Measuring the ROI of Email Marketing
Email marketing is often praised as one of the highest ROI channels—but how do you actually measure that return?
If you can’t prove performance, you can’t improve performance.
Understanding and tracking the Return on Investment (ROI) of your email campaigns is crucial for justifying spend, optimizing strategy, and aligning your efforts with business goals.
This article walks you through what email marketing ROI is, how to calculate it, which metrics to track, and how to interpret your results.
1. What Is Email Marketing ROI?
ROI (Return on Investment) answers the question:
"How much revenue did I generate for every dollar I spent on email marketing?"
It tells you whether your email efforts are profitable—and by how much.
2. The Basic Formula for ROI
The standard ROI formula:
ROI = [(Revenue from Email – Cost of Email) / Cost of Email] x 100
For example:
Revenue from email: $10,000
Cost of tools, design, and time: $1,000
ROI = [($10,000 – $1,000) / $1,000] x 100 = 900% ROI
This means you earned $9 for every $1 spent.
3. Identify Revenue Sources from Email
Track revenue from:
Direct sales through links in emails
Coupon redemptions
Clicks leading to conversions
Event signups
Service bookings
Use UTM parameters, conversion pixels, or platform integrations (like Shopify + Klaviyo or Stripe + Mailchimp) to attribute revenue correctly.
4. What Costs Should You Include?
Include all costs associated with email marketing:
Email platform or ESP fees
Design and copywriting resources
Freelancer or team salaries (proportional time)
List-building expenses
Automation tool costs
Being thorough gives you a clearer picture of profitability.
5. Track the Right Metrics (Beyond Open Rate)
Key performance indicators (KPIs) to watch:
Open Rate: Are subject lines compelling?
Click-Through Rate (CTR): Are your emails engaging?
Conversion Rate: Are subscribers taking action?
Revenue per Email (RPE): Average earnings per email sent
List Growth Rate: Are you attracting new subscribers?
Unsubscribe/Spam Rate: Are you maintaining trust?
These metrics help you understand the full customer journey—from open to revenue.
6. Use Revenue Attribution Tools
To measure ROI accurately, use platforms that support attribution:
Google Analytics (with UTM tags)
Email marketing tools (like ActiveCampaign, Klaviyo, or HubSpot)
Ecommerce integrations (like WooCommerce, BigCommerce, or Shopify reports)
CRM systems (like Salesforce or Zoho)
Choose tools that track the full funnel from click to sale.
7. Segment ROI by Campaign Type
Different email types produce different returns. Track ROI separately for:
Welcome sequences
Promotional emails
Cart abandonment emails
Re-engagement campaigns
Newsletter content
This shows you what’s truly driving results and where to allocate more effort.
8. Calculate Lifetime Value (LTV) via Email
Don’t just measure one-time conversions—track Customer Lifetime Value from email-acquired leads.
Ask:
How many purchases does a subscriber make over time?
What’s the average order value?
How long do they stay engaged?
Higher LTV = higher ROI, especially from nurture and retention emails.
9. Monitor List Health and Engagement
A big list isn’t valuable if no one’s engaging.
Use these health indicators:
Engagement rate over time
Number of active vs. dormant users
Churn rate (unsubscribe + bounce + spam reports)
Healthy lists produce stronger ROI per campaign.
10. Don’t Forget Indirect ROI
Email ROI isn’t always direct sales.
Also consider:
Increased brand trust
Better customer support efficiency
Lead nurturing toward offline sales
Improved customer retention
Email touches influence decisions—even if the purchase happens elsewhere.
11. A/B Test to Maximize ROI
Continual improvement = better returns.
Test:
Subject lines
CTA placement
Email layout
Personalization vs. generic
Send time and frequency
Optimize what works and cut what doesn’t.
12. Benchmark Against Industry Standards
How do your metrics compare?
As a general guide (varies by industry):
Average ROI: $36–$45 for every $1 spent
Open rate: 18–25%
CTR: 2–5%
Conversion rate: 1–3%
Use benchmarks to set realistic goals and identify gaps.
Final Thoughts: Make Every Email Count
Measuring ROI gives you clarity, confidence, and control over your email strategy.
When you know what's working (and what isn't), you can:
Spend smarter
Scale faster
Prove impact
Drive consistent revenue growth
Email marketing isn’t just about sending messages—it’s about driving measurable results. Make your campaigns count.
