The ROI of email marketing is second to none. That’s no exaggeration. For every dollar you invest in your email marketing program, you’ll get an average return on investment of $41. In other words, email is one of the very best marketing channels you can use.
Some types of email work better than others — we’ll talk about that later on. For now, let’s just say that if you don’t currently have an email marketing strategy, you’re missing out.
In this post, we’ll thoroughly dissect ROI and how it applies in email marketing. You’re gonna learn everything: what ROI actually means in practical terms; goals for a half-decent email marketing campaign; how to measure your email marketing ROI — the lot. Let’s get started.
What Is ROI?
In basic terms, return on investment, or ROI, is the amount of money you get back for the dollar you invest. If you buy something for $1 and sell it for $10, that’s a 900% ROI. Here’s the basic equation you need to use to calculate ROI:
- Final value of investment – initial cost of investment ÷ initial cost of investment x 100 = ROI
Or, in plain English:
- What you made – what you spent ÷ what you spent x 100 = ROI
So, if you spent $900 on your email marketing campaign but brought in $10,000 in sales, here’s what your equation would look like:
- 10,000 – 900 ÷ 900 x 100 = 1011.11%
Email Type is Everything
Think all emails are created equal? Think again, buddy. Certain types of email perform better than others. According to recent research, abandoned cart campaigns generate the most revenue. Post purchase emails come in last, with a 2.07% ROI. Here are the middle-of-the-listers:
- Back in stock: 4.08%
- Other types of triggered email: 8.10%
- Browse abandonment: 24.87%
The main takeaway is this: if you don’t currently have an email marketing strategy, create an abandoned cart email first. Next, work an a browse abandonment campaign to burst ROI even further.
Email Marketing Goals
We referenced a “half-decent” email marketing campaign in the intro — the truth is, we don’t do “half-decent” here at Quantum. We only do great email marketing campaigns. Here are some of the top goals to aim for when you craft your own email marketing strategy.
Nurture Your Leads
Got a good lead? Great — now it’s time to nurture that lead until it transforms into a conversion. You can do that with a well-written email series. Most businesses use automation apps to send a number of emails over a set period of time — a day, a week, a month or more.
If you’re new on the market — or if you’re not new, but you’re somewhat obscure — you might benefit from a brand awareness email series. You can use a brand awareness campaign to tell people all about your company, what you do and what you sell — and, of course, why you’re the best.
If you’re not happy with your year-on-year sales, you can use a targeted email campaign to boost revenue. Highlight special offers, limited-edition products, free shipping and anything else that makes your business stand out. Use eye-catching and exciting subject lines to increase open rate — and add a teaser to make your emails more tempting.
Increase Website Traffic
Website a little dusty? Wheel out an email marketing campaign to get traffic moving again. Ironically, the more traffic your site gets, the more “important” it’ll seem to Googlebot — and if Googlebot thinks your site is impressive, it’ll move you up the ranking order. Use a great offer — three for two, or free shipping on all items, for instance — to coax consumers and improve your CTR.
You don’t have to stick to just one type of email campaign. Most companies run a range of email marketing series at the same time — cart abandonment, nurturing, winback, brand awareness — all of them automated and triggered by various consumer actions. You can even create a dual-purpose email campaign if you like: nurturing and brand awareness, for instance, or sales-boosting and traffic-driving.
How to Measure Email Marketing ROI
To come up with an ROI for your email marketing campaign, all you’ll need is the amount of money you spent and the amount of money you made. Simple, right? Maybe not so much.
To figure out your email marketing return on investment, you’ll need to break down your input and output. Then, you can plug the values you get into the ROI equation we mentioned earlier.
Figure Your Expenses
Expenses vary enormously across the board. Some entrepreneurs write their own marketing emails (a valiant and time-consuming effort) while others outsource content marketing production (equally valiant, but less time-consuming). You could go for the DIY approach with an email marketing provider subscription, or bring in a specialist agency to deal with your email messaging.
When you figure your expenses, keep the following in mind:
- Subscription fees: How much you spent on your email marketing provider
- Price per email: Price per email sent, if applicable
- Email marketing agency fees: How much you paid your email marketing agency
- Content writing fees: How much you paid your freelance or on-staff writer
- Hours spent: How much time you — and your staff — spent on the campaign, multiplied by your respective hourly rates
Add up all of your campaign-related costs to come up with an expense total. Don’t underestimate your own hours — as a small business owner, you probably do a lot more than you think. If you stayed up until 2:00 a.m. the day before launch to make last-minute tweaks, factor that time in.
Figure Your Gain
This bit isn’t so hard. If you’re primarily an online retailer, you can use Google Analytics — your personal campaign monitor — to track email marketing statistics like click-through rate and the number of sales you get as a result of your campaign. Some ecommerce platforms have Google Analytics built into the dashboard; other platforms let you stream data from your site to Google Analytics, but don’t make Analytics directly available.
To calculate the value of a lead, track all the conversions that come directly from the marketing emails you send. Then, multiply those conversions by the lead value to come up with a gain amount. Or, just add up sales. Whatever’s easiest. Either way, you should end up with a pretty on-point dollar amount.
Got your expense figure? Your total gain amount? Fab. Time to plug them all into that handy dandy equation we listed above.
So let’s imagine you spent $400 on a DIY email campaign and the conversions you tracked came to $13,450. Not bad, huh? Your ROI would be:
- 13,450 – 400 ÷ 400 x 100 = 3262.5%
That, my friend, would be a good conversion rate. You could pat yourself heartily on the back if you came up with an ROI like that. If your ROI doesn’t look so rosy — or if you actually lose money on email marketing, check out the next section. We’ve got some tips for you.
Improving Your Email Marketing ROI
You set up an email campaign and assumed money would roll in. But then, it didn’t. Your series fell flat and you don’t know why.
If your email marketing ROI just isn’t dazzling, we feel you. Here are seven ways you can make things better.
Strategize to Streamline Your Marketing Funnel
Strategy is where it’s at. Seriously. Before you create another email campaign, consider the following:
- Who is your email for? Identify the email list consumer demographic — or demographics — you plan to target. Are they young, older, hip, not-so-hip? Do they like gardening or monster trucks?
- Why are you sending an email? Seriously, you have to have a good reason. Got a sale on? That’s a good excuse. Reminding your subscriber about the expensive items they left in their cart? Also a good excuse.
- What type of emails are you sending? This follows on from the above. Are you planning an abandoned cart series or a nurturing series? Have you just launched a product after crowdfunding?
- How will you show off your brand? Most marketing emails aren’t plain text. Instead, they’re eye-catching and full of graphics. Make sure you have optimized versions of your logo available, and keep branding colors consistent across all your emails.
- What’s your timeline? Are you going to send an email every week? Every couple of weeks? Timing is everything. Incidentally, most marketing mavens say that abandoned cart emails generate the best returns when they’re sent to cart-abandoners within 24 hours.
Personalize and Segment to Improve Conversion Rates
Segmentation works beautifully because it lets you target one specific demographic at a time. According to a recent HubSpot breakdown, segmentation improvised click-through rate up to 203% — and it can boost revenue up to 760%. How d’ya like that?
First, pick your audience and think about what makes them tick (this is an expansion of the very first thing we listed in the “Strategize” section above). Then, write content aimed at just those consumers, and end with a CTA. You’re trying to sweet talk them, see? Track them as they move through your site and tempt them — via email — with products you know they love.
If you know particular subscribers love special offers, create an email campaign aimed just at them. Send them a new special every week until they cave. Keep things light — include a little humor to oil the gears — and monitor results.
Personalized email campaigns help you retain existing customers — and retaining existing customers costs a lot less than acquiring new ones. So you’ll save money on that front, too. Everyone wins.
Write Great Subject Lines to Boost Open Rates
Want people to open your emails? Of course you do. How do you improve your email open rate, though? Why, with a great subject line, of course!
From overenthusiastic all-caps or emoji-laden screamers that end up in the junk mailbox to achingly boring phrases that just don’t do the trick, bad subject lines are a dime a dozen. Effective subject lines, on the other hand, provoke interest and reduce the number of people who hit “unsubscribe.” Awesome subject lines are tempting, yet subtle, like dessert at a high-class restaurant.
Keep subject lines under 60 characters, and make portable subject lines 25 characters long or less to make sure they stay visible on mobile devices. Aim for between three and five words, just to be on the safe side. Begin with an action verb — buy, complete, stop, make, save, etc. — and leverage urgency.
Make Life Easier With QDM
You know what else you can do to elevate your email marketing ROI? Work with QDM, that’s what. Our marketers bring years of combined experience to the table — and we can share skills and work with your existing in-house marketing efforts. We know how to monitor metrics, drive click rates, track the number of conversions in your campaigns, promote your brand on social media, and generally use digital marketing to make you more successful.
Why not let us write your next email newsletter or SEO-optimized marketing email series? We’ll help you save time, gain new subscribers and use email automation to improve your average ROI. Chat with us today about all the marketing options we offer.