Most retailers are likely aware of the fact that generate one of the highest ROIs of all marketing methodologies.
For those asking, “What is the ROI for email marketing?” – let’s take a moment to survey the landscape.
According to, email marketing ROI clocks in at a stunning $38 per $1 spent, an ROI of 3,800 percent.
However, puts that figure even higher, with marketers generating an astonishing 42:1 ROI.
Similarly, email marketing platform.
These three reports give us a general picture of the tactic’s profitability.
That said, sizable email marketing campaigns can be a bit of an investment of time and resources. Therefore, retailers will naturally want to understand how to calculate email marketing ROI.
Below, we will cover the basics of email marketing ROI and how to calculate email marketing ROI, as well as some of the finer points of the topic.
Without further ado, let’s get started.
What Is Email Marketing ROI?
Return on investment in email marketing is a performance metric used to determine the effectiveness of an investment. In a nutshell, retailers establish what was gained from their and how much was spent on email marketing strategies.
The basic return on investment formula is as follows:
(Gained – Spent) / Spent = ROI%
Using this formula, merchants are dealing with two different values: gained and spent. Thus, it is important to understand what goes into these figures:
- Gained: This value shows sellers how much was earned for a given period. Therefore, it is vital that sellers understand the exact sources from which their sales are derived. Where email marketing is concerned, retailers can integrate their with Google Analytics to track purchases that have been made from specific emails.
- Spent: This value is representative of the amount invested in a given email campaign. This includes expenditures on the email service provider, salaries of email marketers, copywriters, designers and anyone else involved in producing materials for the campaign.
Why Calculating Email Marketing ROI Is Important
Beyond the obvious, there are a multitude of reasons why finding the ROI of email marketing campaigns is critical to retail success.
After all, there are a variety of marketing channels that retailers can use to connect with customers and prospective buyers. However, it is hard to know how to split a marketing budget across channels if sellers don’t understand how profitable each one is for the company.
Alternatively, if merchants are looking to overall, how can they know which tactics to combine without knowing the return each tactic generates?
That said, knowing which marketing strategies are profitable and which are not isn’t the only use for understanding how to calculate email marketing ROI.
Some of the other benefits include:
Make Better Marketing Decisions
In many ways, data is the backbone of today’s marketing industry. If retailers do not have any data on their email marketing performance, they are essentially just guessing.
Understanding how to calculate email marketing ROI will enable brands to make more accurate and prosperous decisions regarding their campaigns, thus helping to increase the impact of their email campaigns.
Build Better Buyer Personas
When sellers know how to calculate email marketing ROI, that information can be utilized to establish which of a brand’s target customers are positively responding to their email efforts.
As a result, retailers can use this data to as the ROI info will point to customer interests, pain points and the like.
With this newfound data, sellers can begin better addressing topics that will resonate with consumers and solve their problems via email.
Additionally, this information will also enable merchants to create better landing pages for specific promotions, and achieve a myriad of other goals.
Refine Email Segmentation
With better customer personas in hand, retailers can begin refining their strategies.
By refining a merchant’s segmentation efforts, it is possible to send more targeted messages, offers, content and the like to subscribers. As a result, the value of the seller’s email campaigns is likely to increase (for the company and the customer), thereby leading to more click-throughs and conversions.
Enhanced Email Personalization
With better buyer personas and more sophisticated segmentation strategies being implemented, retailers can begin focusing their efforts on enhanced.
This is a massive benefit to understanding how to calculate email marketing ROI, as email personalization has the potential to elevate a company’s email performance significantly.
This assertion is backed by which show that:
- Segmented email campaigns have generated a 760 percent lift in revenue
- Personalization produces an average 20 percent uptick in sales
- 94 percent of consumers and marketers say that personalization is important
Furthermore, shows that 72 percent of shoppers claim to only engage with personalized messaging.
Increase Website Traffic
There are a panoply of ways for sellers to increase website traffic. While SEO is one of the most popular, to manifest.
However, through the use of email marketing, retailers can send subscribers targeted messages at the right time, thereby helping to drive qualified consumers to their website.
That said, achieving this is predicated upon learning how to calculate email marketing ROI, as this data enables the buyer personas, segmentation and personalization that will make merchants’ messaging effective in generating site visits.
Boost Conversion Rates
The most crucial part of knowing how to calculate email marketing ROI is that this ability will help sellers to increase their email conversion rates, which is what is required to elevate a brand’s bottom line and.
The bottom line here is that email marketing ROI informs merchants as to what strategies are working and which are not. As a result, sellers will understand how to adjust their campaigns for better performance.
Email Marketing Metrics to Consider
As was mentioned earlier, to figure out what is the ROI for email marketing, sellers must establish how much they spent and how much they earned (gained).
However, the latter isn’t nearly as straightforward as the former. After all, direct sales are not the only kinds of gains that merchants generate from emails. Thus, it is essential to pay attention to a variety of metrics, including:
To calculate this figure, sellers will want to divide the total revenue gained from a campaign by the total number of emails sent.
This will enable merchants to determine how much sales profit was earned from each individual email.
Also, be sure to track how many subscribers became customers after receiving an email, as this is also important to understand.
No matter if merchants are driving subscribers to download an eBook, download the company’s app, make a purchase or something else entirely, it is critical for retailers to track their conversions so that they understand how often they are succeeding in inspiring action. Additionally, this also lets sellers know how much it costs them.
The more conversions a seller generates, the more revenue they will earn, thereby making conversions a critical metric to track when learning how to calculate email marketing ROI.
To find this number, simply divide the total number of conversions by the total number of emails sent.
Click-through rates are reflective of how many consumers clicked on a specific link in an email.
To find this figure, divide the number of unique clicks by the total number of emails sent, minus the bounces.
The more effectively emails encourage subscriber engagement, the better they will be for a seller’s bottom line.
Engagement rates break down into two different metrics: open rates and click-through rates.
Both of these KPIs will inform merchants on how well (or not) they are engaging subscribers and what tactics are not delivering an acceptable ROI.
The more traffic a merchant receives from their email campaigns, the better.
Analyze how emails have impacted traffic to the website and.
In addition to calculating email ROI, it is important to compare this number to the company’s overall revenue. Doing this will enable retailers to put their email marketing efforts in context with the rest of the marketing and sales strategies.
If email is outperforming all other tactics, then it is likely wise to invest more resources into email marketing.
How to Calculate Email Marketing ROI
With the details covered, let’s get down to the brass tacks of the matter.
To find what is the ROI for email marketing, sellers will need to:
Calculate Campaign Spend
The first step in calculating email marketing ROI is to establish how much is spent on email marketing. Again, this may sound simple on its face, but it can be rather complex.
The most obvious expense is the company’s email service provider (ESP). Fortunately, this calculation can be straightforward.
However, there are other factors to consider.
In addition to ESP expenses, merchants will need to figure out how much time each team member spends on email marketing activities and convert that into an hourly rate.
Additionally, if there are any freelancers who develop materials for campaigns, this will also need to be figured into the overall expenditures.
That said, if all of the company’s email expenditures go to the email service provider and the time of team members, the total spend will be what the ESP costs, plus team expenses.
Calculate Campaign Gains
To keep things simple, for now, we will simply look at the revenue driven from an email campaign, not factoring in many of the aforementioned metrics.
For retailers who have integrated their email platform with Google Analytics, it should be easy to trace back each sale that came from email marketing campaigns.
Sellers can calculate their ROI for a particular campaign or their return on investment for a specific timeframe.
The easiest way to calculate email marketing gains is to use Google Analytics to track conversions that can be attributed to email campaigns, including website traffic.
Sellers can then multiply the number of conversions generated by the value of a lead to get the total revenue pulled in from a campaign or during a period of time.
Calculate Campaign ROI
Having organized all of the necessary data, retailers can now plug their figures into the formula mentioned above:
(Gained – Spent) / Spent = ROI%
For instance, if a merchant spends $300 per month on their email service provider. Annually, that comes to $36,000. If retailers also have one employee working on email marketing campaigns for three hours a day, five days a week (261 days a year) at a rate of $17 per hour, that comes to $13,311.
This means that a seller spends $49,311 on email marketing each year.
If the cost of a conversion is $75 and email marketing efforts bring in 1,000 sales per year, then the total revenue generated from email becomes $75,000.
Using this data, retailers can calculate their email marketing efforts for the year as:
($49,311 – $75,000)/$75,000 = 34.3 percent
While this is undoubtedly a healthy ROI, given some of the figures presented at the beginning of this piece, it seems that this retailer would still have some room to optimize their email campaigns.
Understanding how to calculate email marketing ROI is a critical skill for all merchants to possess. Without this knowledge, retailers will be wholly incapable of demonstrating the effectiveness (or lack thereof) of their email efforts.
For sellers who take the time to calculate this figure, only to find that it is more mediocre than anticipated, reach out to.
Our dedicated team of eCommerce email marketers can help your brand to optimize its campaigns through targeted messaging, segmentation, personalization, and other tactics that are critical for increasing email marketing ROI.