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Email return on investment (ROI) stands out as an important metric for businesses involved in ecommerce. It allows ecommerce companies to measure how effective their email marketing and efforts are.
- 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. Since email marketing still stands as one of the most beneficial channels for ecommerce, it’s important to consider the return on investment of email marketing.
Some may question the usefulness of measuring ROI in email marketing.
However, it can help your business to improve their marketing activities and thereby make more money. Here are some key takeaways that show the impact of email marketing ROI.
Try our Email ROI Calculator to see what kind of returns you’re getting from your email marketing campaigns:
What is email marketing ROI?
Email marketing ROI is exactly what it sounds like: it’s when a business looks at the money they spent on their email marketing and see how much of a profit they made.
Email marketing ROI counts as any money you spent specifically for your email marketing campaign. This includes advertisement, creating targeted email marketing campaigns, collecting email lists, and other important aspects of marketing.
What’s an average email marketing ROI?
Before you start out measuring your ecommerce email marketing ROI, it’s important to know how well the average email campaign fares. According to multiple studies, the average ROI for email marketing comes out to be anywhere between $36 to $40 for every dollar spent. So that’s the ROI you should be targeting.
What is a good email marketing ROI?
Logically, many marketers are trying to understand what a good ROI for ecommerce is. There are many ranges given that put a good email ROI at anywhere from 7% all the way to 30%.
But the real answer is that this “good” ROI really depends on what you’re measuring. For stocks, sure 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 go up even further if you use a powerful email marketing tool to launch and manage your campaigns. In fact, Omnisend’s US merchants saw an ROI of $72 for each dollar spent—double the average for email marketing.
|“It was amazing to see that when we sent out an email about our 72-hour pizza dough, we got $1,700 in sales from it. We could look at the heat map to see where customers were clicking, the history of a particular customer, and compare our Google Analytics and Shopify data to see how that customer came to be, which helps inform future campaigns.”
Craig Hastings, Culinary Director at Baking Steel
Read case study
How do you calculate ROI in email marketing?
After figuring out how much money you spend on email marketing and how much money you earned, 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 is the shorthand version of 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 that you earned $9 for every dollar that you spent on the email marketing campaign.
If you would prefer to work with percentages, then you can 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 of your money. In short, earning $1,000 from spending $100 would net a 900% ROI:
Why ROI matters
Some people may question why they should worry about email marketing ROI. However, there are a ton of reasons why email ROI is important, and why you should calculate it on a regular basis, especially in marketing:
- 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 optimal allocation of your financial resources
- Can show tangible results to stakeholders
There are different ways that businesses can reach out to customers. Many people use social media and text messaging, so why not shift the focus to those channels instead of email?
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 nearly double the second closest channel (SEO) while performing much better than the others. Email marketing rakes in money and leads to more business profits.
|“Omnisend [our email marketing app] was paying for itself in the first 2 weeks of use. Now, we’re seeing a 40x return across all campaigns and automations.”
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, you need to start working on it to give it a boost.
Here are a few strategies you can use to give your email marketing ROI a jump and grow your revenue:
- 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
But planning 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. We offer multiple interactive tools that can help you speed things up.
Email marketing stands out as an important channel to communicate with customers. You can encourage them to make purchases and increase your traffic through email newsletters. As your conversions increase, your email ROI will continue to improve as you remind customers about your email newsletter.
Even if your ROI lowers as you make changes, do not panic. This means that 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, which you can keep in mind so that you don’t make that mistake again.
It comes down to providing the services, products, and information that your customers want. As you keep them in mind and make them happy, you’ll continue to retain customers and grow your ROI. This will lead to more success in your email marketing and more success in your business.
No fluff, no spam, no corporate filler. Just a friendly letter, twice a month.