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Measuring Email Marketing ROI #EmailMktg #ROI

by Employee on ‎06-20-2014 02:24 PM (3,629 Views)

A recent econsultancy.com study showed that 75% of companies have rated email as ‘excellent’ or ‘good’ for ROI, yet less than half of them know how to calculate this metric. As perhaps the most consistent marketing channel in an organizations mix, the price of using an email marketing service is relatively low. For this article, we will calculate the ROI of a single monthly email blast to 2,000 contacts.

 

Investments:

 

  • $35.00 - Average monthly service fee from an email marketing service provider
  • $100.00 – If using a contract designer’s time to create artwork for the email template and landing page (assuming one hour of work)
  • $25.00 - Marketing manager’s time to craft message, target contacts and send email (assuming one hour of work at a salary of $50,000/year)

Not taking into consideration other intangibles, on a very simple level we could say the investment to send one email blast in a month is $160.

 

Now we will assume we achieve 100% deliverability and a 30% open rate. This gives us 600 recipients who read our message. Let’s assume our message is compelling enough to garner a 20% click rate sending 120 contacts to a landing page that urges the consumer to purchase our products. The average price of our products is $200 and our average conversion rate for that landing page is 5%. Of the 120 contacts that go to our landing page, six of them will purchase. At $200 per transaction we achieve $1,200 in revenue. We spent $160 to create and send our message and received $1,200 in revenue – that’s a return on investment of $7.50 per every dollar spent – pretty darn good.

 

Why is this important? This simple example demonstrates a successful email marketing campaign and gives you a model to plug in your variable numbers to know what type of open rate, click rate and conversion rate you need to achieve your forecasted sales goals.

 

So, what’s your ROI? 

 

Comments
by
on ‎06-20-2014 02:40 PM

dogdon wrote:

 

Not taking into consideration other intangibles, on a very simple level we could say the investment to send one email blast in a month is $160.

 

Now we will assume we achieve 100% deliverability and a 30% open rate.


Its hard to predict an ROI.

  1. The model assumes that every month the same success rate to the same audience applies. Probably not, depending on what is being offered and what the deal is, there is a a natural resistance to pay as much attention or even open successive months emails by recipients i..e the message is only new to the recipient once.
  2. A  30% open rate is quite optimistic, I would suggest 20% is a high open rate. Once again varies with audience and product.  
  3. Depends how you define 'delivered'. The first instance of sending the message to the target audience could be 100% delivered but further along the campaign, subsequent months would be impacted by unsubscribes over the length of the campaign.    
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