Have you ever wondered how effective your email marketing is? Today we are going to deep dive into 6 important tips for maximizing your email marketing ROI (return on investment).
First, let’s talk about the reason why you should calculate ROI. Now you may be thinking the reason to calculate ROI is to see if your emails are bringing in sales. But what if I told you calculating ROI for a specific marketing campaign would be better? Using this method you will know which marketing campaign is the bottleneck of your overall ROI.
Before we go further, we need go over how to calculate your email marketing ROI first. I am going to give you an example using the formula below so you can be 100% sure you are calculating correctly.
Example: (calculating email marketing ROI for December)
November Sales = $1000 December Sales = $2000 Money used for December email marketing = $100
Let’s apply the values above into the formula now.
Step 1: November Sales ($1000) - December Sales ($2000) = Extra sales generated for December ($1000)
Step 2: Extra sales generated for December ($1000) - money used for December email marketing ($100) = revenue for December ($900)
Step 3: $900 ÷ money used for December email marketing ($100) X 100 = 900% increase in sales
When we compare sales from November and December, we have a 900% increase in sales in December.
Extra sales generated - money used up for email marketing ÷ money used up for email marketing X 100 = % of ROI for email marketing
Now that we've gone over how to generate email marketing ROI numbers, let’s dive into the 6 tips and how they have a direct impact on your email marketing ROI.
Click rate is the number of customers clicking on the link in the email that you send to them. Many people view this as the most important part of their email marketing ROI. The reason is if the customer clicks on the link you send to them, the email successfully got the customer to take action.
But an email might contain more than one link. For example, a link to a landing page, social media or unsubscribe page.
You may track the customer clicks by using a “tracking URL”.
You may create a tracking URL by using a “URL Builder”. But before creating a tracking URL. I would recommend setting up a “Google Analytics” account first. The reason is you need to link your tracking URL to Google Analytics so that you can view which URL the customer is clicking in your marketing email.
For example, you convert (URL Builder) your landing page URL into a tracking URL and paste it into your marketing email. When the customer clicks on the tracking URL it will still direct the customer to the landing page.
But Google Analytics will show +1 click for the landing page.
Google Analytics is a centralized monitoring tool to monitor multiple email campaigns. You can pinpoint which link the customer is clicking on and for which campaign.
Here is a simplified example of how everything works: Multiple Tracking Links In Email (Generated By URL Builder) -- linked to -- Google Analytics --showing -- Tracking URL #1(Landing Page), 80% clicks | Tracking URL#2 (Social Media), 20% clicks
I want you to stay ahead of your competitors. So I am including a detailed guide here for you to set up your own tracking. If you are able to track which site your customers spend most of their time on, you will be saving tens of thousands of dollars. You won't be setting up a marketing campaign that your prospects are not interested in!
The conversion rate is the number of customers who have taken action on your email.
For example, if it is a sales email, they have purchased your product by clicking on the “BUY” button. Now you might be confused with the difference between Click Rate and Conversion Rate.
Click rate is when the customer reads your sales email and clicks the link in the email. The link then directs the customer to your online store. When the customer enters their credit card information and clicks “BUY” then it’s considered a conversion rate.
The answer is use the tracking URL on the BUY button.
The open rate represents the number of customers click on the subject line to open your email. If the email subject line does not attract the customer, the customer will delete the email and your email marketing campaign will be a failure.
You can track this information using a “Custom Image Tag”.
Let me give you an example. Your sales email contains a URL that points to your company logo as the email header. The company logo URL is then added to Google Analytics as one of the items to monitor.
When the customer opens your email, your company logo will appear on top of the email and Google Analytics will display +1 to the logo item.
Here is the guide to set up a custom image tag.
This is the part where the meeting room will be in total silence: when it comes to the overview of email marketing ROI.
The reason is this is the number of customers who do not wish to receive your emails anymore. A customer has unsubscribed from your mailing list mainly because they are not interested in your content anymore. What can you do about these unsubscribe rates?
The answer is you need to gain your customer’s trust. Here are 3 ways you can build your customer's trust with email.
You can track this rate using the tracking URL on the unsubscribe button.
List growth rate shows how many new customers have subscribed to receive your emails. Do not underestimate this part although it does not instantly contribute to your email marketing ROI.
As you may know, new customers need time to trust your brand before buying from you. The list growth rate is the key metric to look at, especially when you are building your top of funnel marketing.
Ask yourself: How much money are you comfortable spending to get new customers? If the amount of money spent on email marketing is able to get the total of new customers you want, you have achieved your email marketing ROI.
You can track your growth using the tracking URL on the subscribe button.
The bounce rate represents the number of your sent emails that got rejected. Some examples of bounce rate: customer mailbox is full, the email address is terminated or does not exist at all.
You will see an email in your inbox with a subject line like “Message not delivered”.
Remove those rejected email addresses from your email list. The reason is these rejected emails will cause inaccurate statistics. Especially for open rate, click rate, and conversion rate.
Dead subscribers: these are customers who do not open your email for ages, even after following up with them many times.
Email image being blocked: as mentioned above, open rate is calculated by Custom Image Tag. The majority of email providers (for example Hotmail and Gmail) blocks images from being downloaded.
Target click rate: instead of using open rates, you may measure by click rates. The reason is click rates are not blocked by email providers. Or you may compare open rates within a couple of months to have a rough baseline for the open rate.
Interact with customers: get customers to sign on your website, social media or even Amazon when they make a purchase, use their sign-in identity to verify which customers are active or dead. Next, remove dead subscribers from your email list.
Before we call it a day, I want to list down all the important takeaways.
To measure email marketing ROI, compare sales for the current month with past months.
You can get the statistics for all 5 tips in Google Analytics except for Bounce Rate.
Inaccuracy in open rates can be solved by using click rates.
You can identify dead subscribers by interacting with them on email.
Now that you are able to calculate and monitor the performance of your email marketing ROI, how about increasing your email marketing ROI? We have email marketing experts who can write copy that resonates with your top, middle and bottom-funnel customers. Also, we write messages that sound more personal so your message has a higher chance of being read. Why not work with an email marketing copywriter today?
Chow Chin Wah is a copywriter in copywriters.com. He only writes for what he believes in. Because the purpose of his writing is to make the world a better place. He strives every day to provide value to society. Chow has an IT background as a Network Engineer and has an interest in computers from an early age.Hire Chow