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How to Measure and Improve Your Email Marketing ROI

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There's no doubt that email marketing is among the most effective channels to communicate and create connections with your subscribers. But, how profitable is it actually for your business?

Are you getting the returns you expected, or are you getting a good number of clicks and considering that achievement? Don't get us wrong; clicks are micro-steps that can lead to high results, but you need to calculate your email marketing ROI to get a holistic view of your email performance.

But, calculating email ROI is not as easy as it sounds. It varies depending upon your goals, email campaigns, and budget.

To help you, we'll share industry benchmarks you can use as reference and 4 super effective ways to improve your email ROI.

Table of contents

What is the ROI of email marketing?

Before we move further, let's discuss the most pressing question.

Different research conducted by companies gives average benchmarks for ROI email marketing. Some of them are:

  • Litmus's research findings show that European companies plus the UK enjoy an average email ROI of 41:1, edging out America's 36:1.
  • A survey conducted by DMA on UK marketers reveals that ROI for email marketing has increased year on year from 44:1 to 48:1 in 2021.

Line graph showing year-on-year email marketing ROI growth

The EU businesses have a higher ROI than America, but geography is not the only location that influences the ROI of email marketing. We will discuss other factors in detail but first, let's discuss how to calculate email ROI.

How to calculate the ROI of email campaigns?

Generally, email marketing ROI is calculated by this formula:

(Total revenue from email - Total costs incurred ) / Total email costs = ROI

So, if you spent 1000$ and generated 1100$ revenue, your email marketing ROI will be (1100-1000)/1000*100 = 10%. This means on every dollar you are spending, you get a 10$ return on that.

Simple, right? Not exactly.

Marketing via email is a versatile strategy used to achieve several goals - increase brand awareness, drive website traffic, lead nurturing, and increase sales and revenue.

There is so much more at work, and it isn't easy to assess the email performance tangibly. There are many factors you need to know to calculate email ROI accurately, and some of these are

  • Revenue from email marketing.
  • Cost of email marketing tools.
  • Cost of in-house email team.
  • Cost of outsourced support.

As per Litmus's survey, 50% of marketers measure email ROI 'poorly,' 'very poorly,' or 'not at all.' Only 25% of companies said they adequately measure ROI from email efforts.

Bar graph showing how well companies measure their email ROI efforts

Although measuring ROI helps marketers validate their efforts, it's still a challenge for many. But, in simple terms, you can measure the return on your email marketing by analyzing how much you spent and what you got in return.

What are the factors that influence email ROI?

Some of the major factors affecting your email ROI are discussed below. All the data points are collected from Litmus's email ROI report.

• Company size

Due to the pandemic, the ROI companies with 100-499 saw a drastic decrease in their email ROI from 40:1 in 2019 to 29:1 in 2020.

• Industry

Average email ROI by industry

Average email marketing ROI by industry

The e-commerce industry tends to have higher ROI than the software industries due to its versatility of products and ability to send creative campaigns to leverage the seasonal trends; holiday offers lead to higher purchases. Besides, these industries have access to extensive customer data, which they can use to send highly relevant and targeted campaigns.

• Email team size

Another factor influencing your email ROI is the size of your email marketing team. A smaller team and lack of resources undermine the effectiveness of email campaigns at scale.

• Email frequency

The number of emails you send in a particular time frame affects your email metrics like deliverability, engagement rate, and bounces. In turn, these metrics impact your email ROI.

Litmus's research suggests that 9-16 emails per month are the optimal number to get a higher ROI. Too less or too many emails can negatively impact your email ROI.

Bar graph showing email marketing ROI based on email frequency

• A/B testing

Testing is always a good option to get data-backed insights and a higher investment return. Despite this, many companies never A/B test their email, which is why they see an ROI of 23:1, 50% less than those who often A/B test their email.

How to increase your email marketing ROI

Here we have listed 4 actionable ways to help you exponentially increase your email marketing ROI:

1. Use automation to send personalized emails

Automation is becoming more and more crucial to launching relevant email campaigns to capture the right audience when they're most active. You can integrate your web and email analytics with email automation software and set up triggered emails to be sent based on user's behavior, preferences, and purchasing history.

As Google announced disabling third-party cookies by the end of 2023, emails can become an essential source of collecting first-party data through behavioral marketing. Using analytics, you can see when and where users clicked most, which product they checked out, and use this data to send hyper-personalized targeted messages. Such targeted emails will be more relevant and valuable. Thus, chances of conversions are higher with such emails.

Statistics also support that automated personalized emails can help you generate higher ROI:

  • 91% of consumers are more likely to shop with brands that recognize, remember, and provide relevant offers and recommendations. - Accenture, Pulse Check Report 2018
  • 72% of consumers said they only engage with personalized messaging. - SmarterHQ

The increased use of update and triggered messages also highlights the increased use of automation to provide timely, relevant content to customers without the need for marketers to generate a new campaign or message.

2. Clean your email list regularly

You are wasting your money, time, and efforts by sending emails to win over the unengaged users. Not to say, impacting your deliverability rate too.

As you know, quality wins over quantity, so the number of active and engaged users will drive your email ROI, not the number of emails you are sending to your entire email list.

So, ensure that you clean your email list by removing inactive users or those who have unsubscribed. To avoid sending emails to such users, you can add them to a suppression list with which your ESPs will help you.

3. Thoroughly test your emails

You can risk your hard work, time, and efforts due to typos or missing alt text. This can impact your email ROI. Therefore, you must thoroughly test your email to avoid deliverability issues or a bad user experience. Here are some of the tests you should run:

  • Spam tests

To even think of getting your emails opened, they need to get delivered to the user's inbox. But what if emails get trapped in the spam folders?

To avoid such unjust scenarios, you should run a spam test to check any spam-triggered issues such as

  • the use of spam trigger words such as jACKPOT, 100% FREE, CLAIM NOW!, etc.
  • Low IP and domain reputation score.
  • Blacklisted IP address.

There are many spam checker tools available you can use to ensure that emails are spam-free. Some of the most widely used tools are Google Postmaster, Mail genius, and Mail tester.

  • Preview emails

Almost every email service provider (ESP) lets you preview your email before hitting the send button. You should not ignore this as even if you think you wrote a foolproof, you never know when some error will catch your eyes. Thus, check for typos, design, formatting, etc., and go through your emails entirely.

Besides, to avoid rendering issues by the user's email provider, it's best to add a fallback version. So, for example, if an email client doesn't support a carousel in an email, you can add static images as a fallback. Fallbacks ensure users can access and engage with your email without rendering issues.

  • A/B test

Email marketing is not a guess-and-win game. Your subscribers have entrusted you with getting relevant emails that resonate with them and give them value in return for their time. Thus, even if you are in doubt about CTA choices, layout choices, or even color combination choices, you should run an a/b test to reach a data-driven decision.

Simply create two slightly different variations of an email - maybe change the CTA copy and send them to two different segments simultaneously. Run the test for adequate time to see which email performed well and use that email for future email campaigns.

4. Make emails responsive

Your emails must be accessible and readable on mobile devices because 71.6% of consumers will delete emails if they don't look good on mobile. Responsive email design also helps you get higher engagement.

Weird Fish, a clothing company, saw a 10% increase in the CTR to its website by adopting responsive email templates.

Responsive email design - on desktop and on the mobile device

Another interesting case study comes from Deckers Brands, a footwear manufacturer that owns several brands. When they realized that 35% and 65% of its subscribers were opening their email on mobile devices, they ran an A/B test with its Tsubo brand.

Responsive email design - on desktop and on the mobile device

Source: Google

The results were impressive - a 10% increase in CTR and a 9% increase in mobile opens with responsive emails. As a result, they now use responsive email templates for all their brands.

These case studies clarify the importance of designing responsive email to get a higher ROI on your email campaigns.

To know the ins and outs of making emails responsive, you can read our guide on creating responsive emails to enhance customer experience.

How does Mailmodo boost your email marketing ROI?

Mailmodo can help you generate higher ROI in the following ways:

• Preview your emails

After creating your email, you can preview it to check for errors and rendering issues. The preview features also allow you to check your email's AMP and HTML versions on both desktop and mobile. This feature helps check the responsiveness of your email templates.

Besides, Mailmodo automatically sends a fallback version (HTML email) if the mail providers don't support AMP emails. As you can see, the reader will see a redirect link instead of a form if their mail provider doesn't support AMP emails.

Mailmodo's email preview dashboard - Showing AMP and HTML preview on both desktop and mobile.

• All-in-one email analytics

The analytics dashboard gives you an extensive view of your email performance. Such an overview helps you gauge which campaign is performing and might be costing you money without driving any substantial ROI.

Mailmodo's email campaign analytics dashboard

• Send interactive AMP emails

Mailmodo's USP is AMP email, an interactive email framework launched by Google in 2019.

AMP allows you to create a website-like experience within the email, thus, reducing the painful redirects users need to complete an action. Such functionality results in higher conversions and thus boosts your email ROI.

Razorpay, a full-stack finance provider, increased its survey response by 257% using the AMP NPS survey and an 87% increase in lead conversion rate. The AMP survey facilitated filling out the feedback within their email, thus reducing the redirects.

Filling out interactive AMP form in email

Related guide: A Comprehensive Guide to Interactive Emails in 2022

Wrap up

Email marketing ROI can be tricky and difficult to measure, but it is the most insightful metric. As email is the higher revenue-generating channel, you might lose on many improvements if you are not enhancing email ROI.

With the right data, you can segment and personalize emails and automate the entire process to reap the benefits of email marketing and drive higher ROI for your business. Besides, AMP emails bring interactivity within the email, breaking the traditional myths about email being boring or right. So, why not leverage it to improve your return on investment!

What you should do next

Hey there, thanks for reading till the end. Here are 3 ways we can help you grow your business:

  1. Talk to an email expert. Need someone to take your email marketing to the next level? Mailmodo’s experts are here for you. Schedule a 30-minute email consultation. Don’t worry, it’s on the house. Book a meet here.

  2. Send emails that bring higher conversions. Mailmodo is an ESP that helps you to create and send app-like interactive emails with forms, carts, calendars, games, and other widgets for higher conversions. Sign up now and send 10k free emails/month. Sign up here.

  3. Get smarter with our email resources. Explore all our knowledge base here and learn about email marketing, marketing strategies, best practices, growth hacks, case studies, templates, and more. Access guides here.

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