Adam T. Sutton

Email Marketing: Show me the ROI

February 3rd, 2011

After squinting at my screen for weeks trying to read the MarketingSherpa 2011 Email Marketing Benchmark Report PDF, I finally have a hard copy sitting on my desk — and it’s bursting with insight.

Having read the executive summary weeks earlier, I flipped through the chapters today and was struck by this stat:

Does your organization have a method for quantifying ROI from email marketing?

  • No: 59%
  • Yes: 41%

Email marketing can be amazingly efficient. B2C marketers report an average 256% ROI from the channel — pulling in $2.56 for every $1 invested — as mentioned later in the report.

What shocks me is that 59% of email marketers have not gauged their program’s efficiency. This means their company executives are likely unaware of the amazing job they’re doing. Even if executives have seen the clickthrough and conversion rates, they’re likely thinking about that line from Jerry Maguire.

Show me the moneyShow me the money

At last week’s Email Marketing Summit, Jeanne Jennings, Independent Consultant and MarketingSherpa Trainer, shot holes in many of the excuses she’s heard for why companies can’t calculate email’s ROI.

Here are three she highlighted:

  1. Our Web analytics software doesn’t provide this information
  2. We can’t track online sales back to email
  3. We don’t have an exact figure for costs

Taking these one at a time, Jennings noted that 1) most analytics solutions can provide the information. Google Analytics does and it’s free. 2) Setting up the tracking is simple. 3) You don’t need exact figures.

“As long as you can compare in an apples-to-apples fashion, that’s enough to get started,” Jennings said.

Judging performance by clickthrough and conversion rates is not enough — you should know the revenue generated, both on a campaign-level and a broader program-level.

Two simple calculations Jennings suggested:

  • Return on investment: Net revenue / cost
  • Revenue per email sent: Net revenue / # of emails sent

On a campaign-level, these metrics will reveal which campaigns pull in more money — not just more clicks. For your overall program, they quickly convey the importance of your work.

Also: The movers and shakers in your company are going to be much more impressed with figures that include dollar signs.

Show email’s potential

Another way to convince executives of email’s power is to point to success at other companies. Also at the Email Summit last week, Jeff Rohrs, VP, Marketing, ExactTarget, mentioned Groupon as a great example that email marketers could rally around.

Forbes recently dubbed the localized deal-of the-day website the fastest growing company ever, and its success is largely due to great email marketing.

The Wall Street Journal mentioned Groupon’s 50 million email subscribers as a competitive advantage and that some analysts estimate its value at $15 billion.

The executives will care

Once you can clearly attribute revenue and ROI to email, you might be surprised at how much attention you attract from company leaders.

At the Email Summit, Philippe Dore, Senior Director, Digital Marketing, ATP World Tour, presented his team’s email strategy to sell tickets to professional tennis events. A single email drove over $1 million in revenue, and several others brought in over $100,000 each.

The overall email campaign generated about $1.5 million in total. Suddenly, ATP’s executives were interested.

“We have our CMO talking about email marketing and subject lines,” Dore said.

Related resources

Email Marketing Summit 2011: 7 Takeaways to improve results

Email Marketing Awards 2011 Winners Gallery: Top campaigns and best results

Live Optimization with Dr. Flint McGlaughlin at Email Summit 2011

MarketingSherpa 2011 Email Marketing Benchmark Report

MarketingSherpa Email Essentials Workshop Training with Jeanne Jennings

Photo by: SqueakyMarmot

Adam T. Sutton

About Adam T. Sutton

Adam T. Sutton, Senior Reporter, MarketingSherpa
Adam generates content for MarketingSherpa's Email and Inbound Marketing newsletters. His years of experience in interviewing marketers and conveying their insights has spanned topics such as search marketing, social media marketing, ecommerce, email and more. Adam previously powered the content behind MarketingSherpa's Search and Consumer-marketing newsletters and carries that experience into his new role. Today, in addition to writing articles, he contributes content to the MarketingExperiments and MarketingSherpa blogs, as well as MECLABS webinars, workshops and summits.

Prior to joining MarketingSherpa, Adam was the Managing Editor at the Mequoda group. There he created content and promotions for the company's daily email newsletter and managed its schedule.

Categories: Email Marketing, Research And Measurement Tags: , , ,

  1. Isaac
    October 10th, 2011 at 13:07 | #1

    Hey guys –

    I noticed you are giving a review for your Email Marketing Benchmark Report. You are charging almost $500 for this report, and yet in the review you say “Email marketing can be amazingly efficient. B2C marketers report an average 256% ROI from the channel — pulling in $256 for every $1 invested — as mentioned later in the report.” I’m admittedly not a math genius, but I would recommend that you change either the percentage or the dollar value figures you used, because those numbers reflect a 25,600% ROI. Just thought I’d bring this to your attention so it doesn’t scare of future prospective report buyers who are conducting market research.

  2. October 10th, 2011 at 15:46 | #2

    Hi Isaac — Thank you for pointing this out. You are absolutely right. My math skills are apparently rusty. We have removed the incorrect reference. Thanks again.

  3. January 4th, 2012 at 03:54 | #3

    When I first started working with small business owners I was amazed at the number of them who didn’t track their marketing dollars. Then I learned they’d been trained not to by ad agencies and mass media reps with the mantras of “building brand” and T.O.M.A. (Top of the Mind Awareness). From my experience it seems 41% tracking might be a little generous.

    By contrast, online marketing is able to easily track results and calculate a fairly accurate ROI. I really appreciate what Jeanne Jennings said (above) about “apples to apples comparisons”. That’s an excellent way to put things in perspective for an organization or merchant who is resistant to change (even for the better).

    Great post. Thanks.

  4. January 17th, 2013 at 20:28 | #4

    Nice post Adam. According to the Direct Marketing Association, email easily outperforms other online channels in generating return. In fact, for each dollar spent by channel, the following ROI was projected (2012): Email: $39.40, Search: $22.38, Display: $19.71, Social: $12.90

    Since the email marketing ROI is so high, it is in the Marketing Organization’s best interest to track and report on ROI, so they can address the executives who demand for them to “Show Me the Money!” Thanks for sharing.

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