What is the Average ROI for Email Marketing?

The Email Marketers
June 13, 2023

Did you know that businesses generate an average of $40 in revenue for every $1 spent on email campaigns? 

According to the Data and Marketing Association, email is still one of the most effective marketing channels for higher ROI. Statista also notes that nearly there are nearly 4 billion unique email users, and over 306 billion emails are sent daily. So, when done right, email marketing can drive sales, build loyalty, and boost brand awareness.

Obviously, you want a slice of those numbers! You’ll need to understand a few numbers to know your place in this digital ecosystem, and those numbers are your ROI.

This article will teach you how to calculate your email marketing ROI and how to implement an email marketing strategy that maximizes returns.

What is Email Marketing ROI?

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Email ROI refers to the return on investment you get from your email marketing campaigns. It’s calculated by comparing the revenue generated from your emails versus the cost to execute them. The more you optimize your email marketing campaigns, the higher ROI will be.

Email marketing ROI tends to be higher when you have:

  • A loyal subscriber base
  • Targeted lists
  • Relevant and engaging content

How to Calculate ROI of Email Marketing

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If your ROI is higher than the average cost of each campaign, your email marketing strategy is working well. But, if it’s lower, it may be time to re-evaluate your approach to boost sales.

To determine if your email marketing efforts are paying off, you need to calculate your return on investment (ROI), and these include:

  1. Email marketing costs: Your costs include expenses like email marketing software, designer fees, and staff time.
  2. Revenue generated: Revenue includes sales, leads, and customers acquired through your email campaigns.

Of course, the process is simple! However, to better understand this process, here are some essential steps for you to follow:

  1. Calculate your email marketing cost by adding all your expenses. For example:
  2. Cost of email marketing software: $500/month
  3. Designer fees: $2,000 total
  4. Staff time: 5 hours/week at $30/hour = $7,800/year
  5. Total Costs: $500 x 12 months = $6,000 + $2,000 + $7,800 = $15,800
  6. Calculate the revenue you generate. For example:
  7. Revenue from sales: $25,000
  8. Leads generated: 100 at $50 each = $5,000
  9. Total Revenue: $25,000 + $5,000 = $30,000
  10. Subtract your email marketing costs from the revenue generated.
  11. Total Revenue ($30,000) - Total Costs ($15,800) = $14,200
  12. Divide the revenue minus costs by your total costs. In this example, $14,200 / $15,800 = 0.9 or 90%.

An ROI percentage of 90 means for every $1 you spent on your email marketing, you generated $0.90 in revenue.

6 Email Marketing Strategies to Increase Your Email Marketing ROI

How can you reach that 400% average ROI?

It’s tough, but there are many ways to improve your marketing. All it takes is some ingenuity and know-how. Here are some digital marketing tactics to help you work on your marketing emails.

1. Set SMART Email Marketing Goals

To get the most out of your email campaigns, you need to establish concrete goals. SMART goals are specific, measurable, achievable, relevant, and time-bound. They provide context and clear parameters so you can track progress and success.

Here's how SMART goals work:

  1. Specific: Focus on a targeted audience and key performance indicators (KPIs) like open rates, click-through rates, and conversions. For example, aim for a 25% open rate from your retail email list over six months.
  2. Measurable: Use metrics and analytics to quantify your goals so you can monitor progress. Track open rates, click-through rates, bounce rates, and email revenue to see what’s working.
  3. Achievable: Set realistic goals based on your current metrics and industry averages. If your open rates are currently 15%, aim for 18-22% over 6-12 months.
  4. Relevant: Goals should align with your overall marketing and business objectives. If sales growth is a priority, focus on email campaigns that drive e-commerce revenue.
  5. Time-bound: Give each goal a deadline to work toward. This creates accountability and urgency.

2. Write Personalized Subject Lines

A well-crafted subject line is the first step to connecting with your readers and ensuring your email marketing messages are opened and read. By personalizing your subject line and using persuasive language, you’ll:

  • Capture attention
  • Build anticipation
  • Drive higher open and click-through rates

According to Campaign Monitor, personalized subject lines that include the recipient’s first name have been shown to boost open rates by 26% across all industries. Rather than a generic subject like “Check out our latest offer!” use the recipient’s name, like “John, check out our latest offer!” This small personal touch makes a big difference in catching your reader’s attention.

Some other tips for optimizing your subject line include:

  1. Use urgency and scarcity. Phrases like “24-hour flash sale!” or “Only 3 spots left!” encourage email subscribers to open the email quickly.
  2. Ask a question. A subject line with an interesting question, like “Guess what we just launched?” sparks curiosity and increases opens.
  3. Keep it short. Aim for 6 to 10 words. Shorter subject lines are more likely to be fully read and understood.

3. Use Triggered Emails Effectively

Triggered emails are automated messages sent in response to a specific action, like signing up for a newsletter or abandoning a shopping cart. They’re highly effective at boosting your email ROI because they are:

  1. Personalized and Timely: These emails are tailored to match a user’s behavior. They’re sent immediately after the triggering action, leading to higher open and click rates.
  2. Meet Expectations: Customers expect certain follow-up emails after acting on your site. Triggered emails, like welcome emails, transactional emails, promotional emails, and brand emails, meet those expectations and provide a good experience.
  3. Save Time: These emails are automated, so they run on autopilot once you set them up. This frees up your time to work on other initiatives to improve your email ROI, like segmentation, content creation, and list growth.

4. Segment Your Email Campaigns

Segmenting your email list into smaller, targeted groups will allow you to send the right message to the right people at the right time. Rather than blasting a generic email to your entire list, break it down into segments based on:

  • Demographics like age, location, and gender
  • Buying behaviors
  • Preferences

According to studies, marketers who segment email lists increase email marketing revenue by over 760%. Subscriber segmentation is the most effective email marketing strategy because it:

  1. Increases open and click rates. Subscribers are more likely to open and engage with an email tailored to them.
  2. Boosts conversions. The right message sent to the right person is more persuasive.
  3. Improves relationships. Personalized, targeted emails make subscribers feel valued.
  4. Provides useful data. Seeing how different segments respond gives you insight into your audience’s needs and preferences.

5. Build Mobile-Friendly Emails

With more and more people accessing email on mobile devices, you must ensure your email marketing campaigns are optimized for small screens. According to Prosperity Media, 43% of emails are opened on mobile, so if your emails aren’t mobile-friendly, you’re missing out on a huge portion of your audience.

To help your marketing thrive, keep these tips in mind:

  1. Use a simple, single-column template. Avoid complex layouts that won’t display well on small screens.
  2. Write a short, scannable copy. Use bulleted lists, short paragraphs, and plenty of headings to make your content easy to read on the go.
  3. Include a clear call to action. Tell readers exactly what you want them to do, like “Shop Now” or “Learn More.” Make buttons and links prominent and easy to tap.
  4. Test how your email looks on different devices. Send a test to yourself and check how it displays on mobile, tablet, and desktop. Make any needed tweaks before sending them to your full list.

6. Track the Success of Your Emails

To boost your email ROI, you must monitor your campaigns’ performance closely. Tracking key metrics will show you what’s working and not working so you can optimize accordingly.

To track success, below are some essential key metrics for you to know:

  1. Open rate: Indicates how many people opened your email. Aim for at least 15-20% to ensure your emails engage subscribers. If low, revisit your subject line, content, or list segmentation.
  2. Click-through rate: Measures how many people clicked a link in your email. For most campaigns, a CTR of 2-5% is average. Look at which links got the most clicks and replicate that success in future emails.
  3. Conversion rate: The percentage of people who took your desired action, like purchasing or signing up for a trial. Work to increase this over time through testing and optimizing your email content and calls-to-action.
  4. Bounce rate: Shows how many emails failed to reach recipients. Keep this under 2% by maintaining an up-to-date list and using spam-friendly sending practices.
  5. Unsubscribe rate: Indicates how many people opted out of your emails. Monitor for any spikes which could signal a problem. Aim for under 0.5% per campaign.
  6. List growth: This should outpace unsubscribes. Promote your list on your website, blog, and social media to build your audience.

Tracking and optimizing based on these metrics will boost the success and ROI of your email marketing campaigns. Paying close attention to how your emails perform and making changes to underperforming areas will keep your subscribers engaged and increase the impact of your efforts.

Boost Your Email ROI With Us!

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Want your email marketing to prove itself as an effective channel for customer engagement and sales?

If you still need to start using email to connect with your audience, you’re missing out on a huge opportunity. A few marketing dollars for not tracking your results could be leaving money on the table, and here my team at The Email Marketers doesn't want that.

Chat with us, and we will take the time to review your email marketing performance and make the most of this digital marketing tool. With a little fine-tuning, you’ll be well to achieving the average ROI or even higher.