You’ve prob­a­bly heard that email mar­ket­ing has one of the high­est ROIs of all mar­ket­ing tac­tics. Dol­lar for dol­lar, mar­keters get more ben­e­fits out of emails than they do out of pret­ty much any oth­er endeav­or. It’s one of the most lucra­tive mar­ket­ing prac­tices out there, and one that you def­i­nite­ly can’t neglect if you want to eke out the max­i­mum amount of prof­it (and who doesn’t?)

Suc­cess­ful email mar­ket­ing requires a big invest­ment in terms of resources. And when you’re spend­ing a lot of time and mon­ey on some­thing, it’s impor­tant that you ful­ly under­stand how much you’re get­ting in return. Below, we’ll cov­er the basics of email mar­ket­ing ROI, includ­ing how to mea­sure it effec­tive­ly so that you always know what’s work­ing for your bot­tom line.

What Is Email Marketing ROI?

ROI, or return on invest­ment, is an essen­tial met­ric for quan­ti­fy­ing how effec­tive your mar­ket­ing efforts are. Emails pret­ty much blow oth­er dig­i­tal out­reach meth­ods out of the water in terms of ROI, with an aver­age of $38 gained to $1 spent, mak­ing their ROI an awe-inspir­ing 3,800%. It’s clear that email mar­ket­ing is worth your focus when it comes to mak­ing every dol­lar you spend real­ly count.

The for­mu­la for fig­ur­ing out your own email mar­ket­ing ROI looks like this:

Net Gain (prof­its derived from email mar­ket­ing – email mar­ket­ing costs) / Email Mar­ket­ing Costs

Keep in mind that aver­ages are not guar­an­teed. Spend­ing $5,000 on email mar­ket­ing doesn’t mean you’ll get 38 times that amount back. But it does mean that you’re like­ly going to be able to turn that $5,000 into a lot more prof­it than you would if you’d ded­i­cat­ed it to some­thing like PPC ads.

Setting Goals to Measure

Setting Goals to Measure

To fig­ure out your email mar­ket­ing ROI, you need two fig­ures: how much you spent and how much you earned. The lat­ter, how­ev­er, isn’t quite as easy to fig­ure out. Sales aren’t the only kind of prof­it that results from emails, and you’ll want to pay atten­tion to a vari­ety of met­rics when deter­min­ing the val­ue you derived.

So what are those met­rics? Here’s what you’ll want to be sure to measure:

  • Email-gen­er­at­ed sales. To cal­cu­late, divide the total rev­enue gained from your emails by the total num­ber of emails that you sent. This will help you deter­mine how much sales prof­it you earned from each indi­vid­ual email. Keep track of how many peo­ple became cus­tomers after receiv­ing an email. If you’re automat­ing your email mar­ket­ing, track­ing rev­enue result­ing direct­ly from your email mar­ket­ing will be much eas­i­er. But more on that later.
  • Con­ver­sions rates. What­ev­er your call to action is, be it to down­load a whitepa­per, set up a call with your sales team, or sched­ule a demo, you need to be track­ing it, so you know how often you suc­ceed at guid­ing that action — and how much it costs you. The more con­ver­sions you get, the more rev­enue you’re earn­ing, mak­ing this one of the most impor­tant met­rics to track when eval­u­at­ing your ROI. To cal­cu­late, divide the total num­ber of con­ver­sions by the total num­ber of emails you sent out.
  • Click-through-rates. Your CTR, or click-through-rate, is how many peo­ple clicked on a spe­cif­ic link. To get that num­ber, you’ll want to divide the num­ber of unique clicks by the total num­ber of emails sent out minus the num­ber of bounces. The high­er the CTR, the more bang for your buck you’re get­ting with your CTA.
  • Engage­ment. The bet­ter your emails are at encour­ag­ing engage­ment, the bet­ter they are for your prof­it mar­gins. Your engage­ment rate breaks down into two spe­cif­ic KPIs: open rates and CTRs. Both of these tell you how well you’re engag­ing and what’s cost­ing more than it’s worth.
  • Lead accel­er­a­tion. Lead accel­er­a­tion is the speed at which you move leads down the email mar­ket­ing fun­nel. Mea­sur­ing this met­ric is more about com­par­isons than a set for­mu­la. If your lead con­ver­sions have sped up thanks to your emails, you know your out­reach is working.
  • Over­all rev­enue. Look at your email ROI in com­par­i­son to your over­all rev­enue. Doing so will put it into con­text with the rest of your mar­ket­ing and sales tac­tics. If it’s out­per­form­ing every­thing else, this tells you that it might be worth putting more resources toward your emails and less toward the things that aren’t pulling quite as much weight.
  • Web­site traf­fic. The more traf­fic, the bet­ter. Look at how your emails have impact­ed web traf­fic as a way to eval­u­ate their ROI in terms of brand aware­ness and engagement.

How Email Marketing Software Can Help

Mak­ing heads or tails of your email mar­ket­ing ROI requires pay­ing close atten­tion to a wide range of met­rics. To take the guess­work out of it, use email mar­ket­ing soft­ware or mar­ket­ing automa­tion soft­ware, which will track, mon­i­tor, and ana­lyze your data to give you ROI insight you might not have oth­er­wise. It’s a lot eas­i­er than run­ning all the num­bers your­self, and means that you get the data you need a whole lot faster.

SOURCE: Bench­mark