Email marketing ROI is defined in other words as Return on investment (ROI) as a consequence of Email marketing. Calculation of the ROI is carried out via a formula which reads as

Gained – Spent / Spent = ROI.

The ROI is expressed in percentage.

You might ask here as to how do we start with email marketing ROI calculation given the fact that we don’t know how many people are we reaching. Moreover, when email campaigns are run, they are for various reasons or goals.

For instance, email campaigns may be run for lead generation, to increase the website traffic, for creating brand awareness, etc. This is where we need to go back a little and look at email marketing, as a subject to be studied, from the beginning.     

Before we get into the nuances of why is Email marketing even a need, here is a brief idea on what is ROI i.e Return on investment, in general. Every business, while investing in any aspect of marketing, expects the investment to the least bring back or return to the business what was invested.

An extra earning on the same becomes a profit, which again is a return on investment ROI. When it comes to email marketing ROI, the reference is to the profits ushered in by the marketing campaign

So Why Are Email Marketing Campaigns Run?

This needs to be the first question to be asked when attempting to calculate the ROI (return on investment):

  • Is the email campaign run to enhance brand awareness?
  • Is it for generating and nurturing leads?
  • Is the email campaign run to increase sales and revenues?
  • Or was it solely to increase the website traffic?  Or
  • Was it purely for engagement?


Understanding the goal projection of email marketing campaigns is essential to get the metrics and parameters for calculating the ROI correctly.

It Is Easier Said Than Done:

The formula for calculating the email marketing ROI seems easy enough, does’nt it? However, is it? Let us recall the formula once more.

Gained – Spent / Spent = ROI.

“Gained” here is lead gained / or target audience reached.

“Spent” here is about how much was invested by the business into the email marketing campaign.  

It must be noted here that the gained figures of the formula will imply to various parameters.

Email marketing ROI calculation is carried out for the target audience, based on the following reasons, in addition to some more: –

  • Engagement: to calculate engagement and arrive at a number for gained you will have to consider:
  • Open rates;
  • Conversions;
  • Click rates; and
  • Unsubscribes     
  • Emails impacting revenue: This is an impact that can be witnessed over some time in terms of the revenue generated at many touchpoints.
  • Emails can increase traffic: Emails have been one of the strongest contenders in the race for the best tactic to reach the target audience. Having said that, emails are also efficient in driving website traffic to an extent.


The impact of emails in driving website traffic can be measured by email open rates and the number of people who landed on the website after clicking on the link included in the email.  

Emails for increasing brand awareness: Here is a quick look at the list of metrics that can help us measure the effectiveness of emails in increasing brand awareness.

  • The number of direct traffic on the website. This is basically when a prospect directly types in the website’s URL into the address bar. This is a psychological inference that emails have been effective in raising brand awareness due to which people can recall the URL out of interest.
  • Tracing back the backlinks: SO you have been doing a lot of off-page SEO. It is therefore obvious that your website will generate a lot of diverted traffic. So how will the backlinks give a heads up on the email marketing ROI generation?


This is done by tracing back to the email list and finding out about the customers on the website who has received an email from us.

Last but not least, let’s look at an email marketing ROI calculation.

Your spend on an email marketing campaign is: 1000 INR/- per month

The annual spend on the same is 12,000/-

You have a 5 member team working on this email campaign, 5 days a week for 1 hour. Their hourly cost comes up to 60 INR/-.

So the annual man power cost is 18,000 INR/-

Email marketing spend equals to 12,000 + 18,000 = 30,000.

The cost of each lead is 50 INR/. 

Your campaigns bring in 400 leads a year which equals 20,000 leads per year.

Leads gained 20,000.

So the ROI calculation is:

Gained – Spent / Spent = ROI.

20,000 – 30,000 / 30,000: 34%

Conclusion:

Calculating the email marketing ROI is a data-intensive, parameter calculative and measurable way out to assess the success of an email campaign. The needs a comprehensive understanding of many factors like the goal set for the email campaign, human resource time utilized, click rates and open rates to name a few.  

Vikas Bhatt

Author Vikas Bhatt

Vikas is the co-founder of OnlyB2B ITES Pvt Ltd and a Demand Generation cum Data Cleansing Expert. He has 10+ years of experience in B2B Lead Generation, Data Mining, and Content Syndication. Say hi on vikas.bhatt@only-b2b.com

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