Are you wondering about email marketing ROI (return on investment) and how to calculate it? This metric is extremely important as it helps you understand the effectiveness of your initiatives.
This article will answer all your questions and clear your doubts about ROI and email campaigns.
Let’s begin!
What Is Email Marketing ROI?
Email marketing ROI helps determine how much you earn for every dollar you spend on email marketing campaigns. The goal is to measure the effectiveness and profitability of your email marketing.
With that said, not all campaigns will generate the same ROI.
For example, a promotional email offering a generous discount might generate a high ROI with immediate sales.
On the other hand, a nurturing email focused on building customer relationships might yield a lower ROI.
However, this doesn’t necessarily mean this type of campaign performs poorly. It’s like comparing email and SMS marketing pricing. They aren’t the same.
Your goal here is to build long-lasting relationships instead of immediate income. These lasting relationships will bring you even more returns in the long run.
So, always factor in the campaign’s goal before judging your numbers.
How To Calculate ROI for Email Marketing
After learning the definition, you must be curious to learn how to calculate ROI for email marketing. For that, you must calculate the total revenue a campaign generated and the total money you spent on it. After that, all you need is this simple formula:
ROI for email marketing = Total revenue - total cost ÷ total cost
For example, let’s say you got a total return of $20,000 on a campaign you spent $1000 on. You’ll get $19 or a 1900% ROI by putting these values in the formula.
On the other hand, you can also use an email marketing ROI calculator.
What Is the Average ROI for Email Marketing?
The average ROI for email marketing is 3600% to 4000%. Put simply, you’ll get $36 to $40 in return for every $1 spent on small business email marketing.
However, the answer to “What is the average ROI for email marketing?” is much more complex than that. Here’s why.
Each industry has a different email ROI. Media and communications usually have a 32:1 ROI, the lowest of all industries.
Software and technology emails stand at 36:1, while marketing, PR, and advertising agencies get 42:1.
Retail, e-commerce, and consumer goods businesses enjoy the highest email ROI, 45:1. Remember this when analyzing your numbers.
Why Should You Know the ROI of Your Email Marketing?
So, why should you know the ROI of your email marketing efforts? If that’s the next question on your mind, you’re on the right track.
Here are three reasons you should calculate this metric:
- Tangible results: Email marketing isn’t a one-person venture. Business owners, marketers, graphic designers, and writers are all part of an email marketing strategy. These people need to see their efforts working to stay motivated. Calculating email ROI brings tangible results, which helps with this.
- Data-driven improvements: Smart and successful business people never rely on guesswork. They base their decisions on data. Calculating ROI email marketing gives you this data to identify loopholes in your efforts. Using this information, you can improve your email marketing even better. Besides, there’s no concept of email A/B testing without calculating the ROI. It is a technique that helps you improve your campaigns and maximize the benefits of email marketing.
- Better resource allocation: Tangible results help you see where to allocate resources. For example, if your email marketing efforts bring enough returns, you can assign other tasks to your team. However, if you keep guessing, other aspects of your business might suffer. On the other hand, you can bring in extra resources if your ROI is less than average.
Frequently Asked Questions About Email Marketing Return on Investment
Before wrapping this article up, let’s answer frequently asked questions about email marketing return on investment.
What is the average ROI of email marketing?
The average ROI of email marketing is anywhere between $36 to $40. This means you get $36 to $40 for every $1 you spend on email marketing.
However, this number also depends on the industry. For example, retail and e-commerce emails generate $45 for every $1, the highest of all industries.
Does email marketing have a high ROI?
Yes, email marketing has a high ROI, reaching 3600% to 4000%. However, the exact number you get will depend on multiple factors. You’ll have to know a particular campaign’s exact cost and revenue, which isn’t always easy to find.
Moreover, the industry you’re in also matters. Media and entertainment businesses usually have the lowest ROI compared to other categories.
How often should I calculate email marketing ROI?
You should calculate email marketing ROI at least monthly or every four months. Keeping regular checks helps you make sure everything is on track.
It also helps you make regular changes to improve the numbers as much as possible. However, the frequency will also depend on the campaign type. For example, a one-time calculation would be enough for a short-term campaign.
Combine ROI With Other Email Marketing Metrics for a Better View
While email marketing ROI helps you learn a lot about your email marketing efforts, it isn’t enough on its own. Various other metrics also come into play.
For example, conversion rate tells you how many email subscribers performed the intended action. This metric is better than ROI for long-term nurturing campaigns.
Need some help making email marketing work?
At Beambox, we’d love to help you market your small business. Beambox is a WiFi marketing platform that enables you to build a contact list without effort.
Additionally, you can easily run and optimize campaigns through data to reach your goals. Start your trial today!
