How to calculate it and improve your Email marketing ROI

Email marketing is a powerful tool for businesses looking to engage their target audience and boost sales. 

On average, companies can earn up to 3,600% returns on email campaigns. But, of course, the exact ROI your brand will witness will depend on several factors, including the efficiency of your campaigns. 

With a clear idea of your ROI, you can properly assess your campaigns’ impact and identify opportunities for improvement. 

So, today, we’ll explore all you need to know about calculating and improving your email marketing return on investment.

Understanding email marketing ROI

Return on Investment (ROI) is a financial metric used to evaluate the profitability of an investment.

Email marketing ROI refers to the profits from your investments in various email marketing efforts, like building your email ist, running targeted email campaigns, and paying for email marketing tools.

Email marketing is known for its high ROI. According to a survey by Upcity, more than 50% of marketers confirm gaining an average ROI of about $21-$40 for every dollar spent on email marketing. That is about a 2,100% – 4,000% return, making email one of the most cost-effective channels for marketing. 

Multiple studies also confirm that the average email ROI is somewhere between $36 – $40 for every spent dollar. So, if you were looking for a benchmark to assess the quality of your email revenue, that’s a good place to start. 

As an email marketer, your ROI will help you understand how well your campaigns are performing. A higher ROI indicates that your investments are worth it since the profits are good. Profits, in this case, depend on your key objectives. For instance, your email marketing aim could be to:

• Generate new leads
• Increase sales and conversions
• Increase website traffic, or 
• Get higher open rates

Also, keep in mind that your ROI may vary based on the effectiveness of your email marketing strategy or the quality of your email list. 

However, with clear email marketing objectives, calculating your ROI will be more straightforward. This brings us to the next section.

How to calculate the ROI

First, email marketing ROI is calculated using the formula below:

For instance, if a company spends $1,000 on an email marketing campaign and generates $15,000 in total revenue, here’s how you’d calculate your ROI:

To determine the ROI of email marketing, you must account for the money spent on your campaigns and how much profit they’ve brought in. 

For the costs, you simply need to add up what you’ve spent on the following:

• Email software 
• Content creation – email design, copywriting, etc., if they were outsourced. 
• Third-party integrations
• Costs for building and maintaining your email list

There could be more, depending on how much effort you put into the email campaign. For instance, if your in-house team handled the campaign, you should factor in the time they spent. To do this, calculate the number of hours each team member spends on the email campaign and multiply it by their hourly rate. 

Now, to determine your revenue, you’ll need to track every sale that came from your email campaign. Thankfully, this can be done if you have Google Analytics 4(GA4) on your site. 

Here’s how:

Integrate GA4 with your email marketing software: 

GetResponse offers direct integration with GA4. You only need to turn on the Google Analytics tracking toggle when creating an email message to use it. 

When Google Analytics is turned on, it will automatically add UTM parameters to all your email links. 

For instance, you’ll have something like:

https://www.example.com/landing-page?utm_source=email&utm_medium=email&utm_campaign=campaign_name)

If you want more precise tracking, go to the integrations tab on your website. You’ll see a  Google Analytics form like the one above. Use this to customize your UTM parameters (source, medium, campaign, etc.)

Set up conversion events

Once the integration is done, you also need to set up conversion events in GA4 to monitor key actions (e.g., form submissions, purchases, etc.). You’ll use this data to calculate the revenue generated from email campaigns.

Monitor campaign performance

To track your campaign performance, Go to Reports > Acquisition > Traffic Acquisition. Filter traffic by Source/Medium. Then, choose the source with the email/newsletter parameter to see all email-driven traffic. You should see a table like this one:

Multiply the conversions by their value to get a proper estimate of the revenue generated for a given period— at least one month.

Once you know the total revenue and the cost of running the campaign, use the ROI formula to calculate the result. For quick estimates, you can also use tools like the Email Marketing ROI Calculator.

ROI’s success in the industry

Email marketing has proven to be highly effective for businesses and continues to deliver significant returns on investment. 

Here are a few email marketing ROI statistics that confirm the vital role of email in content marketing across industries. 

• The Global Email Marketing Market size is expected to reach about $46.1 billion by 2033, growing at a CAGR of 14.9%. 
• As of 2024, email marketing revenue is projected to exceed $9.5 billion. 
• Statista’s survey reveals that about 52% of marketing professionals saw a 100-percent improvement rate in their ROI for email marketing. 
• Stats by Emarsys reveal that almost 81% of small businesses use email marketing to acquire customers. Also, 80% of survey respondents say they use email marketing for customer retention. 
•  95% of marketers report that email marketing was effective in helping them meet their business goals.

Industries like retail, e-commerce, travel, IT, and telecommunications can boast an even higher email marketing ROI. For instance, in retail, ecommerce, and consumer goods sectors, the average ROI is $45 for every dollar spent, according to Statista.

But what contributes to such a high email marketing ROI? 

There are several factors, but here are three major ones: 

• Personalization: Emails are a lot more personal than other forms of marketing online. You get to reach leads in their inbox and present your offers to them. This increases your chances of getting them to perform a desired action or enter your sales funnel. Research by SmarterHQ confirms that 51% of consumers prefer to be reached via email. 
• Automation is another major reason why email marketing ROI continues to be significant. Even from our 2024 email marketing benchmarks, it’s obvious that an automated marketing email outperforms regular newsletters in terms of opens, clicks, and click-through rates.
• Integrations: Most email marketing tools have smooth integrations with CRM, social media, ecommerce, and other platforms. This makes it easier for businesses to streamline their marketing campaigns and increase their chances of success. The integration also allows email platforms to use existing customer data to help you run effective campaigns. 

Also, email marketing tools now include strong analytics that allow you to measure the performance of your campaigns and make adjustments to improve your return on investment.

Overall, email remains one of the most effective marketing channels for building customer relationships and improving sales over time. Regardless of your industry, you can be sure to get huge returns from investing in email campaigns. 

Strategies used to improve ROI

Here are some effective ROI email marketing strategies to boost your campaign efforts.

1. Define a goal

The first step to improving your email marketing ROI is to have a clear goal. With a clear goal, you’ll know where to channel your efforts and what to focus on. 

Goals also help you know what to look out for when it’s time to measure the effectiveness of your campaigns. For instance, you can align your goals with relevant email KPIs (Key Performance Indicators) to help you monitor your success rate. 

Your email marketing goals should be SMART— specific, measurable, achievable, relevant, and time-bound. 

So, instead of saying you want to “increase email engagement,” a clearer goal would be to “increase email open rates by 15% over the next four months.” 

With such a goal, creating an effective email strategy becomes easier. For example, you may focus more on your subject line or consider sending your emails at peak times for the best results.

2. Use email segmentation

Another thing you want to do is organize your email list into smaller, more specific segments. Use shared attributes within your subscribers that align with your email marketing goals to segment your list. 

Segmentation allows you to send targeted messages that resonate with leads in different groups. This is a lot better than sending everyone generic marketing emails. 

With more targeted emails, you can gain your lead’s interest and encourage them to engage. That makes you more likely to have a better ROI on email marketing campaigns you send.

Some common segmentation categories include:

• Demography
• Location
• Purchasing history
• Interests
• Engagement levels

Segmenting your email list starts from the beginning when you’re collecting their email addresses. It’s advisable to create an email capture form that collects the key data you need for segmentation. Here’s an example of a form that includes location data:

How you segment your audience will depend on the types of products or services you offer. A B2B company, for instance, might collect details like company size, industry, or position. See this example from Intouch Insight.

Also, you can determine lead segments based on their activity on your website. For example, which pages they visit and what they buy or search for in your store. 

Monitor and update your segments as user preferences become clearer over time, especially based on how they respond to your emails.

3. Send personalized emails

This draws from a well-segmented email list. 

Email personalization goes beyond addressing your recipients by their first names. But that’s a good first step. The email below features an image that includes the recipient’s name. No doubt, your leads will be excited to receive something like this.

Personalization also involves customizing your emails to address your recipient’s preferences and behavior. A good hack for effective personalized emails would be to target specific pain points. What’s that one problem that your reader wants to solve? How can you present a strong solution in your email?

Another trick is to upsell or cross-sell products based on past purchases. So, if a user bought a pair of sweatpants, it may be nice to recommend a pair of shorts, a T-shirt, or a hoodie, as Mack Weldon does below. 

Or, you can use the lead’s website history to let them know when a product they had searched for is back in stock, like Nisolo below:

Personalized emails should also include specific CTAs that align with the recipient’s needs, as this can significantly improve engagement. Calls to action should be clear, direct, and actionable. 

It’s also wise to use CTAs directly related to your email marketing goals. So, based on Brighland’s CTAs in the email below, we can say that the goal was to drive more sales.

In all of this, remember that your emails should always offer something valuable, whether it’s useful information, a nice discount, or a product recommendation.

4. Use email automation

Email automation involves sending triggered emails based on user actions or predefined schedules. See the illustration below:

For example, you can set up a welcome email to be delivered when new email users subscribe to your newsletters. You can also set up an abandoned cart email to deliver a few hours after a user adds a product to their cart and doesn’t complete the purchase. 

Here’s an example from Nomad:

Apart from the abandoned cart and welcome emails, here are some other types of automated emails you can use:

• Birthday or anniversary emails
• Order confirmation or shipping updates to inform buyers about the status of their orders.
• Feedback emails asking customers to review a recent purchase.
• Re-engagement emails for subscribers who have been inactive for a while. Use this to reignite their interest in your products or services.

Automated transactional emails not only help you keep users engaged, but they can also be quite useful in leading prospects through your sales funnel. These emails are also quite effective when you nurture a large email list.

5. Use the right email software

The right email marketing software makes your work easier. These tools have features that help you implement every strategy we’ve discussed so far, i.e., build/segment your email list, personalize your campaigns, and automate email drips.

Work with email software that’s easy to use. Getresponse, for instance, has an intuitive user interface that you can quickly adapt to. Our platform comes with a drag-and-drop email builder that simplifies your email creation process. Also, there are loads of templates to help you design and deliver dynamic content to your audience.

Beyond that, Getresponse emails are well-optimized and have high deliverability rates. So you can be sure that your emails reach customers.

If you have an e-commerce store, you can integrate it with Getresponse and set up automation to engage your customers. If you’re a B2C or B2B service provider, you can also integrate Getresponse with CRM platforms to manage your client data and maintain communication with your customer base.

The platform also includes detailed analytics features that allow you to track success and improve your campaign’s performance. You can start with a free trial or find your preferred price plan here.

6. Conduct A/B tests

Finally, you should conduct A/B tests to determine which emails are more likely to perform better. 

According to a survey by Litmus, brands that include A/B testing in their email program generate an ROI of 48:1 or 4,800%. That’s better than an ROI of 35:1 for those that don’t.

With A/B tests, you’ll send different versions of an email to small segments of email subscribers.

Test various elements like subject lines, CTA, images, and email copy to determine what works best. Test a single element at a time to get a more accurate view of what’s moving the needle. 

Refer to this email A/B testing guide for more details on how to conduct an effective A/B test.

When running an A/B test, observe how each element impacts the performance of your email and use the results to refine your future emails. 

Conclusion

ROI for email marketing is a major indicator of your campaign’s success. A high ROI may reflect effective lead generation, increased click rates, or positive results in your audience engagement. A low ROI means something needs tweaking.

To improve your email campaign ROI, you must have a SMART goal. Also, divide your audiences based on common attributes like demography, history, or purchasing behavior. Then, personalize your emails to resonate with subscribers in different segments. 

Next, automate emails to consistently engage your audience and move them through your sales funnels. Use A/B tests to experiment with different marketing email content and identify what your audience prefers.

Finally, be sure to use the right email marketing software. A platform like Getresponse offers an all-in-one solution for engaging your customer base and improving your brand’s email marketing ROI.