Email ROI
Calculator
Find out if your email campaign is actually worth it — or how to make it worth it. Fill in your numbers and get the full picture instantly.
You’ve sent out a campaign. The numbers are in. So what do they really mean, though? While a 22% open rate is good, is it generating profit for you? This calculator is for that purpose.
Insert your figures and discover exactly how your email marketing performed- profitable, cost per subscriber, revenue per email, break-even point, and a straightforward conclusion- was it successful or not?
What Is Email Marketing ROI and Why Does It Matter?
Return on investment (ROI). It is used in email marketing to inform you about the return you received on your investment. Let’s say you spent $500 on a campaign and it earned you $3,000 in revenue; you would have $2,500 profit and a 500% ROI.
That number is significant because it’s the best indicator of whether your email marketing is successful or not. While the open rates and click counts can be useful for diagnosing issues, ROI is the only metric that gives you the answer to whether you should continue running the campaign, ramp it up, or try something different.
Email has one of the highest ROI of all marketing channels. However, industry research estimates that for every $1 spent, the average return is in the $36-$42 range. It’s not promised- there are lots of campaigns that fall flat- but it’s because businesses that are serious about email tend to do well with it.
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The Email ROI Calculator Formula
The basic formula is simple.
ROI = ((Revenue – Cost) / Cost) x 100
So if your campaign cost $800 and brought in $4,000:
Profit = $4,000 – $800 = $3,200
ROI = ($3,200 / $800) x 100 = 400%
All that’s done automatically with this calculator. It also comes with additional value added features such as cost per subscriber, revenue per email deployed, number of sales to break even and break down your entire funnel from sends to conversions.
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What Numbers Do You Need to Calculate Email ROI?
It’s not necessary to use them all to obtain a helpful outcome. The more information that is entered the more accurate the results will be. The following explanations are for each field-
This specifies the number of subscribers that are in the list you’re distributing to. Not all your list- just the portion that will be used for this particular campaign.
Campaign cost- All the cost of running the campaign. This means your email platform cost, any design and/or copywriting fees, and your time if you’re charging for it. Be honest here. Many people underestimate the expenses and then wonder why there is a disconnect between the numbers and the actual expense.
Total revenue- Revenue that can be specifically tied to the campaign. Use this number if you’re tracking this via UTM links or your email platform’s revenue tracking. If not, it’s a good guess, based on orders received during or just after the campaign.
Open rate- The percentage of people who opened your e-mail. This is a report from your email reporting.
Click-through rate (CTR)- This is the percentage of recipients that have clicked one of the links in your email.
Conversion rate- This is the percentage of clickers that have converted, typically this is the percentage of people who purchased, but it may be people who signed up or downloaded, depending on your campaign.
Average order value- The amount that each individual average customer pays when ordering.
If you have revenue and cost, and not the individual rates, then only enter those two. You will still be able to obtain your ROI, profit, and the break-even number. The funnel fields are useful if you need to determine where exactly the numbers are leaking.
What's a Good Email Marketing ROI?
Again, there is no definitive answer, but these are some general guidelines.
Under 100% ROI is good- but less than the average for email. If a campaign costs $1,000 and returns $1,800, that’s an 80% ROI. While it’s possible to make money off of email there, it should work better in general.
100% to 500% ROI is a decent range. Your campaign is profitable and it is indeed working. You may want to try out subject lines, CTAs, or offers for potential improvement.
A score of 500% or greater is considered strong. You’re making a lot of money for your money. You should now be focused on scaling – adding more people to your list, sending more emails or repeating a successful strategy to a similar audience.
Negative ROI indicates that the campaign had a higher expense than ROI. It isn’t necessarily a bad thing- some campaigns are for awareness, list growth or re-engagement, not necessarily for immediate revenue. If this doesn’t lead to a positive return on investment, then there is something wrong with the funnel.
How to Improve Your Email Marketing ROI?
When your ROI is less than you want, there actually are only a handful of places to look. Email marketing is a funnel. The places that users can get lost is at every step- open, click, convert. Now it’s up to you to determine which step is biggest and fix that step first.
Open rate is low (under 20%)
Your title is likely the issue. It is the only thing people see before they make a decision on whether to open or not. Some things that always lead to higher open rates: Send from a number, build some real interest rather than clickbait, personalize messages with the recipient’s name and/or location, and try different send times. Tuesdays and Thursdays mornings may work best some days, but try out your own list.
Try to see your deliverability as well. Even if you have amazing subject lines, your emails won’t have a good open rate if they end up in the spam/promotions folders.
Low click through rate (less than 2%)
Unopened, but not clicked. This typically means the email message body did not meet the expectations of the subject line, or there was a lack of clarity in the CTA. Three weak CTA buttons are not as effective as one strong CTA button. Be specific: “Get my 30% discount” is more effective than “Click here. Don’t forget to test your email on mobile as well- the bulk of email opens take place on mobile.
Low conversion rate (less than 1%)
There were a lot of clicks, but not purchases. This is typically not an email problem; it is a landing page problem. Make sure the page loads fast, the title on the page is the same as the one in the email, and that there’s an obvious way to follow through and complete the transaction. Reviews, guarantees, and well-known logos all play a big role here, too.
Average order value (AOV) is low.
If your ROI is positive and smaller than you’d like, focus on increasing your Average Order Value. You can boost your average conversions without increasing the number of customers by using the tools of bundles, minimum order limits for free shipping and upsells at checkout.
Understanding Your Results
Now let’s see how to interpret each of the outputs from the calculator.
Cost per subscriber- This will tell you how much it costs to send to each person on your list. The lower number the better. If you are getting a $1.20 in revenue per subscriber and spending $0.05 per subscriber, then your economics are fine. At $0.50 per subscriber, but only $0.30 per revenue, something is very wrong.
Average revenue per email sent- The average revenue per email sent represents the amount of revenue generated on average for each individual email sent. This is because even a minor change, whether it’s a better subject line or an offer can be multiplied throughout your list.
Sales to break even- This will tell you how many sales you need at your average order value to offset the cost of your campaign. 10 sales to break even and 5,000 people on your list are a realistic goal. You either have to raise your price or lower your costs if you’re going to make 500 sales.
Total profit- Revenue minus cost. The real number is the one that counts. It may look good on a report, but ROI percentage is what you keep.
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Email ROI vs Other Marketing Channels
It is important to benchmark email to other options you may consider using your marketing dollar for.
Paid search and social ads can provide quick results, but you’re paying to rent the targeted audience. Traffic stops as soon as you stop spending. Email is unique in that the list is yours. After a person has been on it, you can contact them over and over at virtually a minimal marginal cost.
SEO is slow, but it is quality traffic that grows over time. Campaigns can bring in revenue the very day they are sent via email.
Reach is important in social media, but organic reach on most social media platforms has sharply decreased. Your efforts are going into reaching just a small portion of your followers.
This does not mean that email is always the best option. However, with a list of people who have subscribed to your email list and expressed some interest in what you’re selling, the numbers are more favourable for email. This is a reason why email has a generally higher ROI than other channels.