Are Your Email Marketing Efforts Paying Off? How to Calculate your Email Marketing ROI

Sharing is caring!

Reading Time: 4 minutes

You need to determine the profitability of your email marketing campaign to ensure that you are gaining and not losing money. By tracking the performance of your email marketing campaign, you can improve your game plan, future-proof your strategies, and identify challenges that are affecting your promotional efforts. 

Despite the popularity of social media and smartphone app marketing, email marketing remains the most effective and widely utilised marketing strategy across all industries. No other methods enable businesses to connect with potential customers, nurture business relationships, and develop targeted, highly personalised messages than email marketing. 

While the effectiveness of email marketing remains undisputed, some promotional campaigns work, and some don’t. That’s why it’s essential to determine if your efforts are paying off by calculating your email marketing ROI. How? Continue reading to find out!

How to Calculate Email Marketing ROI?

A successful marketing campaign should produce a healthy return. Below is a step-by-step guide to calculating your ROI:

What is an email conversion? 

For an accurate ROI calculation, you need to determine what an email conversion is. Not all email messages should make a sale. You can list relevant content, run polls or contests, and request testimonials. You can also share special reports or inspiring content to generate conversions. Below are some potential conversions from email: 

• Signing up for a free trial
• Downloading free content
• Renewing a subscription
• Applying new features
• Leaving positive customer feedback
• Returning to an abandoned cart to complete an order
• Making a purchase

Calculating the Email ROI

The average email marketing ROI is $36 for every $1 spent. You should receive 36 times for every dollar you invest in a marketing campaign. Research shows that all email marketing campaigns drive 36% of email marketing ROI. 

To calculate the profitability of your email marketing campaign, you need to list the expenses related to the marketing campaign itself and its revenues. Then, subtract the costs from the income and divide that by the spent. 

Calculating the expenses

The expenses may include the following:

• How much time (hourly rate) do you or a team member spend emailing customers 
• How much time do you spend executing your marketing plan
• How much money do you spend on email marketing services 

Calculating the gains

This is a fairly straightforward process; you need to list and add all the sales you made throughout your email marketing campaign. If you have Google Analytics integrated into your email marketing tool, you can trace every sale that every email generated for a certain period of time. 

Calculating how much your email campaign brings in is relatively easy if you sell your goods online. If your ESP has Google Analytics integrated into the dashboard, it’s especially easy to trace every conversion attributed to your email marketing campaign, including website traffic. This can be for a particular campaign or over a certain period of time.

To calculate your email ROI, use this basic formula: gains – expenses = ROI (defined as a percentage). 

For example, say you are spending $500 on an email marketing service. In a year, you’ll spend $6,000. If you have a team member executing your email marketing tasks at $15/hour for 2 hours, 5 days a week, that amounts to $7,800. Now add up all your email marketing expenses: $6,000 + $7,800 = $13,800. 

To calculate your gains:

1. Determine the cost of your lead. If your lead costs $100, for example, your email marketing efforts bring about 500 leads a year, you earn about $50,000.
2. Subtract the total expenses from your earnings: $50,000 – $13,800 = $36,200 in profit.
3. Divide the profit by the costs, and you get 262.32% ROI. You can also use a free ROI calculator online to make the calculations easier. 

Ways to Boost Email ROI

Now that you’ve determined your email marketing ROI, you may be wondering what you can do to boost your revenues even more. Here are some tips: 

Raise brand awareness:

• Being active on social media.
• Publishing fresh content regularly.
• Optimising your content with your primary keywords across all online platforms you get helps raise brand awareness.

Take advantage of every chance to promote your brand but not to the point that you sound like a car salesman. You have to prioritise value over promotions to avoid putting potential customers off. 

Nurture the leads: Establish a nurturing email sequence consisting of a purchase reminder, a limited offer, and a list of products that customers might like to put your brand on top of your customer’s minds.

Generate website traffic: Boost your website by publishing fresh, optimised content and promoting your website and website content on social media platforms to let people know about it. Find ways to market your website to generate more traffic, such as running a contest, collaborating with influencers or market readers, or guest posting on prominent websites. 

Boost sales: Boosting sales generates more profits. Find ways to offer your product or services without being too pushy to avoid putting people off. You can present incentivised offers, offer limited offers, and use your social media influence to drum up attention and attract potential customers. Taking care of your current customers will also lead to repeat purchases. 

Outlining your email marketing goals makes it easier to determine the profitability of your email marketing campaign. It’s equally important to track your progress using the right metrics to get an accurate reading of your profits. Are you ready to discover how much money you make on email marketing efforts? Use the basic formula outlined in this guide and start crunching the numbers.

Sharing is caring!