When your email marketing campaign ends, you will be anxious to know the results. You have invested in your email marketing, and you will be measuring the returns. Measuring the ROI for email marketing is important for revealing how well your campaign performed, and if you need to do some tweaking to get more out of your email marketing strategy.

What is ROI email marketing?

This is the same as for any other investment. In simple language, it means Return on Investments. Measuring the ROI for email marketing boils down to calculating the ratio of the profits generated less the total investment over total investment. Written as an equation this will be -

ROI = (Profits – Total Investment)/ Total Investment.

How to calculate the Profits generated?

Whatever product or service you offer to your customer, will have some premium attached to it. Which means you will be charging something extra over the cost of producing the specific service or product. The total profit generated will then be the summation of all individual profits for all products or services.

How to calculate Total Investment?

Each of your product or service will require some expense to bring it up to the level where you can offer it to the customer. There will be staff salaries to pay, design charges and marketing expenses. In essence, whatever expenses you have made towards getting the product or service worthy of offering to the customer is your Total Investment.

How does this apply to email marketing?

Email marketing involves designing the emails before sending. Therefore, there are design charges and staff salaries to be counted. Additionally, emails are sent through marketing service providers, and their fee adds to the cost incurred.

For determining the sales derived from your email marketing campaigns, you need to track the origin of the sales. Each email could have a link directed to a specific landing page. Sales originating from individual landing pages will then be tracked to a specific email marketing campaign. Measuring the ROI for email marketing will then be simplified for individual campaigns.

How to improve the ROI email marketing?

Email marketing takes time to build up its momentum. Therefore, you will need to give it at least a year or so, before you can derive anything meaningful out of measuring the ROI for email marketing. However, as a quick check, you can make a measurement monthly or every two weeks. For this, it is important that you understand and learn the metrics involved in the ROI email marketing.

As against the total number of emails sent out, there will be only a few that will be opened, still fewer that will be read, and even less that will be actually converted to sales.

Therefore, the vital metrics that you will need to monitor, track and tweak periodically will be -

➢ Open Rate – percentage of people who opened your email.
➢ Click-Through Rate – CTR – percentage of people who clicked on the link for call-to-action in your email.
➢ Conversion Ratio – percentage of emails leading to actual purchase.