How to Calculate and Improve Email Marketing ROI

email marketing ROI

The potential of email is immense. In just 4 years from now, it is estimated that the number of email users will grow from 3.7 billion to 4.3 billion email users worldwide.

And email marketing is a definite king when it comes to ROI. For every $1 spent, email marketing generates $38 in ROI. For our Essence of Email clients alone, email is generating 22.8% of all revenue!

But are you tracking your company’s email ROI?

If you are measuring your revenue return for PPC, SEO, traditional marketing etc, you need to start doing it for email too. Having a proper business plan and measurement of all marketing channels will give you a clear vision where you need to invest more. 

However, according to Litmus’ 2018 State of Email Survey, only 30% of brands can measure the ROI of their email marketing efforts well or very well.

Calculate Email Marketing ROI

You can start by calculating the revenue from your email customers. If you’re using the right ESP, such as Klavyo or Mailchimp, it will allow you to easily see revenue gained over a certain period.

The next step is to calculate your email expenses. Every cost item you have that help and support the content you promote through your email channel should be inserted in the calculation. This means the cost to create the content, marketing, design, CRM systems, license fees, email marketing agency etc – all of this goes into the second part of the calculation.

In very short and simple words, the ROI equals the revenue within a certain period (example: a month is a good metric) divided by the cost for that specific month.

ROI % = Revenue / Cost (Marketing Investment)

You can do the calculation per campaign, per automated email, per other specific emails, per segment or other. 
There is bit more complex calculation, that gives you the true success of ROI of your email marketing channel by product.

Take the net value of your products for a certain period, deduct the total marketing investment for that specific period, see your profit, and divide it by your total marketing investment. That will give you the following formula:

ROI % = Profit / Cost (Marketing Investment)

Now that you know how to calculate your company’s email ROI, compare it to the ROI you get from other marketing channels, as well as with the average ROI for other companies in your industry. Check your email marketing key metrics against industry averages are if they are lower than what you would prefer, there’s lot’s you can do to improve them!

Here’s an overview of Essence of Email clients’ ROI in the first half of 2018. We strive to increase customer-lifetime-value (CLV) for our clients and our promise is an ROI above 1000%. In 2017 we’ve achieved over 2000% for our clients, and the numbers for the first half of 2018 is 10300%.

How to Improve Email Marketing ROI

1. Start with an email marketing audit so you identify see what has worked for you so far and what you are doing wrong. The audit should cover:

• email deliverability, to make sure your emails don’t end up in the dreaded spam folder
• mobile optimization, to check how your emails appear on mobile devices
• copy and design, including subject line, preheader, body copy, images and calls-to-action
• personalization, to identify if your emails are relevant to subscribers
• frequency and sending times.

2. Grow your email list. Use your homepage as a lead-generating machine, create the best pop up with a specific CTA (call-to-action), and optimize your landing page. Don’t forget to double-opt in. That gives a 32% higher ROI than companies that use single-opt in.

3. In addition to creating a campaign calendar, introduce automated emails. They are contributing with 45% in the total email revenue (Essence of Email internal statistics), whereas in some other industries automated email campaigns account for 21% of email marketing revenue. Here is a representation of our own experts advice on automation flows.

4. Mobile opens account for 47% of all email opens and therefore mobile optimization is getting more important than ever. Hubspot’s research shows that emails that display incorrectly on mobile may be deleted within three seconds.

5. Do a proper segmentation, as it has been proven again and again that this technique improves email performance. Last year, email list segmentation and personalized emailing were the most effective email strategies.

6. A/B test everything. You need to be sure what works for your audience. It may generate an ROI of 41:1.

7. Measure all results monthly and optimize your campaigns accordingly.

Check out our summary of key steps in setting up a profitable email marketing campaign and start boosting your email ROI!

Need more email marketing support? Book a call with us!

Iskra Sekulovska is a dynamic, logical, and creative person, infatuated with the secrets of the Universe. She is our Chief Operating Officer, with over 15 years of working experience. Her childhood dream was to become an astronaut, but she has decided to stay on Earth, watch StarWars, do math and help animals. What keeps her going? Helping companies everywhere achieve their top line numbers, and through that success, she constantly grows.


Top stories from the email marketing world.

No ads. Only news that matters. Sign up.