Are you getting the best return on your email marketing efforts?

Emails are one of the most effective digital marketing strategies for brands. But if you want to make the most of them, you need to know what’s working, what’s not, and what your overall return on investment (ROI) is. Not only will this help you optimize your tactics for better conversions, but it will also ensure that you’re not wasting money on campaigns that are falling flat with your audience.

Below, we’re covering what you should know about your email marketing ROI, including the quickest ways to measure it.

What is Email Marketing ROI?

Your email marketing ROI is how much revenue you bring in from your emails compared to how much you spend.

On average, email generates an astounding ROI of 4,200% or $42 for every $1 spent. This makes it one of the most — if not the most — cost-effective marketing tactics. It also means that if you’re not tracking your email ROI, you might be falling short of what you could be achieving.

Why It’s Important to Track the Return on Your Email Marketing

Tracking the ROI of your various strategies is just good marketing. Both print and digital campaigns run on data, and if you don’t dive into it, you’re missing out on key insights that can help you boost performance and sales. This is particularly true with email marketing since the return potential is so high.

Ultimately, tracking your email marketing ROI does a few very important things:

  • It ensures that your strategy is working
  • It ensures that you aren’t wasting time, money, and other resources on tools and tactics that aren’t delivering results
  • It can help you pinpoint whether things are going wrong — and where

If you’re like most marketers, you rely on your email marketing efforts to accomplish a lot. This includes building brand awareness and buzz for your products or services, as well as aiding with lead generation and nurturing, and increasing web traffic and sales. There are many ways to track your performance (open rates, click-through rates, and conversion rates, just to name a few) but your ROI is perhaps the most telling of all. Tracking it is essential, and it’s also easier to do than you might think.

How to Calculate Your Email Marketing ROI

There are a couple of ways to determine what you’re earning from your emails versus what you’re spending. Try out this formula first and get a big picture look at whether your efforts are paying off (or not).

Step 1: Determine How Much You’re Spending

The first thing to calculate is the total amount that email marketing costs you. The big cost factors to consider here are your spending on your email marketing software + labor costs.

Step 2: Determine How Much You’re Earning

Calculate the dollar amount of sales generated by your email campaign during the same period of time you calculate your total spend for. Profit isn’t the only valuable thing you’re gaining from email marketing, but it’s what you’ll want to look at when calculating your basic money-out-money-in ROI.

Step 3: Do the Math

The formula for email marketing ROI is:

(Amount Gained – Amount Spent) / Amount Spent

If you spent $500 on email marketing for the month and gained $1,500 in sales as a result, your calculation would be:

(1,500-500)/500 = 2

You can then multiply that by 100, which shows an ROI of 200%.

If you want to get even more specific, you could calculate the total amount spent and gained per lead, which in addition to showing your ROI, will also tell you whether you’re targeting the right audience.

All you’d have to do is divide the amount you spent by the number of leads you converted to sales for that month. Once you add up the total of all your converted sales, you can compare that against the total amount you spent to determine if your efforts were successful. 

Use your ROI to figure out if your email marketing strategy is successful, but also to make changes to it as needed. The more you know about the value of your performance, the better you’ll be able to tweak your campaigns for more positive results.