What is Email Marketing ROI?

In order to ascertain the return on investment of email promotion, it is essential to comprehend the meaning of this concept and what it monitors. ROI stands for “return on investment” and is the ratio of the gain achieved from an investment compared to the amount of money invested. The most difficult aspect of this is determining how much money you will be getting back. If you consider the rise in sales compared to the original sales figures to be the measure of success, then this should not be difficult. The advantages of email marketing, for instance, becoming familiar with a brand, are more difficult to assess.

The calculation of the ROI gained from email marketing can be easy or complex, depending on what you specify as “reward”. In this instance, you can express the ROI as the revenue obtained as a result of email marketing, divided by the amount you have paid for the email marketing project. Investment can encompass employee hours, software services that are bought for use in emails, as well as any other expenditure. Let’s analyze the advantages of using email marketing to determine the associated “return.”

Email Marketing Increases Sales

A principal way to measure the return on investment of an email marketing campaign is to observe an uptick in sales. The high return on investment email provides is largely due to its great effectiveness. Approximately six out of ten people state that email has a direct impact on the purchase decisions they make. Research has demonstrated that clients who receive promotional emails spend 138% more on their purchase than individuals who do not get marketing emails.

The figures demonstrate that email marketing is not only successful in increasing sales but that it also produces an amplified result. In other words, you have an advantage over your rivals when you have access to a customer’s inbox and the knowledge that you are about to launch a promotion or new product. Maintaining a consistent flow of communication with customers can be hugely beneficial.

Email Marketing Improves the Effectiveness of Your Marketing Efforts

There are many other ways to get a return on investment from email marketing besides simply increasing immediate sales. Research has shown that using email results in a greater success rate with promotional activities. Attracting visitors to your site is a major element of success, especially if you are utilizing email marketing strategies. Nevertheless, to acquire a customer’s commitment, you will still need to persuade them in a different way.

Getting engagements is easier with email, too. For example, the typical response rate to an email is six times higher than that of an organic social media post. Individuals often scroll through Facebook in search of updates on their loved ones and acquaintances. Emails, meanwhile, are examined for any kind of advertising material. It is not surprising that email is five times more likely to be read than on Facebook. Other social media networks have similar results. The probability of obtaining a click-through from email is six times higher than from Twitter.

How Do You Calculate ROI in Email Marketing?

It is understandable why the return on investment (ROI) of email marketing is so high, since email is a truly effective marketing instrument. This, however, does not replace the ability to work out these figures. If you have an understanding of what your marketing objectives are, it makes things much simpler. Most businesses have established financial goals for their sales teams to meet or try to exceed in comparison to the previous reporting period. It is essential to consider your email marketing objectives in relation to the general sales goals to determine the return on investment.

In the end, your return on investment is contingent on the objectives you wish to accomplish with email marketing. It is simple to work out sales figures, however, other measurements such as brand recognition and customer devotion are more difficult to measure. Certain metrics do exist, for instance, the “customer lifetime value”. Bear in mind that customers that are retained generate more sales throughout the long run.

Calculate your spend

Figuring out the ROI of your email marketing efforts necessitates ascertaining the sum you have expended on the activity. This data can be determined yearly, monthly, or as part of a particular effort. Whatever the situation, it is important to factor in all costs associated with email marketing. This includes:

Staff time

Every email marketing campaign requires staff. Even if it is only one employee responsible for overseeing freelancers and any other outsourcing possibilities, their salary must be paid. People employed on the emails can have a lot of expertise in the field.

Content creation

Creating the emails and related content also costs money. Examples include graphics design software and freelancer fees.

Email program fees

Most email marketing software requires payment, usually done in regular installments. Sometimes they’ll charge you by the month. In some situations, the cost of email marketing services is calculated based on the number of contacts on your mailing list.

Lead magnets

If you are running an online store, a common lead magnet is typically a coupon code that can be used to get a discount on a future purchase. For other corporations, it could be something like a research paper or a section from a book. The type of goods and services you offer will affect your selection.

Compliance costs

Depending on your jurisdiction, you may have compliance costs. In the U.S., you must provide a method for people to unsubscribe from your emails. In California and the European Union, privacy rights have been instituted. There are programs which can help you stay compliant.

Calculate your gain

The worth that you have acquired from your campaign is the second part to consider when assessing the email marketing ROI. It is best to have precise numerical figures for your administration group rather than just saying “sales increased by a certain amount.” Attaining this level of accuracy necessitates taking additional measures.

Google Analytics

Employing Google Analytics permits you to evaluate a broad scope of variations in website traffic. For example, you will be aware of how many different people visit your website, as well as how many people return. Analytics can provide insight into the geographical location of customers. This apparatus is particularly helpful in gauging aspects such as shifts in cognizance of a brand and (to a lesser degree) faithfulness of customers.

Compare Customers with Subscribers

Examine how many of your subscribers to your email list end up making a purchase. It is relatively simple to observe the outcomes if you combine your CRM or sales order databases with your email service. You will be able to find out how many of your new customers have agreed to receive marketing emails.

Combined, these elements and other considerations can assist you in calculating the return on investment of your email marketing strategy for your business. You can use this number to check how far your actual results are from the company objectives. You can also precisely illustrate the extent to which your actions have been successful.

In pursuit of achieving the desired objectives of your email marketing strategy, constant evaluation of campaign performance is imperative. But what metrics should you focus on?

12 Email Marketing KPIs to Track

1. Email Delivery Rate

This metric gauges how many emails were sent successfully to the servers of the email services utilized by your recipients.

2. Bounce Rate

The rate of emails that did not reach their destination correctly is referred to as the email bounce rate, which is distinct from the delivery rate. A high bounce rate (over 5%) will damage your credibility as a sender and make it harder for your emails to reach the recipient in the future.

It is essential to differentiate between the various categories when addressing delivery problems. Mail that is returned to sender can be classified as either a soft bounce or a hard bounce.

A soft bounce occurs when an email message wasn’t sent due to a momentary issue. The percentage of messages that were unable to be delivered to their intended recipients as a result of an ultimate issue, such as the email address no longer existing, are referred to as hard bounces.

3. Deliverability Rate

The rate of deliverability informs you of the amount of emails that were sent to their destinations out of the overall number of emails sent. It strongly depends on your email sender reputation.

How does it differ from the delivery rate? The rate of emails being sent is calculated based on the quantity of emails that arrive, no matter what folder they are put in. In contrast, the measure of success for email deliverability is how many emails succeeded in arriving in their recipients’ inboxes.

Having knowledge of your email deliverability measurements over an extended period of time is a good sign of when you should consider removing some addresses from your list. Make sure not only that you are keeping your mailing list interested, but also that your website remains in good standing by having an appropriate proportion of emails that are sent correctly to those that are rejected.

No matter the circumstance, individuals will invariably switch jobs, take a sabbatical, become unemployed, or resign. Having a roster that is continually updated and relevant is always beneficial.

4. Open Rate

A metric used to measure how many people opened an email in comparison to the number of people it was sent to is the email open rate.

5. Email Open Time

With email open times, you can determine when your readers are more likely to read your mail and modify your campaign plan accordingly.

Why is this metric important? You can enhance your campaign open rates by monitoring when emails are opened.

The quicker your email can be opened, the more people will take notice.

6. Email Read Time

A metric in email marketing, email read time, shows how long subscribers spend reading through the email message. It’s a convenient way to measure how pertinent the material of your promotion is to the people you are interacting with.

For example, if your emails are opened frequently but the average time spent reading them is low, it is evident that your subject line is far more captivating than the content of the message.

7. Subscriber List Count

The total amount of email addresses registered on your list of subscribers is the subscriber list count. The more individuals who choose to receive your emails, the better the outcomes you can anticipate from your email marketing efforts.

8. List Growth Rate

By determining the rate at which your email contact list is enlarging, you can ascertain the success of your lead acquisition endeavors. If you don’t have lead capture campaigns that you are working on regularly, this measure won’t prove very useful.

9. Unsubscribe Rate

The rate at which people choose to no longer be a part of the mailing list after having received an email gives the percentage of those who unsubscribed. The Sendinblue Email Marketing Industry Benchmark Report states that the typical unsubscribe rate across all sectors is 0.05%. It is highly advisable that you keep your unsubscribe rate at or below 2% in order to maintain a favorable sender image.

10. Click Rate

The proportion of sent emails which yielded a click is known as the click rate. The amount of clicks does not offer a lot of insight on the success of your campaign, however the click rate is an informative measure.

11.  Click-to-Open Rate

The click-through rate (CTOR) expresses what fraction of those who clicked a link in your email subsequently opened the message. This email marketing metric indicates:

• Whether your subject line is relevant to your email content
• Whether your email content is convincing enough to make people click

12. Conversion Rate

The proportion of individuals who have completed the sought-after task following engagement with your email is referred to as the conversion rate.

Despite popular belief, conversions aren’t necessarily sales. You can define any campaign goal as a conversion. An invitation to take action (CTA) can take various forms such as clicks, webinar registration, specific scrolling depths, or any other type of customer action.

Using email as a form of marketing is a proven way of encouraging readers to take on a certain action like purchasing something or signing up for a service.

To maximize conversions, consider adopting a multichannel approach. Enhance your email marketing strategies with additional methods such as web notifications, instant messaging, WhatsApp, and text messages.