Email marketing ROI is a crucial metric for businesses that use email as a marketing channel. As referred to in an article on Linkedin, the ROI of email marketing is approximately 4400%. Ensuring that your email marketing campaigns generate a positive ROI is essential to justify the effort and expense.
This article will give you the top 5 effective strategies businesses can implement to improve the ROI for email marketing. So stay tuned and read on to find the best strategy for you in place.
What is the ROI of email marketing?
The email marketing ROI refers to the return on investment a business generates from its email marketing campaigns. It is used to assess an investment’s efficiency and profitability of email marketing.
Email and voicemail are two of buyer-seller communication best practices that are the most popular marketing channels among B2B businesses. Email is suitable for conveying detailed information and personalization, while voicemail effectively delivers time-sensitive or even urgent information. Both methods should be used strategically based on the context of the message and the intended audience.
It is worth noting that the ROI of email marketing can vary significantly depending on the industry, target audience, and specific campaign goals. Nevertheless, businesses can increase the effectiveness of their email campaigns and ultimately generate a higher ROI by improving key metrics such as open rates, click-through rates, and conversion rates.
How to calculate email marketing ROI?
Here is the basic formula for the email marketing ROI calculator (expressed as a percentage):
ROI = (Gain – Spent)/Spent
- Spend: The budget that you spend on your email marketing campaign. The most obvious expense is your ESP which can be calculated straightforwardly. In addition, you also need to calculate how much time each team member spends directly on email marketing and convert it to an hourly rate.
- Gain: The number of sales your marketing campaign brings in, which you can easily pick from the point-of-sale report. A simple way is to calculate the value of a lead. You may use Google Analytics to track any conversion your email marketing attributes to, including website traffic. Then, you can multiply the conversions to calculate the total revenue generated by your email marketing campaign.
The average ROI of email marketing
According to a report by Constant Contact, the average email marketing ROI is $36 for every $1 spent. Therefore, if you invest $1, you will receive 36 times its value back. Furthermore, this report indicates that targeted email and list segmentation emails account for 36% of total ROI email marketing. Meanwhile, Direct Marketing Association research also stated that 66% of customers had completed an online purchase due to an email marketing campaign.
In addition, the ROI for email marketing is different in each industry. Litmus has published a report that broke down the email marketing ROI statistics by industry:
- Technology industry: 40:1
- Marketing agency: 42:1
- Retail industry: 45:1
- Media and entertainment: 45:1
- Travel and hospitality: 53:1
Email marketing generates this great ROI due to several factors, including its low cost, highly targeted audience, ability to personalize content, provision of measurable results, and automation capabilities. So, your business needs to utilize this effective marketing channel to spread your brand and increase sales. If you wonder how to optimize the email marketing campaign, jump to the next part to explore the top 5 strategies for email marketing.
Top 5 strategies to improve the ROI for email marketing
Set specific objectives
If your business is new or email marketing is a new channel, setting measurable objectives that align with business goals is crucial. It recommends creating a set of actionable goals and key performance indicators to go with them. Set the objectives in short-term and long-term and track your progress over time to ensure the effectiveness of your campaign.
Here are some critical indicators in email marketing that can help you in setting objectives:
- Email open rates. Show the interest of customers with your email content.
- Click-through rate. The percentage of recipients who clicked on a link within your email.
- Conversion rate. The percentage of recipients who took the requested action, such as purchasing or filling out a form.
- Unsubscribe rates. Indicate the resonating of your content with your customers.
For example, you may observe that your open rate is lower than the industry average. In this scenario, you can set the objectives to have an open rate equal to the industry average in 6 months and higher than 10% in 1 year.
Customize your emails
Personalized emails have a 29% greater open rate and 41% higher click-through rate than non-personalized ones.
In email marketing, personalization refers to modifying an email’s content, such as the recipient’s name, location, or other personal information. This can range from addressing the recipient by name in the subject field or body of the message to leveraging data from prior contacts to offer products or services they may be interested in.
Create a high-quality email list
If you use an integrated system for online and offline sale channels, all customer information and order data are centralized. Thus, it’s simple to collect the email addresses of your current customers, start to execute nurturing emails, advocate promotions, and reward points to drive more returning customers.
However, you need to segment the email to achieve high marketing ROI. Email marketing segmentation enables you to send targeted messages to specific groups of customers, increasing the possibility of engagement and conversion.
You can segment the emails depending on demographics, interests, previous purchases, etc. For instance, you can send different messages to customers who have bought before and those who have not.
Experiment A/B testing
According to Campaign Monitor, experimenting with split testing can increase the click-through rate to 127%. A split or A/B test is an experiment that business owners and marketers conduct to boost conversions and learn more about their target demographic.
You can run unlimited split tests to get a fantastic email marketing ROI. However, some options are industry-specific. It recommends coming up with concepts and testing them one at a time. Otherwise, you won’t know which changes resulted in beneficial outcomes.
You can play with your subject line, offers, photos, and other elements. Make a few changes over time to see if you can transform an excellent campaign into something spectacular.
Optimize your email for mobile devices
Over 6.8 billion people own at least one smartphone, and many buyers prefer to check their email on their phone rather than a desktop or laptop. Business owners need to adjust responsive email designs to the size of customers’ screens to increase the ROI of email marketing.
On the other hand, based on tracking customer journeys on Google Analytics, you can have more insights into the devices users use and learn about their interest in the email content. This is an important metric to evaluate the effectiveness of marketing plans on different sales channels.
Here are some tips to optimize the mobile responsive:
- Ensure the mail is easy to read and navigate.
- Avoid huge blocks of text.
- Use clear, concise language.
- Apply the mobile-responsive templates.
- Remember to send testing emails to check the message on various devices.
Email marketing is advantageous for businesses looking to reach and engage with their audience effectively. However, to achieve a positive ROI of email marketing, it’s crucial to implement these strategies, which help businesses enhance the effectiveness of their email campaigns, drive more sales, and achieve tremendous success in their marketing efforts.