Calculating Email Marketing ROI

If you are planning an email marketing campaign, you may be interested in estimating your potential results and ROI. This will allow you to identify if the proposed activity is likely to meet your targets and objectives whilst also allowing you to calculate the impact on your website traffic, product sales or broader campaign.

Firstly, email marketing is a fairly broad term so let me be more specific with my terminology. I call emails which are sent to your own database “House Emails” and emails that are sent to a third party or rented database an “eDM campaign” (Email Direct Marketing campaign). Both of these allow some response estimation based on industry standards.

When looking at email marketing, there are freely available reports online which will give you some indication about industry standards. I recommend looking for a report in your geographical area and industry and make sure you note what type of organisation has published the report. For the purpose of this article Im referring to Vision 6’s “Australian Email Marketing Metrics Report“. This has been written by Vision 6 who is a provider of email broadcasting and management tools. Therefore it is reasonable to assume that this report will largely consist of data and reporting on House Email broadcasts….

This report is a good one in that it breaks down results by industries as well as campaign send volumes. So for the purpose of this exercise, let’s say I am in the Banking and Financial Services industry. Based on this, here are some industry standards that I can access:

  • Average email open rate: 35.08%
  • Average click through rate (calculated as total number of unique links clicked as a % of total emails sent): 4.07%
  • Bounce Rate: 14.61%

Based on this information, I could estimate that if I was to send an email to 10,000 people in my own database, I could expect approximately 3,500 people to open the email and 400 people to click on a link.

Of course, please remember that there are a number of factors that will influence your emails and response rates such as:

  • type of content in email (newsletter vs promotion)
  • number of links in the email
  • calls to action in the email

At this point you can get a view for your campaign reach and potential traffic and if you wanted to take it a step further you could perhaps consider your website statistics to see % of visitors to your website that sign up/ purchase a product/ conduct other desired activity. Depending on the level of tracking on your website you may also be able to distinguish these numbers by where people came from (eg. Email campaign, banner ad, search etc).

If you are doing an eDM campaign, you can except results which are generally similar to what is shown here however they will also be influenced by database reputation and whether or not it is an incentivised list. These are definitely questions that the list owner will be able to answer so don’t hesitate to ask them for standard or expected response rates on campaigns too.

Hopefully through this example you can see the value of estimating your email marketing ROI. If there is an alternative industry source that you use or method of calculation, please share them with us too.

One Response to Calculating Email Marketing ROI

  1. Thanks for this Louisa, that was an interesting read.

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