Email marketing ROI: Guide + how to calculate

Email return on investment (ROI) stands out as an important metric for businesses involved in ecommerce, providing a clear measure of the effectiveness of their email marketing efforts.

This includes:

• How well they perform compared to previous years or months
• Changes that draw in more revenue 
• Customers’ reactions to changes in the company

While it may not seem like it at first, ROI allows businesses to look at these points and identify potential problems in their business. For example, after looking closely at your email marketing spend versus return, you may realize that you’re actually losing money or only breaking even. Since email marketing still stands as one of the most beneficial channels for ecommerce, it’s essential to consider your email marketing’s return on investment.

Monitoring ROI can help you improve your business’s marketing activities and, therefore, make more money. Try our Email ROI Calculator to see what kind of returns you can get from your email marketing campaigns:

What is email marketing ROI?

Email marketing ROI is exactly what it sounds like: the revenue generated from the money spent on email marketing.

Email marketing ROI is any money spent specifically on your email marketing campaigns. This includes advertisements, creating targeted email marketing campaigns, collecting email lists, and other vital aspects of marketing.

What’s an average email marketing ROI?

Before you start measuring your ecommerce email marketing ROI, it’s necessary to have a baseline understanding of how the average email campaign performs. According to multiple studies, the average ROI for email marketing ranges from $36 to $40 for every dollar spent. So, that’s the ROI you should be targeting. 

What is a good email marketing ROI?

Naturally, marketers looking to improve their email marketing are interested in learning what a good ROI for ecommerce is, especially since opinions on what’s considered “good” can vary. There are many ranges given, however, a good email marketing ROI is generally anywhere from 7% to 30%. 

But the honest answer is that a “good” ROI really depends on what you’re measuring. For stocks, for example, it’s 7%. For large businesses, anything near 10% is great. And for small businesses, we’re looking at an ROI range of 15-30%. 

This email marketing ROI can increase even further if you use a powerful email marketing tool to launch and manage your campaigns. In fact, in 2023 Omnisend’s US merchants saw an ROI of $73.20 for each dollar spent — double the average for email marketing.

How do you calculate ROI in email marketing?

After identifying how much you spend on email marketing and how much you earn, you can calculate your email marketing ROI. 

Calculating requires a simple equation:

• Subtract the money gained from the money spent
• Divide that number by the money spent
• Check out the ROI of your email marketing

Here’s the shorthand version of the email marketing ROI calculation formula:

(Gained – Spent) / Spent = ROI

To give an example, if your business earned $1,000 from an email marketing campaign after spending $100, then you would have an ROI of $9. This means you earned $9 for every dollar spent on the email marketing campaign.

If you prefer to work with percentages, use the equation in the image below to calculate your ROI percentage. By multiplying the previous equation by 100, it will let you know the percentage increase in your money. In short, earning $1,000 from spending $100 would net a 900% ROI:

Why ROI matters

There are many reasons why email ROI is important and why you should monitor it continuously. Keeping track of ROI:

• Gives you an idea of your campaign’s profitability
• Enables you to tweak your campaigns based on what works to drive better returns
• Helps with the optimal allocation of your financial resources
• Can show tangible results to stakeholders

Email marketing remains on top when it comes to return on investment. As you spend one dollar, businesses, on average, earn $36 from their email marketing. This is why it’s so critical to continually look for ways to improve your email marketing and, ultimately, your email marketing’s ROI.

“Omnisend was paying for itself in the first two weeks of use. Now, we’re seeing a 40x return across all campaigns and automations.” Marc Trimble Digital marketing manager at Duke Cannon

How to improve your ROI

If your email marketing ROI is lagging behind your competitors or is only in the average range, it’s a good idea to consider ways to boost it.

Here are a few strategies you can use to improve your email marketing ROI:

• Build an email list continuously
• Write effective subject lines and email preheaders
• Design personalized emails thanks to targeting
• Send browse and product abandonment emails
• Clean your email list regularly
• Experiment with your email CTAs
• Check analytics and performance
• Do A/B testing
• Adjust and optimize your email campaigns

Remember that, however, implementing new email marketing strategies can only take you so far. You need the right set of tools to help you execute these tactics and boost your ROI. Omnisend offers multiple interactive tools that can help you speed things up:

Wrap up

Email marketing is one of the most important channels for communicating with customers. By sending emails to customers (or potential customers) who have opted in, you can encourage purchases and engagement. As you refine your strategies and optimize your approach, you’ll only see your email marketing’s ROI increase.

Even if your ROI lowers as you make changes, don’t panic! This means you should revert the changes you made since they don’t appeal to your audience. On top of that, you learned what your customers didn’t like, information that’s invaluable as you tweak your marketing strategies.

It all comes down to providing the services, products, and information your customers want. By keeping this information in mind, you’ll not only maintain an email list with happy, engaged customers, but you’ll also continue to improve your ROI.

Frequently asked questions