By Ryan Malone

email marketing roi
In the MarketingSherpa 2013 Email Marketing Benchmark Report 60% of respondents indicated that they feel email marketing is producing an ROI. But that was on a survey level and they “feel” it is producing an ROI, how do they measure it? The new mantra across all marketing functions is “Engagement”. The focus of successful email marketing campaigns is to create a relationship of communication and touches. A better way to evaluate email marketing ROI includes evaluating the following:

  1. Was It Delivered?
    In order to consider an email marketing campaign a success you must first determine if the email was even delivered to customers and prospects. Use tools like Return Receipt in Outlook (if your database is small and you’re doing it yourself). Signals by Hubspot, and email hosting companies like MailChimp and Constant Contact will include delivery confirmation information in their reporting. Review the delivery numbers on a regular basis. This will tell you if your message is getting through company spam filters and directed to the right recipients. According to Marketing Sherpa, “
    Delivery rate increases from 60% to 99% by separating inactive subscribers”.

  2. Bounce, Bounce
    There are two types of “bounces” when it comes to email marketing - hard and soft. After every marketing email sent, you should review the bounce results and edit your list. This should be an ongoing process vs. a one time project. Those that keep their lists clean and updated see a significant change in their open and click rates. Be wary of bounce rates of over 10% or over 1,000 per send. This could cause your email marketing company to disable your account. When there is a high bounce rate, it increases your likelihood of being blacklisted. There are two types of bounces you should know about:

    A “Hard Bounce” is when the email address you have sent your message to just doesn’t exist. Either your contact is no longer there, or the company has changed it’s email address extension (@xyz.com). These messages have been permanently rejected/denied. Or what you want to avoid at ALL costs -  the recipient’s server has blocked the sender’s server.

    A “Soft Bounce” is a temporary non-delivery when a recipient's inbox is full, the server is down, or the message size is larger than the size limit imposed by the recipient or their ESP. Although do keep an eye on your soft bounces, too many will equal a permanent hard bounce. Did you know that if you continually send emails to addresses that have previously “bounced” it reflects poorly on your company? Be sure to monitor your bounce rates by the domain they are sent to. If the rates are significantly higher to a certain domain, your emails may have been marked as spam.

  3. Opens and Clicks = Old School
    Sure you want to make sure that they open your email. And it’d be great if they clicked on a link. But your true measure of the email’s success is going to be if they opened the email, clicked on a link, went to your landing page, and filled out a form to download a white paper, eBook or other promotional offer - this is ENGAGEMENT. Executives want to know how much revenue is being generated from every marketing activity. The best way there is to create offers that are compelling - people want to share their information for it. When you have a plan in place to guide your customer and prospects through your Top of Funnel (TOFU) to Middle of Funnel (MOFU) to Bottom of Funnel (BOFU) THAT is the ROI the C-Suite wants to see.

  4. What is the formula?
    There are a couple of formulas that are used to measure marketing ROI. This first one has been around for quite some time and seasoned CEO’s will want this number:

    ((Revenue - Cost) / Cost) x 100 = ROI expressed as a percentage

    Here’s an example:

    Say you spent $3,000 on creating an ebook. You published it on your site, and got 500 people downloading that. Of those 500 people, 125 of them bought the product you were offering at $150 each -- total revenue of $18,750. Your ROI for this project would be: 

    (($18,750 - $3,000) / $3,000) x 100 = 525%

    Another way to look at the effectiveness of your campaign is the revenue-to-cost ration. According to Inc.com, “Most Fortune 500 marketing VPs look at the revenue-to-cost ratio: incremental revenue driven by a marketing campaign divided by the cost.” So by setting up the email to direct them to a landing page, they filled out a form or requested a quote you can more closely monitor incremental vs. total sales. For our example above the revenue-to-cost would look like: 

    Revenue / Cost = Ratio

    or

    $18,750 / $3,000 = 6.25

    A general rule of thumb is that 5x is a good return 10x is a resounding success. Being able to show executives the direct result of marketing spend helps support current and future endeavours.

Creating engaging content that readers will look forward to and even search out if the email goes astray, should be the goal of every email marketing campaign. Don’t alienate buyers with irrelevant blasts that are not segmented and targeted. Your email should provide the answers to the questions, the perfect handbag to go with that new outfit, the travel package to that destination or a sought after holiday gift for Junior.

Share an example of an email that was wildly successful for your company. Or one that wasn’t and what you learned.

 

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Ryan Malone

About the author

Ryan Malone is the founder and CEO of SmartBug Media and is a veteran of Deloitte & Touche, Seagate and several venture-backed technology companies. When he's not leading SmartBug and helping clients build high-octane marketing organizations, he's loving his wife and daughters and unsuccessfully learning the guitar. Go Terps! Read more articles by Ryan Malone.

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