1. Whitepaper
FEBRUARY 2012
Best practices in email marketing
6 secrets to Unlocking
email marketing roi
© Mailigen Ltd. All rights reserved 02/2012. Mailigen Email Marketing Solutions

2. 6 SecretS to Unlocking email marketing roi 2
All successful marketing campaigns are based on numbers. ALL. This is a common mistake for novice marketers. Assessing the ROI for
email marketing starts with understanding all marketing campaigns must ultimately deliver on reinforcing your sales strategy and busi-
ness objectives. Email marketing is no different. Email is part of everyday business now, and email marketing is a critical tool for delivering
marketing objectives.
So what is email marketing ROI? ROI is a measure of investment profitability; a percentage return based
on investment not a measure of the investment size. Email marketing ROI is the same, a percentage
return based on your investment in creating and managing email marketing campaigns. According
to MarketingSherpa B2C marketers report an average 256% ROI from the email marketing chan-
nel — pulling in $256 for every $1 invested. You can generate significant ROI in your marketing
efforts through email campaigns. Using our simple calculations you can easily see the return
on investment from your email campaigns, based on your expected costs and response lev-
els.
Get the most our of your email campaigns with our 6 best practices to establishing an
effective method for quantifying email marketing ROI.
list: 1. planning
2. Using third party tools
3. assessing the VariaBles
4. calcUlating roi
5. increasing roi
6. comparing resUlts
© mailigen ltd. all rights reserved 02/2012. mailigen email marketing Solutions Phone: (+1) 718 303 1864

3. 6 SecretS to Unlocking email marketing roi 3
1. planning
When planning email marketing campaigns, it is important to carefully think through how you are going to measure your progress
and how you will know if your email campaign is moving the needle closer to achieving your goals. The challenge in measuring email
marketing ROI is in connecting the result to the goal and associating the costs involved. When optimized, email marketing outperforms
most marketing tools with higher ROI. According to research conducted by the Direct Marketing Association, email marketing was ex-
pected to generate an ROI of $42.08 for every dollar spent on it in 2010 and 72% of respondents to an Econsultancy survey in early 2011
described email’s ROI as excellent or good. Only organic SEO scored better in their survey.
Planning is the key to seeing high returns from your campaigns.
In planning your email campaigns, take these factors into con-
sideration for a high ROI outcome:
Craft a clear message with one call to action
Use a clean, permission based email list
Leverage your list segments for a highly
targeted audience For an extensive guide to planning your email
Create great content with a strong subject line marketing campaigns use our Framework:
Test the message before you send it out Email Marketing Planning Guide
2. Using third party tools
You can use reports and tracking tools to better understand your campaign income and how you are spending your budget. Because
email campaigns attract visitors to your site, you can use Google Analytics to tag email campaigns with campaign tags to track how well
each email performs. Campaign tags are available through the Mailigen solution to automatically add information to apply campaign
tags to links within the email. When clicked, the tag passes information to Google Analytics and you can analyze the performance of each
email link. This allows you to optimize your campaign and track your ROI. Google Analytics offers several important capabilities you can
use to increase your email performance.
Advanced Segmentation: Google Analytics provides precision “funnels” to design a path you expect visitors to take on their
tools to analyze specific data elements and gain a deeper un- journey toward converting to the goal. Funnels in an ecom-
derstanding of your customer. All advanced segment templates merce goal can include landing pages for the checkout process,
are associated with visits data and Google Analytics offers out or funneling a customer to your newsletter sign up form.
of the box segmentation or customized segmentation. In cus-
eCommerce: Google Analytics collects two categories of e-
tomizing your segments start by thinking about the segment
commerce data: transaction data and item data. The transaction
that you want to design and what kind of visits it will include.
data identifies the elements of the overall transaction. The item
You can identify the appropriate dimensions or metrics for your
data specifies the items purchased in the transaction. This data
segment. For example, if you only want to see visits with two or
compiles into Google Analytics reports. Using the data elements
more unique purchases in your reports, you would choose the
available, you can vastly increase your segmentation and tailor
‘Unique Purchases’ metric. Use the advanced segmentation fea-
your email marketing messages based on the preferences of the
ture to identify key trends and behaviors to anticipate and react
to your customers.
Goals: Goals are a page view - serving as conversions for your
Learn more about Google Analytics tips for tracking
site, like a thank you page. Goals can be used to track newslet-
email marketing campaigns
ter signups, email list subscriptions and contact forms. Goals use
© mailigen ltd. all rights reserved 02/2012. mailigen email marketing Solutions Phone: (+1) 718 303 1864

4. 6 SecretS to Unlocking email marketing roi 4
3. assessing the VariaBles Each of these variables tells you something about how much
your email campaigns are costing you and will enable you to
ROI cannot be judged solely by performance clickthrough and calculate your ROI. If this is your first email marketing campaign,
conversion rates. For Marketing ROI, you need to determine use it to obtain a baseline of these figures. Building your baseline
what you view as the “return” in the equation. Is it total revenue will give you insight to how you are trending and improvement
generated, profit, new Fans, coupon redemption? opportunities.
To prepare for calculating the ROI, there are several important
variables to gather and define as they relate to your business
model: 4. calcUlating roi
Creative development costs (templates, images) There are several third party tools on the market to calculate
complex ROI equations using the variables we have suggested.
Email Service Provider costs
However, here are some simple calculations we recommend:
Campaign management time
Return on Investment: Net revenue / cost
Also, you may need to gather email specific variable data: Return on Investment: Gross Profit-Marketing
Investment/Marketing Investment
# of contacts
Revenue per email sent: Net revenue / # of emails sent
Average cost per contact
Customer Lifetime Value: CLV-Marketing
# of Responders
Investment/Marketing Investment
# of Buyers
Revenue Generated Customer Lifetime Value is a measure of the profit generated
Profit by a single customer or segment of customers over the lifetime
of their engagement with your company. Using this equation
Cost per Responder
will help determine customer segments and how you position
Cost per Buyer
offers to each segment. Since ROI is usually expressed as a per-
Campaign Audience Size centage, for each of these equations multiply the result by 100.
Campaign Cost
Any of these simple calculations will track the campaign level
Response Rate (what % do you expect measures to reveal which campaigns brought an increase in
based on prior performance) sales rather than clicks.
Conversion Rate (what % of responders will buy
based on prior performance)
Average Buyer Purchase Amount (How much will
buyers spend based on prior performance)

5. 6 SecretS to Unlocking email marketing roi 5
5. increasing roi 6. comparing yoUr resUlts
Once you have assed the variable factors contributing to the Email is a huge part of interactive marketing and is very valuable
overall ROI, you should be able to glean information related to compared to its more expensive marketing tools. Want to know
increasing the ROI of your campaigns. Use this 10 step checklist how much ROI campaigns are generating for others? Comparing
toward increasing ROI: your results to industry best practices and averages will give you
more insight to your campaign performance. Review industry
Review your analytics performance on email conversions, revenue conversions, land-
Integrate (or review) Google Analytics to track conversions ing page conversions, retention and email marketing costs. The
Compare campaigns and levels of success emailstatcenter.com is an authority on email marketing metrics
and a valuable resource for campaign comparisons. Through this
Optimize list segmentation
site and others, you can research important comparisons such
Consider customer re-engagement campaigns
as the average revenue per delivered message. Thoughtful com-
Test new approaches parisons will provide a benchmark for your current ROI vs. your
Test subject lines and call to action goal return for future campaigns.
Use more automation capability
Test email designs in different email clients and devices
Email marketing is a great way to increase your brand awareness,
engage with customers, and remain top of mind. To ensure that
the ROI on your marketing campaigns is high the more informa-
tion you can gain from your customers, the better. Segmenting
can be highly beneficial when setting up your campaigns and
boosting your ROI.
As with any ongoing calculation, obtaining as many metrics
and statistics as possible can help you see where opportunities
and faults may lie. If you’re making changes to try to affect your
ROI, ensure that you have a baseline to work off of. Try different
avenues to see what your audience responds to, and your ROI
should replicate those trends. Once you find a winning formula,
don’t placate – things change, and you must always be willing
to innovate.
For more information on boosting your email marketing ROI,
visit the Mailigen Resource Center.
SUMMARY
So why should you calculate email marketing ROI? Because all successful marketing campaigns are based on numbers. ALL.
And your marketing campaigns need funding to implement. By clearly attributing revenue to email ROI, calculating the ROI
will convince executives and you of the efficiency and cost benefits of delivering marketing through email campaigns.
Mailigen has the easy to use tools you need to generate action with powerful email messages and newsletters and robust
analytics for measuring your ROI. If you want to learn more about Mailigen, take it for a test drive before choosing your
email marketing solution, we offer a 30 day free trial!
© mailigen ltd. all rights reserved 02/2012. mailigen email marketing Solutions Phone: (+1) 718 303 1864