How to Work Out Your ROI With Email Marketing

How to Work Out Your ROI With Email Marketing

Email marketing is one of the most cost-effective ways to sell directly to your audience. According to research over the past ten years, email marketing has provided the best returns on investment of any digital marketing channel.

For some campaigns, the returns can be as high as $40 for every $1 spent. It doesn’t mean you can automatically take these figures for granted. Even if you are getting high responses from your email marketing campaigns, it would be foolish to stop monitoring your costs.

Therefore, you should regularly monitor your email marketing ROI. There are several benefits to this which include knowing:

  • When costs are higher than revenue being generated
  • When marketing isn’t as effective as first thought
  • What style of communication is working best
  • What products sell best via email marketing
  • And which segments are more attuned to your email marketing messages

Segmentation of All Email Marketing Campaigns

One of the significant aspects of calculating your email marketing ROI is that you can monitor your email campaigns in general and in segments. Segmentation is essential for gaining an understanding of your audience. Knowing what content is making them purchase a product or service is also crucial.

There are many different ways to create a segmentation of your email marketing ROI analysis. You can segment by existing customers, networking prospects, website prospects, trade show prospects, etc. It will tell you which groups are offering you the best results.

Other types of segmentation are product-based or type of content sent. For the latter, you would split up the segments, so you are monitoring direct sales, blog newsletters, company news or other content. It will let you know what your best content is.

Calculating Email Marketing ROI

Calculating email marketing ROI is relatively straightforward. It only requires a few numbers from your production and marketing teams.

The equation is:

(Total Revenue – Cost To Produce / Deliver Product – Email Marketing Costs) / Email Marketing Costs

For email marketing campaigns to be highly valuable, the result should be greater than one. It means the campaign produced more profit compared to the cost.

Some of the costs for email marketing could include the costs of the email software system, the email design and time to create each campaign and monitor it.

If you use one design for all of your emails, you shouldn’t multiply the design cost by the number of emails you’ve sent out. Just use the one cost for all the emails sent out.

If you generate $100,000 from email campaigns over the year, spend $30,000 on producing and delivering the products sold and $20,000 on the email marketing campaigns themselves, the equation would look like:

(100,000 – 30,000 – 20,000) / 20,000 = 50,000 / 20,000 = 2.5

The example shows that $2.50 was generated for every $1 spent.

What if Your Return is Less Than One?

If you find that your campaigns aren’t returning a satisfactory result, you need to consider ways to improve the ROI. There are several options for this which include:

  • Offer better discounts and offers
  • Adjust your campaign timings
  • Change your email segmentation
  • Consider sending more/fewer emails
  • Perform email list maintenance
  • Redesign your emails to make them more enticing to your readers
  • Review the content you are sending to your contacts

If you need help with your email marketing campaigns, consider speaking to Mann & Co. to see how we can help you improve your email marketing ROI.

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