The purpose of this post is to provide marketers with a simple formula for calculating the return on investment (ROI) of their email marketing campaigns. It is based on a formula created by Olark, a customer engagement platform, which is often used by marketers to analyze the performance of their email campaigns.
Calculating ROI in email marketing is more complicated than usual because you are trying to measure the effect of a marketing campaign spanning multiple actions (i.e., emails sent and opened). It is also more difficult to isolate the impact of a single action in digital media because there are so many other variables that could affect the outcome. However, with the right measurements and workflows in place, it is still possible to calculate a fairly accurate estimate of the ROI of an email marketing campaign.
The Right Measurements
To properly calculate the ROI of an email marketing campaign, you will need to take several measurements. Olark’s formula recommends starting with the number of emails sent and opened by prospective buyers. The reason why this is the starting point for the measurement of ROI is because once a prospect has opened your email, they are more likely to take further action (e.g., click a link or fill out a form).
On the surface, this may not sound like a problem. After all, you have a quantifiable measurement (i.e., number of emails). But things get tricky when you want to calculate the ROI of an email marketing campaign. This is because you will need to adjust for a variety of factors that could skew the results of your measurement. For example,
- The email marketing platform you are using may or may not capture the number of emails sent and opened. Make sure you check with the vendor before you start creating your campaign.
- If you are using a marketing automation platform to send your emails, make sure you look at the engagement metrics of previous marketing automation campaigns before you calculate ROI for your current marketing automation effort.
- An important factor that could affect email open and click-through rates is the time of day people open their emails. Before you make any assumptions about the behavior of your target audience, test different timings and see which one gets you the best results.
- People have different devices and operate them on different operating systems. Make sure you test and see what percentage of your audience is opening your emails on different devices and operating systems.
- The language people use varies from region to region and even from country to country. Make sure you test the language of your audience and see which one gets you the best results.
- The country where you live and work could impact how easily people engage with your content. For example, in some countries, people are more likely to engage with marketing content in general while in other countries, people are more likely to scan content quickly to get to the point.
- The age of your target audience varies from region to region and even from country to country. Make sure you test different age groups and see which one gets you the best results.
- The education level of your audience varies from region to region and even from country to country. Make sure you test with different educational levels and see which one gets you the highest engagement rate.
- The wealth of your audience varies from region to region and even from country to country. Make sure you test with different wealth levels and see which one gets you the best results.
- The gender of your target audience varies from region to region and even from country to country. Make sure you test with different genders and see which one gets you the highest engagement rate.
- The culture of your target audience varies from region to region and even from country to country. Make sure you test with different cultures and see which one gets you the best results.
- The language people use varies from region to region and even from country to country. Make sure you test the language of your audience and see which one gets you the best results.
- The style of your content varies from region to region and even from country to country. Make sure you test with different styles and see which one gets you the best results.
- The time of day people open their emails varies from region to region and even from country to country. Make sure you test different timings and see which one gets you the best results.
- Email marketing platforms vary in how they store emails. Make sure you test which one gets you the best results when using different email marketing platforms.
- Mobile users and web users visit websites with different browsers. Make sure you test with different browsers and see which one gets you the best results.
- Tablets and mobile devices vary in size. Make sure you test which one gets you the best results when using different sized devices.
- Email marketing platforms vary in how they store emails. Make sure you test which one gets you the best results when using different email marketing platforms.
The Perfect Timing
Once you have your measurements, it is time to find the perfect timing for your email marketing campaign. You want to send your emails at the right moment to maximize the effect of the campaign. To do this, you need to use research to inform decision-making and make the most of each opportunity. In order to do this, you will need to test different times and see which one gets you the best results.
There are several things you need to keep in mind when finding the perfect timing for your email marketing campaign. First, you want to determine the right moment to send the email based on the behavior of your target audience. This is so you can send the email at the right time and maximize the engagement rate. For example, if you know from previous research that your target audience tends to scan email content quickly, you should send your emails early in the morning to avoid being drowned out by other emails in their inbox.
Second, you want to find the right frequency for your emails. Based on your target audience’s behavior, you will determine how often you should send the email. However, it is important to note that sending too many emails could cause your target audience to ignore your messages. On the other hand, if you send the email too rarely, you may lose the chance to engage with your audience.
Lastly, you want to ensure that you use a perfect, compelling subject line for your emails. A perfect subject line puts a smile on your prospect’s face and makes them eager to open your email. This is because when people know exactly what they are getting into, they are more likely to have an open mind and be receptive to your message. The key is to find a way to make the subject line interesting yet not too complicated. Once you have an interesting and compelling subject line, try playing around with different variations to see which one gets the best results.
How Many Sent?
Once you have determined the timing and frequency of your email campaign, the last thing you need is an accurate measurement of how many people opened your emails. You want to use a tool like Bitly to easily measure the success of your email campaign. Bitly provides the ability to track the number of times your links have been clicked (i.e., opened) which enables you to easily see the number of times your email has been opened.
Bitly recommends using their free tool to measure the success of your email campaign. All you need to do is copy and paste a link to a specific piece of content (e.g., a web page, video, or event) into the Bitly URL Builder. Then, when you hit ‘Submit’, you will see the numbers immediately appear in a green bar above your content.
When someone clicks on a green bar, it means they have either visited that site or engaged with it in some other way (e.g., opened an email, shared a blog post, etc.). As a marketer, you will then want to compare this number to the number of emails you sent to get an idea of how effective your email marketing was. It is important to keep in mind that these are only the people who clicked on a specific link. This number will not include those who scrolled down a blog post or those who opened an email and then immediately deleted it. In these cases, you will not see a green bar even though the email was opened.
What About Click-Through?
An important measurement to include in your ROI analysis is the number of times people actually clicked on a link within your email. This number will inform you of the effectiveness of your email in driving traffic to a specific location (e.g., a website or social media page).