Despite eye-catching prophecies, email marketing is not dead, neither is it slowly withering away. Each year, benchmark reports highlight that email remains one of the most cost effective marketing channels. However, with many email marketers not measuring their campaign performances or not adequately, these benchmark reports might soon change for the worse. 

The most important aspect of email marketing success is to measure the “right” KPIs: KPIs that impact your bottom line. Today we will explore some of them. So, let’s dive into the world of email marketing KPIs, shall we?

Email Marketing ROI = (revenue attributed to email marketing – cost of email marketing) / cost of email marketing

For example, let’s imagine you spent $2,000 last month on your marketing campaigns. Your campaigns were a hit and you recorded purchases worth $5,000 that are attributed to your email marketing efforts. What would your email marketing ROI for that month be?

Email Marketing ROI = ($5,000 – $2,000) / $2,000 = 150%

As the name “return on investment” implies, this is probably THE most important KPI to measure, yet often businesses and nonprofits still get this wrong.

Most email service providers (ESPs) will provide you with basic statistical data, such as your open rate and your click-through-rate. If you also know your conversion rate for the campaign, the net conversion value, as well as your total costs, then you can calculate your email campaign ROI using this calculator. Feel free to copy it into your own Google Drive for future reference. It goes without saying that a positive ROI is what you’re striving for.

Step 1: Calculating your true email marketing costs

If I received a dime every time I hear someone claim that there is no cost involved in email marketing, I would be rich. This couldn’t be further from the truth.

Here are some of the factors that you need to add to your email marketing cost calculation:

• monthly fees of your email service provider (ESP).
• total monthly cost of your email marketing and analytics staff, involved in creating, sending, and analyzing your email marketing campaigns
• monthly fees of analytics tools, including inbox monitoring service providers
• monthly fees for your landing page hosting
• other fees related to your email marketing campaigns

If you’re interested in obtaining your cost per campaign, divide these costs by the number of campaigns you’re sending each month. Do the same with your revenue calculation.

Step 2: Calculating your true email marketing revenue

Just like with calculating your actual email marketing costs, I often see companies and nonprofits struggle with revenue calculations.

Some email service providers add a revenue component to the standard reporting, such as average order value or revenue per subscriber. If your ESP does this, that’s a great start. If it doesn’t, you will have to draw this data from your analytics program.

In most cases, you will see large fluctuations in your email marketing revenue depending on which attribution model you choose to track your success. I’m well aware that I might have just opened the box of Pandora. Conversion attribution is something even more seasoned marketers sometimes struggle with. Yet, finding the right attribution model for your campaign is likely one of your most important factors that influences your understanding of revenue and with it the outcome of your ROI calculations.

Step 3: Calculating your true ROI

Now, that you’ve determined your costs and revenue, you can enter the numbers into your ROI calculation.

Here’s the formula again. Enjoy!

Email Marketing ROI = (revenue attributed to email marketing – cost of email marketing) / cost of email marketing

For any organization, it is important to know whether your email marketing campaigns are pulling their weight. Whether you’re a for-profit or non-profit, you can only survive and accomplish your organization’s goals if at the end of the day, your efforts show a positive ROI. Ups and downs are normal, but if your records show a negative ROI for a longer stretch, it’s time to rethink your email marketing approach.

Website Traffic Growth Rate = (email-driven website traffic in the last month – email-driven website traffic in the previous month) / email-driven website traffic in the last month

For example, let’s say in May, your email campaigns resulted in 300 clicks to your website, up from 200 in April. What would your Traffic Growth Rate be?

Website Traffic Growth Rate = (300-200) / 200 = 50%

If you have your tracking properly set up and your analytics program is attributing traffic to email correctly, you can easily see how much traffic your campaigns are bringing to your site. If you compare the link clicks in your email service provider (ESP) with the traffic your analytics program is attributing to email and you see a big gap, then you’ve got a bit of work ahead before you can measure your Website Traffic Growth Rate accurately.

For more information why this happens and how to fix it, please refer to the chapter on UTM tagging.

You or your staff are probably spending a lot of time writing emails trying to get people interested in your offering and entice them to come to your site to learn more, make a donation, purchase your products/services, download a file, etc. The Traffic Growth Rate KPI helps you find out, if you are accomplishing this goal.

List growth rate = number of new subscribers gained in the last month – number of subscribers lost in the last month, incl. hard bounces) / total number of subscribers on your list.

For example, let’s assume that last month, you gained 500 new subscribers but lost 20 subscribers due to hard bounces, unsubscribes, and list cleaning. Your total list is now 10,000 subscribers. What was your list growth rate last month?

List growth rate = (500 – 20) / 10,000 = 4.8%

Life is full of changes. Interests change. Preferences change. Communication needs change. Even if your records indicate that you’ve already reached email marketing nirvana, you should not rest on your laurels. Subscriber engagement fluctuates continuously. Some of your most enthusiastic followers might unsubscribe one day. The best way to guard yourself against this inevitable occurrence is to continue growing your email marketing list and the list growth rate measures how well you’re doing on that front. . But, don’t be tempted to “buy” those new subscribers you need to earn them! Don’t worry, the “how”, we’ll cover that in a later chapter.

The list growth rate allows you to measure whether in the grand scheme of things, you’re gaining or losing subscribers.