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How to increase the ROI of email marketing
Inna Sabada
by Inna Sabada
How to increase the ROI of email marketing

Maximizing Returns: A Guide to Better Email Marketing ROI


Email marketing has long been one of the most reliable ways for businesses to generate revenue. 


Regardless of whether you're just starting out or if you've been in business for decades, taking advantage of email marketing is a key part of driving sales and growing your customer base—and thankfully, it's also easier than ever to do. 


However, that doesn't mean it should be done without thought and careful consideration as there’s great potential to maximize ROI if set up correctly. In this blog post we'll dive into some tips on how best to approach email marketing so that it gives the return on investment (ROI) your business deserves!



What is Email Marketing ROI?


ROI (Return on Investment) of email marketing refers to the amount of revenue generated by an email marketing campaign in relation to the amount invested in it. The ROI of email marketing can be calculated by subtracting the total cost of the campaign from the total revenue generated and dividing that number by the total cost of the campaign. For example, if a business spends $1,000 on an email marketing campaign and generates $5,000 in revenue, the ROI would be 4 or 400%.


Email marketing has one of the highest ROIs of any marketing channel, with an average return of $42 for every $1 spent, according to a report by the DMA (Direct Marketing Association). This is due to the low cost of sending emails and the high potential for reaching a large audience. Additionally, email marketing allows businesses to target specific segments of their audience with personalized messages, which can lead to higher conversion rates and increased customer loyalty.


However, the ROI of email marketing can vary depending on the industry, the quality of the email list, the effectiveness of the messaging, and other factors. It's important for businesses to track their email marketing campaigns carefully and continually test and optimize their approach to maximize ROI over time.


For marketing, it is of key importance, by which it is evaluated:


1. The expediency of launching targeted advertising.

2. Required investments for planned projects.

3. The number of funds spent on marketing activities and the maintenance of all departments of the company.


All these investments are of great importance for business development, and the ROI indicator is universal for calculating the profitability of a business.


ROI is often confused with ROMI. Let's see what are the main differences between these indicators.


ROMI - Return on marketing investment, as a percentage, relates to the implementation of the company's activities.


ROMI is a measure of return on marketing investment. If ROI helps determine the return on all investments, then ROMI takes into account only marketing costs: advertising budget, printing, and billboard rental, but does not include the cost of producing goods.



How to Calculate ROI?


ROI is calculated by dividing the net profit of an investment by its cost and expressing the result as a percentage. Here are the steps to calculate ROI:


1. Determine the net profit of the investment. This is the amount of revenue generated from the investment minus the cost of the investment. For example, if an investment generates $10,000 in revenue and costs $5,000, the net profit is $5,000.


2. Divide the net profit by the cost of the investment. In the example above, the cost of the investment is $5,000. Divide the net profit of $5,000 by the cost of $5,000 to get a quotient of 1.


3. Multiply the quotient by 100 to get the ROI percentage. In the example above, multiplying the quotient of 1 by 100 yields an ROI of 100%.


The resulting ROI percentage indicates the amount of profit earned per dollar invested. An ROI of 100% means that the investment has generated a net profit equal to the initial investment. A higher ROI indicates a more profitable investment.


It's important to note that ROI is not the only metric to consider when evaluating an investment. Other factors such as payback period, risk, and opportunity cost should also be taken into account.


The formula to calculate ROI for email marketing is as follows:


ROI = (Revenue generated - Cost of email campaign) / Cost of email campaign x 100%


For example, let's say a business spends $2,000 on an email marketing campaign and generates $10,000 in revenue from that campaign. The ROI for the email campaign would be calculated as:

ROI = ($10,000 - $2,000) / $2,000 x 100% = 400%


This means that for every dollar spent on the email campaign, the business generated a return of $4. 


The higher the ROI, the more successful the email campaign was in terms of generating revenue compared to the investment made in the campaign. 


It's important to track and calculate ROI for email marketing campaigns to determine their effectiveness and make data-driven decisions about future investments in email marketing.



How to Increase Email Marketing ROI


Email marketing can be a very effective tool for increasing ROI (Return on Investment) if done correctly. Here are some tips for increasing the ROI of your email marketing campaigns:


Segment your email list: One of the best ways to increase the ROI of your email marketing campaigns is to segment your email list. This means dividing your subscribers into smaller groups based on their interests, demographics, and behavior. By doing this, you can tailor your email content to better suit each group's needs, which can lead to higher engagement and conversion rates.


Personalize your emails: Personalization is key to increasing the effectiveness of your email campaigns. Address your subscribers by name and use their past interactions with your brand to tailor your content to their preferences. This can help to build trust and loyalty and can ultimately lead to higher ROI.


Focus on your subject lines: Your subject line is the first thing your subscribers will see when they receive your email, so it's important to make it compelling. A great subject line can grab your subscribers' attention and entice them to open your email, leading to higher engagement and ultimately, higher ROI.


Test and optimize your emails: To increase your email marketing ROI, you need to continually test and optimize your emails. Test different subject lines, email designs, calls-to-action, and landing pages to see what works best for your audience. Use this data to continually improve your email campaigns and increase your ROI.


Use automation: Email automation can help you to send targeted, personalized messages to your subscribers at the right time, which can lead to higher engagement and conversion rates. Use automation to send welcome emails, abandoned cart reminders, and other types of targeted messages to increase your ROI.


By following these tips, you can increase the ROI of your email marketing campaigns and see better results from your marketing efforts.



🔹 In conclusion, email marketing is a powerful tool for businesses looking to increase their ROI. By following the tips outlined in this article, including segmenting your email list, personalizing your emails, focusing on your subject lines, testing and optimizing your emails, and using automation, you can increase the effectiveness of your email campaigns and drive higher engagement and conversion rates.


It's important to remember that email marketing is not a one-size-fits-all solution, and what works for one business may not work for another. It's important to continually test and optimize your email campaigns to find the strategies that work best for your audience.


Overall, with the right approach, email marketing can be a highly effective tool for boosting your ROI and driving long-term growth for your business.



Read also - Email Marketing as a Source of B2B Lead Generation in 2023