How Do You Calculate Your Email Marketing ROI?
Calculating email marketing ROI can prove how effective your email marketing is… or isn’t. It pays to know the truth. According to available research over the past ten years, email marketing has provided the best returns on investment of any digital marketing channel.
For some, the returns can be as high as $40 for every $1 spent. This doesn’t mean you should just take these figures for granted. Even if you are getting high responses from your email marketing campaigns, it just makes sense to keep monitoring your costs.
You should regularly monitor your email marketing ROI. There are several benefits to this which include knowing:
When costs are higher than your revenue
When marketing isn’t as effective as you might have thought
Which layouts are working best
Which products are selling best
And which readers are more attuned to your email marketing messages
Calculating Email Marketing ROI
Calculating email marketing ROI is relatively straightforward. It only requires a few numbers from your production and marketing teams.
The Email Marketing ROI equation is:
(Total Monthly Revenue – Cost To Produce and Deliver Product – Advertising Costs) / Email Marketing Costs = ROI
For email marketing campaigns to be highly valuable, the result should be greater than one. It means the campaign produced more profit compared to the cost.
If you generate $1,000 from an email marketing campaign over the course of a month, spend $300 on producing and delivering the products sold, spend $200 on advertising and $17.95 on the email marketing campaigns themselves, the equation would look like:
(1,000 – 300 – 200) / 17.95 = 500 / 17.95 = 27.85
The example shows that $27.85 was generated for every $1 spent.
Take this same example with a digital product that:
a) has no production costs
b) has no advertising costs because you promoted to your existing subscribers via broadcast
and the equation looks like this:
(1,000 – 0 – 0) / 17.95 = 1000 / 17.95 = 55.71
It’s pretty easy to see why successful email marketers love email marketing; especially with TrafficWave’s flat rate monthly pricing plan.
But What if Your Email Marketing ROI is Less Than One?
If you find that your campaigns aren’t returning a satisfactory result, this just means you need to consider ways to improve the ROI. There are several options for this which include:
Offer better discounts and offers
Adjust your campaign timings
Change your email segmentation
Consider sending more/fewer emails
Perform email list maintenance
Redesign your emails to make them more enticing to your readers
Review the content you are sending to your contacts
Sometimes, a simple tweak can dramatically boost your results. George McBride made a SIMPLE CHANGE in his capture form that dramatically boosted his subscription rate for his Thai Food Cooking list.
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