Do customers still read emails? The answer is absolutely. Try calculating your ROI with this easy formula to get more bang for your email buck.

How to Calculate Email Marketing ROI and Improve It

Email might seem a bit old-school, but it is still a valid form of content marketing. According to the Rock Content Email Marketing Guide, this method is standing the test of time. In fact, 77 percent of marketers report seeing an increase in email engagement. 

How can you ensure that email marketing is worth the investment? The best way is to measure the ROI. In this article, we will show you how to calculate the ROI of your email marketing and improve on it. 

Step-by-Step Guide to Calculate Email Marketing ROI

Statistics on ROI, or return on investment, tell businesses if their marketing efforts are paying off. Sending emails is a low-cost way to reach out to leads, but you still have to put time into creating the messages and managing a subscriber list. 

It would be nice to know that it’s worth the expense and effort. Fortunately, figuring out your ROI isn’t complicated. It is just a simple math calculation that can tell you a lot. 

How much you spend

The first step is to determine how much you spend on sending email. Factor in things like what it costs to create the messages. Do you pay for graphics? How about a content writer? 

Next, consider the time spent by you or someone in the company to manage your email campaigns. Measure this time in hours, and identify the average hourly cost. If you take two hours to set up each campaign and value an hour at $25, your labor expense is $50. 

How much you gain

After you put together your expenditure data, you must determine how much you gained from the campaign. First, identify your email marketing goals. For instance:

• More product sales
• Email opens or clicks
• Increased website traffic
• New leads

You could have multiple goals, but remember to look for things you can measure. For example, you know when you have an increase in sales after sending out promotional email messages.

If you use an email tracking program, you can measure the open and click rates, too. This tells you how many recipients look at the messages and click on links to visit your landing pages. 

Whatever you find, assign a value to it. If you saw a $500 spike in sales, that is the value of your campaign.

Calculate your ROI

The formula for email marketing ROI is:

• ((Gain – spent)/spent) x 100 = ROI

Let’s say you have made a $200 investment in your latest email campaign. You saw an increase in sales of $600. That would make your ROI equal 200 percent. 

• ((600-200)/200) x 100 = 200%

You can calculate email marketing ROI for one campaign, several, or a set amount of time, such as one year. If you spend $2,400 on email marketing campaigns in a year, and you pay someone $7,680 to create them, your total spent amount is $10,080. 

As a result, you see an increase in revenue of $30,000. This results in an ROI of 197.6 percent. 

• ((30000-10080)/10080) x 100 = 197.6%

Obviously, this is a good return. What if you are not seeing the results you want, though? 

Strategies to Improve Email Marketing ROI

Don’t give up if you find your email marketing ROI low. There is a reason why email marketing is still around. It can be quite effective. You might just need to make some adjustments to your process. 

Improve list quality

The golden rule of all marketing is to know your audience. Maybe your list isn’t reflecting your target audience well. One way to figure out who to focus on is to segment your current list to see what group responds best. 

For instance, you might divide it by location or another demographic. If your brand is B2B, think about focusing on the job title.

You could also consider where you got the lead. You might see better results when people sign up in a store rather than your website, for example. 

Segmenting your list will enable you to factor in the buyer’s journey based on behavior. The results of your email campaign can also identify what part of your audience you need to work harder to convert. 

A/B testing for email campaigns

A/B testing is similar, but it involves segmenting marketing styles instead. You’ll create two separate email messages with the same content but a different presentation and see which message generates the best response. 

Optimize email delivery

Regularly check your email list to weed out dead and inactive email accounts. This is also an excellent time to see who never opens your messages. They may be going to a spam folder.

There is no reason to spend money and time on a customer who doesn’t open any email. Your goal should always be to add more promising leads to your list and remove those that are not giving you any return on your investment. 

Implementing automation

Increase your return by reducing the time spent managing your email marketing campaigns. The right email marketing program can segment your list, monitor and analyze metrics, and weed out bad addresses. 

Automation will also improve the quality of your email messages by personalizing them. They could address each lead personally instead of using boilerplate greetings and content.

Automation can send email messages in response to events. For instance, the program could create a welcome email when someone signs up for your newsletter or discounts. 

Some benefits of email automation include:

• Personalized experiences for customers
• Creates targeted messages based on customer behavior, such as abandoned shopping carts
• Improves customer retention
• Allows you to create more scalable email marketing strategies

The less time you spend sending out emails, the higher your return. You can also learn more about your audience by tracking responses to automated messages. 

There is little doubt that email marketing could help you grow your brand. Take the time to figure out your ROI and nurture it for the most significant benefit. 

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