What is email marketing ROI?
Return on investment (ROI) of email marketing is the net revenue generated from email marketing divided by the total spending. It measures the profitability of your email marketing campaign – the profit you earned from investment in email marketing. The role of email marketing extends beyond its measurable Return on Investment (ROI), as it serves as a powerful tool for fostering customer relationships, brand awareness, and engagement, contributing to the overall success and growth of businesses.
How to calculate email marketing ROI?
To calculate email marketing ROI, first, take into consideration all the expenses or spending. It may include your email provider cost, time spent by employees on email marketing, designing, writing, automation, etc.
The next step is to consider the total revenue generated by your email campaign. Once you have the above data, subtract email marketing ‘expense/investment’ from the ‘revenue’ generated, which gives us the net revenue. Now, divide the net revenue by the ‘total investment’ and multiply by 100.
Formula for calculating email marketing ROI
Real-life example of email marketing ROI
Let’s understand email marketing ROI with an example:
You are running an email marketing campaign with an investment of $250. At the end of the campaign, you’ve generated $1000 in revenue.
Putting this info into the formula, you’ll get an email marketing ROI of: (1000 - 250) / 250 x 100 = 300%
What’s considered a good email marketing ROI (benchmark)
According to a study, the average email marketing ROI is $36 for every $1 spent. In simple words, if you spend $1 you will receive 36 times the return from it.
However, the ROI of your email marketing depends greatly on your industry, how vast your email list, offer, content, and many other factors. So, there isn’t just one answer to it. At this stage, you also need to setup DMARC to ensure the security and authenticity of your email communications.
Read this report for an industry-wise breakdown of email marketing ROI: The ROI of Email Marketing.
Ways to increase your email marketing ROI
- Aim to expand your email list: More subscribers, more conversion, and ultimately more ROI. Growing your email list will eventually increase your ROI. But make sure to prioritize quality over quantity. Read ways to grow your email list.
- Personalize your subject line and content: People love personalized things, yes emails too. Something as simple as using your subscribers' first names in the subject line and content would do wonders. Personalization increases email click-through rates by an average of 14% and conversions by 10%.
- Craft a hyper-targeted segment list: Marketers have noted a 760% increase in revenue by segmenting email campaigns. One size doesn't fit everyone and the same goes for email marketing. Segment your email list based on purchase history, age, location, gender, or whatever suits your business the best, and launch a hyper-targeted email campaign.