How to Calculate ROI on email marketing?
Published in january, 18 of 2016
ROI is the most common profitability ratio. It is often used by professionals as a way to evaluate the company's performance.
What is ROI (return on investment)?
But let's start by defining the ROI: Return on Investment is a performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of various investments. Basically, as a marketer you must be able to measure what you gained from the investment on your email marketing campaigns and what you spent on it.
So, how to calculate ROI?
The
mathematical formula is:
Gained-Spent/Spent = Return on Investment expressed as a percentage
As marketers we should be interested in open and clicks rates. But at the end of the day, what really matters is the profit of our e-mail marketing campaigns! Without money coming in, all of the other metrics are pointless! According to the recently carried out research by DMA, over a third of businesses are unable to calculate the revenue from email marketing campaigns. The research clearly presents that many online businesses do not know much about ROI and confuse many terms, like for example: revenue and profit. Do not be one of them and prove that you can do better.
Measuring the ROI of email marketing is not complicated at all and it can be calculated as any other form of marketing. You just need to compare your investment in email marketing campaigns to your return.
Upon sending e-mail marketing campaigns, the ROI should be calculated in all the cases, so you can compare the results and have an idea which campaigns worked better, and which ones need improving. You should also remember, that you can use ROI in several different ways to measure the profitability of your business. And to make the most of your email marketing campaigns, you need to measure your ROI and compare your email marketing campaigns regularly.
By analyzing details of your campaign you will be able to understand the way your customers behave and think. In addition, by calculating the ROI of your own business, you can identify products/services that are more popular than others and focus your email marketing promotion on them.
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