Quantifying The ROI of Email Marketing

Email marketing remains a key part of any marketing effort, perhaps even more important than social media marketing. Due to the simple fact that everyone would likely have at least 1 email address, email marketing should not be ignored if you wish to achieve good returns on your investment (ROI).

Why do you need to define your email marketing ROI?

If you do not clearly define the goals you wish to achieve for your email marketing, you run the risk of overspending for an email marketing campaign. As a general rule, you should earn more money than you spend in any marketing effort.

Let’s try to define some criteria to measure your ROI

Please note that we are just providing a generic guide towards measuring the success of your email campaign. Your company may have different goals and numbers to meet.

As mentioned in the previous section, you should aim to earn more than enough to cover your marketing expenditure. By splitting your goals into multiple sections, you can measure your ROI progress in an ordered fashion.

Section 1: Email bounce rate

The very first thing you should look for in any email campaign is email deliverability. By using Email Service Providers (ESPs) like MailChimp or AWeber, you can view detailed explanation about the cause of your bounce rate whether they are hard bounces or soft bounces. The overall bounce rate should be ideally low. When your emails are not being delivered, you have wasted an opportunity to reach out to a customer and potentially make a sale.

Therefore, you have to settle on a threshold for your bounce rate and not go over that number. Some bounces will be inevitable but keeping it below your threshold means you have successfully managed your ROI for this section. It is also advisable to screen your mailing list in bulk before each campaign to reduce incorrect email addresses and make sure any inactive emails are removed. You may want to look for a solution with email verification services; they do a great job of cleaning your email list via bulk upload or real-time (REST API).

Section 2: Open & click rates

The open rate will give you a good idea of how many people are opening your emails and reading them. Bear in mind, this may not be 100% accurate as it relies on the email client loading an image. Not all email clients can load an image or may be configured not to. Still, a rough estimate is better than nothing. Next, you have the click rate which measures how many links your readers are clicking in your emails.

As with Section 1, you need to set a threshold number for your open and click rates. Anything higher than your threshold is considered good. High open and click rates mean that your emails are interesting and your audience likes your content enough to click a link to make a purchase or to learn more from your website.

Section 3: Conversion rate

Using a tool like Google Analytics, an email marketer can effortlessly determine what is the sales conversion rate. Sales conversion rate refers to how many of your website visitors that you have managed to sell something to. A good conversion rate should cover your cost as well as earn a decent profit.

Conclusion

Once you have settled on your threshold numbers, you can know if you’re doing well or badly in your email marketing efforts. When your email bounce rate is low while your open and click rates are high, your conversion rate should also be high. This means your marketing campaign can be considered a success.