How to Calculate Email Marketing ROI

Calculate Email Marketing ROI

Today, marketers may connect with their customers through a multitude of platforms, such as social media marketing, influencer marketing, and video marketing. However, marketers shouldn't overlook one of the most tried-and-true and effective ways to reach potential customers – email marketing.

Email marketing is essential for marketing communication and, when done correctly, can yield amazing results. After all, 4 billion people use email every day, and by 2025, that figure is predicted to reach 4.6 billion.

Email can help you achieve the biggest return on your investment (ROI). In fact, a great email marketing ROI statistic to note is that email has the highest ROI of any channel, averaging $42 for every $1 invested.

Read on to find out more about email marketing ROI, how to calculate B2B email marketing ROI and the benefits of tracking it.

What is ROI Email Marketing?

Return on investment (ROI) is a crucial financial indicator that assesses the effectiveness and profitability of an investment. To determine whether email marketing is providing a good return, one looks at the entire ROI.

It is computed by dividing the net income by the total investment cost. You can calculate this by subtracting the initial value from the final value, then dividing the net income by the total costs incurred, and lastly multiplying the result by 100. This is the formula for calculating email marketing ROI:

ROI = (Final Value - Initial Value) / Costs x 100%

For example, an investor puts $5,000 into a project at no additional expense. The venture was sold for $20,000, therefore the investor had a net profit of $15,000. The result of dividing $15,000 by $5,000 is 3. That produces a 300% ROI when multiplied by 100.

ROI = ($20,000 - $5,000) / $5,000 x 100% = 300%

Applying this formula to your email marketing strategy can help you determine the likelihood of your efforts being successful.

Why Track Email Marketing ROI?

Email marketing ROI is a very helpful indicator when evaluating whether or not your email approach is effective. If your ROI isn’t where you want it to be, you can modify your strategy to achieve better outcomes.

Prior to calculating ROI, you must decide what your goals are. Knowing the objective of your email marketing campaign makes it easier to calculate your ROI because you'll know the precise KPIs to monitor.

Once you begin monitoring the average ROI of your email marketing campaigns, you'll reap the following benefits:

Increase brand awareness

Regular communication with your audience can help them get more familiar with your brand. Since you'll always be in their inbox, your subscribers will get to know your goods, services, and business. You can determine the success of your attempts to reach subscribers by monitoring the ROI of your campaigns.

Lead nurturing

Lead nurturing is a terrific technique to convert leads into customers. 69% of marketers say that generating leads is their top marketing objective. By tracking the ROI of your campaigns, you can assess how many people actually opened your email and how many conversions you were able to obtain.

Boost sales and revenue

Email marketing can dramatically increase your sales and revenue. In fact, 59% of marketers cite email as their primary source of return on investment, and those who used targeted marketing report revenue increases of up to 760%.

Email marketing ROI measures your return from the investment you put into creating campaigns.

Businessman investing money coin in ROI box to get return profit

Increase website traffic

A solid email marketing strategy is an excellent approach to increasing website traffic. Understanding your ROI will help you discover what drives customers to click on links in your emails and visit your website. Once you figure out what works, you can use this strategy in all of your emails to deliver the best results.

How to Calculate B2B Email Marketing ROI

Now that the groundwork has been covered, let's tackle the heart of the issue: calculating email marketing ROI.

Follow these steps to calculate your email marketing ROI and determine whether you need to alter your strategy.

Calculate expenses

The first step in figuring out your email marketing ROI is to calculate your costs within the time period for which you're seeking to measure your ROI.

A huge cost you need to factor in is the software you use. Add up all the resources you employ to send email campaigns, such as the cost of your email service provider (ESP) and your email design and analytics platforms. 

Next, you should calculate the cost of your employees. Determine how much time is spent directly on email marketing by each team member and translate that time into an hourly fee.

You must also account for any costs associated with email marketing that goes beyond the cost of your ESP and the time of your staff. Include any other costs incurred in connection with your email marketing campaigns.

Determine your profit

If you sell your goods or services online, calculating how well your campaigns have performed is rather simple. While sales are an important aspect of email marketing, leads should also be considered.

Google Analytics is the most convenient approach to tracking sales and leads, especially if your ESP connects with the platform. Examine your Analytics dashboard to see how many sales were generated by the email campaign.

Then, take a look at your analytics and check for conversions that can be linked to your email campaigns. This can be anything that could lead to a future sale, such as clicking on the website or viewing a product page. 

Then, multiply the value of your offering by its conversion rate to calculate the value of each lead. The final step is to add together your sales income and calculated lead value.

Calculate your email marketing ROI

It's finally time to compute the return on investment from your email marketing initiatives. After you've gathered all of your data, enter it into the ROI formula discussed previously.

Let’s say your overall email marketing costs for the year were $3,550. Your lead costs $80 and your email campaign generates 100 leads each year, for total revenue of $8,000.

You can calculate your ROI as follows:

ROI = ($8,000 - $3,550) / $3,550 x 100% = 125.35%

Why Does This Matter?

When implementing an email marketing strategy, you must be able to assess your email marketing ROI to evaluate whether it is generating income or hurting your business. 

This metric can be used to further increase brand awareness, boost sales, and increase website traffic. If you follow the steps in this post, you will be able to calculate your B2B email marketing ROI precisely and discover where you need to improve.

But are you constantly struggling to see the results you desire? Consider outsourcing your B2B cold email marketing services to ensure a high ROI.

How Saleshive Can Increase Your Email Marketing ROI

Are you ready to have great returns? SalesHive provides cold email marketing services through a team of expert sales strategists and skilled email deliverability engineers.

When you partner with us, you can count on our team to successfully cut through the clutter and book sales meetings with your team. 

With our expert skills and resources, we can build efficient email marketing campaigns to capture the attention of your prospects and arrange more meetings so you can focus on closing deals.

Learn more about our B2B sales outsourcing services today!

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