Calculating the ROI of Email Marketing

"Email consistently and undisputedly provides the biggest returns in digital marketing, and is leaps and bounds more effective than traditional advertising channels like TV and radio."--Chad S. White, Director of Research at Litmus. 

That's a pretty bold statement, and it's backed up by hard facts. In a Litmus report, we find that the average ROI for email marketing is 38:1. That means for every $1 you spend, you're getting $38 in return.

Laptop computer with red mailbox signal and a paper envelope coming out of a screen.

Not bad, right?

The only problem is that 70 percent of brands don't know how to measure email marketing ROI. 

What Is Email Marketing ROI?

In short, it's the revenue you generate for every dollar you spend on email marketing. It's how you determine the effectiveness of your campaign. The formula for figuring this out is:

(Gained - Spent) / Spent = ROI%

"Gained" represents the amount of revenue generated directly from your email campaigns. "Spent" refers to how much you invested in the email campaign. 

So if you spent $100 on a campaign and gained $1,200, then it'd look something like this:

($1,200 - $100) / $100 = 11% ROI

Now, don't expect to see any ROI right away; email marketing does take time to build some steam.

How to Calculate Your ROI

The purpose of email marketing is to help convert website visitors who aren't ready to buy yet. It enables you to grow relationships and guide them through the funnel. 

What email marketing data do you need to determine your ROI? To  determine how effective your lead nurturing is, you can review:

  • Engagement with emails (i.e., opens, clicks, conversions)
  • Sales cycle (how long it takes to convert a customer)
  • Revenue impact (total sales from subscribers

It's not just your emails; you need to look at your website traffic as well. After all, your emails should invite subscribers to visit your site. In this case, you want to look at click-through rates (CTR) and click-to-open rates (CTOR). 

You can find your CTR by taking your unique clicks and dividing that by how many emails were successfully delivered. Then multiply this number by 100 percent. 

To find your CTOR, look at how many of the people who opened your emails clicked on the links inside. Just divide the number of unique clicks by unique opens and multiply by 100 percent. 

How to Enhance Your Email Marketing ROI

Smiling woman sitting in a coffee shop with her laptop.

What if you're calculations are coming up short? If you did your math right, then maybe it's the strategy you got wrong. So here are some quick tips for maximizing your email marketing ROI. 

Implement Email Automation

Inconsistent emails are a quick way to hurt your campaign results. If you're a small or medium business, then fitting email marketing into your workload may be challenging. With email automation, you can free up your time and bandwidth to focus on other essential marketing initiatives, such as content marketing and PPC campaigns. 

Add Social Media Into the Mix

Email marketing yields a higher ROI than other digital marketing campaigns. So why do you need social media?

Well, social media platforms offer a unique advantage -- they allow you to collect data about your audience so you can create hyper-personalized messaging and content. 

A/B Split Test Your Campaigns

When's the best time of day send out emails? How about the best subject lines and content formats? 

The best way to learn all of this is to experiment with your email campaigns. Create two different versions of each email to see which of them performs the best. 

Continue to do this with each campaign until you find the perfect formula to boost your conversions. 

Keeping Your Email Marketing Data Clean

Your email campaign won't account for much without clean data. With 30 percent of email addresses going bad within 12 months (according to Marketing Sherpa), you're going to need a tool to keep your database fresh. 

With SmartSuite, your database is updated in real-time to ensure names, emails, and other vital details are accurate. Want to see how it all works? Then get the demo today!

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