A Complete Guide - How to Calculate ROI on Email Marketing?

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As other digital marketing strategies have evolved, a question that keeps coming up is: “is email marketing still important?” 

Nowadays, there are many digital marketing tactics of which you can enhance the growth of your business. And that is the reason most of you ignore or you can say believe that “Email marketing is dead”. But it is not true because in future email marketing is very effective and beneficial for small businesses. 

Now, you think “how it is effective for small business”?

As you know, Email marketing is considered to be the most effective marketing channel with its return on investment. Along with this, 

  • It is an effective way to reach and engage with the target audience.
  • Helpful in developing a business plan implementation. 
  • It provides a possibility to reach customers within real-time. 
  • Email marketing helps you to build credibility. 
  • It provides ease of converting more conversions with trust. 
  • And the most important is that it is very cost-effective. 

A Complete Guide – How to Calculate ROI on Email Marketing?

If you talk about email marketing return of investment, most of you think about how to calculate ROI. ROI (Return of Investment) in email marketing is a performance measure that is used to evaluate the effectiveness of an investment. With the ROI, you can find which campaigns are earning a profit and which ones aren’t.

To calculate ROI on Email marketing, there is a simple formula called 

Returns – Costs = Return on Investment 

Or 

(Gained – Spent) / Spent = ROI

First, you subtract the spent money from the gained money, and then you divide that number by the total money you spent. This will give you the ROI for your email marketing. 

1: Consider Spend Costs:

The first and foremost thing that you should consider for calculating ROI on email marketing is the cost. Yes, you have to calculate how much you spend on your email marketing. It is not as simple as it looks. To calculate the cost, ESP (Email Service Provider) is the most obvious expense but it is easy and straightforward to calculate. This indicates that you have to calculate how much time each member spends on email marketing then convert them into an hourly rate. 

A Complete Guide – How to Calculate ROI on Email Marketing?

2: Open Rate: 

Another step is to calculate the open rate by dividing the number of opened messages by the number of emails you sent. (But subtract the bounces). In short, if you send 6000 emails, 100 bounced and 2000 were opened, your open rate would be 2000/5900 or just over 40.8%. But if you have a low open rate then you should consider what could be causing it. There is a common reason for it like subject lines are boring or imperfessional, don’t like content, etc. 

A Complete Guide – How to Calculate ROI on Email Marketing?

So you look at the content and continue to create attractive content to attract your audience. But if you are unable to create a focusable and attractive content then you probably miss the chance of increasing effectiveness and the reception of your audience.

3: CTR (click-through rate):

CTR is considered as the ratio of users who click on a specific link to the number of total users who view a page, or email. To calculate this you have to divide the number of click-throughs by the number of emails delivered to recipients’ inboxes. If you experience that your CTR is low, it means the offer you have in the email is not relevant to the person you are sending emails. To get most of the click rate, you should craft content that directly speaks your offers to your target audience. You can also take help seo content writing

A Complete Guide – How to Calculate ROI on Email Marketing?

4: Focus On The Bonus Rate:

If you want to get more return of investment then you have to ensure you keep your bounce rate low. If your 5000 messages generated 100 bounces, the bounce rate would be 100/5000 or 2%. Along with this, you have a list of fake or no active mails then this is not going to. 

A Complete Guide – How to Calculate ROI on Email Marketing?

5: Calculate The Percentage Spam:

No matter whether your marketing is good or not, your messages will be marked as spam at a point. When you ready a mail to get all the images and Links, you should look at the percentage of spam. If you have a high spam percentage, it will decrease the score of deliverability. 

A Complete Guide – How to Calculate ROI on Email Marketing?

High performance of spam emails will probably blacklist from some email providers. Sometimes you may add many links to your email with little text; this will also affect your spam score. So try to create different styles of emails to find the methods that give you the lowest spam percentage. 

 


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