The ROI of Email Marketing

Loyalty Email Marketing can be extremely efficient. According to the latest Response Rate Report of the Direct Marketing Association, in 2012 the ROI of email marketing loyalty was 28.50$ in sales for every 1$ invested. However, we were struck by the following data on the ROI of email marketing that we have seen in the MarketingSherpa 2013 Email Marketing Benchmark Report.
Q: Which statement best describes your organisation's perception of email marketing's ROI (return on investment) at budget time?

Q: Does your organisation have a method for quantifying ROI from email marketing?

- No: 59%
- Yes: 41%

It is clear from this data that a large percentage of marketers have the perception that email produces a positive ROI, which is true. However, they do not rely on concrete metrics to reach this conclusion. Surprisingly, this 41% of professionals who say they do not have a methodology for measuring the ROI of email marketing in their organisation.

Some of the most common reasons for not measuring email marketing ROI that we hear are that we don't have the ability to link e-commerce sales to email, and also that we don't have a clear measure of the direct costs associated with a campaign.

In fact, to determine the ROI of email marketing it is not enough to measure the CTR and the conversion rate. you need to know the revenue generated and the costs of the campaign (usually CPM, and creative).. With this data, we can calculate the ROI of the email marketing investment (Net revenue / costs) or the revenue generated per email sent (Net revenue / total emails sent).

Another interesting metric is the Customer Lifetime Valuewhich sheds light on the lifetime value of a user.