respond to consumer actions (or inactions) and often deliver the highest ROI, even if they reach small volumes. This proves that audiences want personalization. These emails, personalized by product or based on an understanding of customer loyalty, yield high open rates, click rates, conversion rates, and revenue.
Kath Pay,
We have many more insights from Kath Pay, the guru of email marketing. Read the full webinar recap to level up your email game.
Regularly clean your email list
Having a long list of subscribers is good, but making sure that all of these subscribers are active is even better.
This is why you should regularly delete inactive accounts that are dragging down your overall performance and ROI. Additionally, you should ensure that contact information is up to date so that your targeting efforts are accurate.
However, before you remove inactive users, it’s worth trying to reactivate them by offering incentives to shop with you again.
Experiment with your call-to-action buttons and phrases
CTA buttons encourage recipients to take specific actions, which can increase your conversion. This is why you should pay special attention to this aspect of your email design.
For example, according to email marketing statistics, personalized CTAs perform 202% better than standard ones. Experiment with CTA buttons and try different designs, forms of wording, and text placements to find the best combination for your email marketing strategy.
To help you find inspiration for your CTA-button design process, we’ve created a special article with the best practices for impactful calls to action.
Create impactful subject lines
According to surveys, 64% of people decide whether to open an email or not based on its subject line, so creating impactful lines directly affects the success of your newsletter and its ROI.
Your subject lines should captivate recipients and intrigue them, which will encourage them to open your emails. In addition, personalized subject lines where a special offer for a specific person is indicated or a recent action performed by the recipient is mentioned work great. The field of experimentation is limitless in this case.
Work on your email content and designs
An attractive and unique email design is also an important variable in the success of your email campaign in terms of ROI. If a recipient likes the subject line but finds the email design unattractive, the process will most likely not reach the point of conversion.
The key to creating successful, ROI-positive designs and campaigns often comes down to preparation and a focus on what’s really important. Master templates allow this. They streamline the creative process while abiding by the company’s design guidelines and best practices for email coding.
Kath Pay,
Creating eye-pleasing emails requires knowledge and inspiration. We’ve gathered all of that in a special article that will help you come up with powerful email designs to boost your ROI.
Use A/B testing
A/B testing is a classic technique in email marketing because it allows you to change and test all the above aspects and see how they affect your email ROI and other key performance indicators.
On top of this, regular A/B tests result in a high overall ROI of $48 per dollar spent. So, don’t neglect them.
In this marketing channel, the main focus is segmentation (understanding the audience and goals), automation, and working on content, its quality, and relevance. Furthermore, the importance of tests cannot be overstated. Marketers need to do a lot of testing, analyze results, and scale up winning ideas and solutions.
Oleksandr Dieiev,
Wrapping up
As you can see, calculating the ROI of your email marketing efforts is quite simple, but boosting this indicator is more difficult. Doing so requires working on your audience and its quality, perfecting email designs, adopting new strategies, and constantly testing the changes made.
Email marketing ROI statistics shows that putting effort in raising ROI is a vital part of any email marketing strategy.
This is a thorny path, but your efforts will definitely pay off in the form of increased profit from each email.
