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Email ROI and Why It Matters – Services


Email has long been a vital weapon in the arsenal of marketers, and many companies have increased their reliance on the channel during the pandemic.

In Validity and DMA’s 2021 Marketer Email Tracker, nearly three-quarters (72%) of brands said email is their preferred and most used channel to engage with customers throughout the customer journey, up from 66% who reported on social media.

While the popularity and effectiveness of email is not in dispute, it can be difficult to accurately calculate its value as a marketing channel. In fact, Validity has found that one in three marketers are unsure of calculating ROI for emails, which is a significant challenge when it comes to reporting performance and securing current budget and resources. (This can become a vicious cycle – with less budget and resources, performance is likely to decline).

Industry benchmarks and return on investment

To better understand email ROI, let’s take a look at some industry benchmarks. The average return on investment for emails is 38: 1 and this has continued to increase year on year, even during the pandemic. Meanwhile, the customer’s lifetime average value – what each subscriber is expected to spend during their time on the sender list – can reach $ 67.

Validity and the DMA Email Marketer Tracker show that there has been an improvement in performance across the board for email marketers. Metrics that have improved include mailing list size, delivery rates, open rates, and click-through rates. Meanwhile, unwanted metrics like unsubscribe rates and spam complaints have declined. These statistics are not unique either. On average over the past three years, the proportion of marketers reporting improvement in deliverability, open rates, click-through rates, etc. is greater than 4: 1. This contributes to the improved ROI that the vast majority report.

The growing importance of email is reflected in increasing email budgets which have grown steadily over the years. The average email budget as a percentage of total marketing budget is now over 20%, the first time this has happened in ten years of production of DMA’s Email Marketer Tracker. This is almost double the low point of 11% reported in 2018 (This compression was due to the implementation of GDPR in the UK and Europe that year). Looking ahead, the majority of email marketers believe their budgets will continue to grow over the next 12 months.

Challenges in Calculating Email ROI

While about two-thirds (71%) of email marketers are confident in their ability to calculate ROI (and this has tended to increase steadily for several years), there are still around 30 % who are not confident in their abilities. Incidentally, research from Validity shows that marketers in higher positions are more likely to be able to calculate ROI, and that this drops sharply for mid-level and junior-level positions.

Attribution is a big challenge in calculating the ROI of emails. Clicks (which are easy to measure) make up about a quarter of actions in response to a compelling email. Recipients are also very likely to engage with brands that send interesting emails through channels other than email, such as company website or app, social media, or by making a phone call or even visiting a physical store. This poses significant measurement issues, as all of those positive responses that are not clicks are less easy to measure, but represent a considerable amount of action taken and can double the stated effectiveness of a campaign.

Another challenge is the quality of the data. While 52% of email marketers cite budget and resources as their main challenge for email success, that number has thankfully declined year on year. Concerns about data (data access, data visibility and data quality) are now on par with budget and resources as the most important challenge for success. Another concern that has grown considerably is access to technology. This is at the heart of the ROI discussion – we need good quality data and up-to-date technology to do a great job, but budget and resources will remain a challenge unless we can improve. and establish the return on investment.

Demonstrate return on investment

When calculating ROI for emails, by relying on a simple formula like “conversions – investment = return on investment”, you are doing yourself and your efforts a disservice. This is because, as stated earlier, there are many positive email results where the value cannot be measured by a click. Therefore, the most sophisticated marketers use a number of metrics to calculate ROI, taking into account things like Net Promoter Score (NPS) and acquisition / cost ratios. Some companies also integrate their messaging platform with their analytics platform to collect customer insights and track end-to-end customer experience. This helps them determine when customers are taking positive action, like filling out an online form or calling the call center, actions whose value cannot be measured by just monitoring open rates or clicks.

When calculating ROI, it’s important to consider additional metrics as well, not just those related to conversion. For example, if an email is designed to encourage attendance at an event, registrations should be taken into account when calculating ROI.

Steps for moving the needle

It might sound obvious, but the key to improving your email program’s ROI is to make sure your emails are delivered, because for every email that is undelivered, that’s the ROI you are getting. not generate. During the pandemic, we saw a significant increase in global email volumes, and that didn’t facilitate deliverability, in fact one in seven emails still fail to get to inbox. . Therefore, examining your company’s email deliverability performance is a good place to start for improving ROI. Think of it this way – if you make a restaurant reservation, you expect confirmation immediately. If it doesn’t happen, it will likely result in an online chat or a customer service call, where the cost of execution is considerably higher, ultimately reducing your ROI.

Marketing automation in the form of triggered emails is incredibly effective at moving the ROI needle. In email programs where 5% of the total volume consists of triggered emails, 50% of the revenue is generated from these emails. And when it comes to email revenue and revenue per click, cart abandonment emails generate ten times more revenue than other emails, due to their targeting and relevance. Wish list emails perform well too, so if you aren’t already, consider including more of these types of messages in your marketing mix.

Channel optimization is another consideration, as we know that only a quarter of responses are clicks. Therefore, companies would be wise to ensure that other media such as a phone number to call, the ability to leave a review, etc. are all prominent in emails, as only three out of five recipients will read under the cover (the point where they need to scroll down), which is where these important links are often found in the footer of page.

While the extraordinary circumstances of COVID-19 have certainly helped consolidate email as a preferred marketing channel for consumers, its growing popularity is expected to continue given its proven effectiveness. By taking the time to assess and invest in your measurement capabilities, you will set yourself up for success in the future, because not only will you know where your program can be improved, but you will be able to confidently demonstrate your success, helping to ensure a permanent budget and support for your organization.

Guy hanson is VP Customer Engagement at Validity inc.

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