Return On Investment (ROI) is probably the most important metric for you to take into consideration when planning a marketing strategy. If you’re spending more money promoting your products or services than your sales are putting back into your coiffers, you can imagine how the clockwork of your organisation is going to come to an abrupt stop.
So let’s take a look at how you can calculate the return on your email marketing investments – then maximise it through automation.
Calculating ROI
ROI measures the return of an investment relative to that investment’s total cost. It’s easy to calculate. You simply divide the return of your investment by the cost of the investment.
For instance, let’s say you spend $500 on an email campaign. The email performs well and secures you $1000 in sales profits. We take the ‘return’ of that investment (the total sales profits, minus the initial cost of the campaign), and divide that by the cost of the campaign. In this tidy little example, we get a result of 1:1, or a 100% return on your investment. You’ve doubled your money.
Now obviously, in reality, these ROI calculations are going to be a little more complicated. Initial costs often include far more factors – employee’s wages, costs of tools, etc. But once you’ve crunched all the numbers, the ROI of each of your marketing campaigns is an incredibly important metric to be tracking.
Many marketing teams fall into the trap of only tracking their open rates or clicks. These are important, sure. But at the end of the day, opens aren’t going to keep the lights on. We need to look at profits.
Email Marketing Costs
So what factors should we consider when calculating the ROI of our email marketing strategies?
There are many costs involved in setting up a good email campaign:
- Service charges for the email platform
- Strategy
- Copywriting and design
- Development
- Admin, quality assurance and final send
- etc
Depending on your creative team, the scope of your emails, the size of your subscriber base and innumerable other factors, figures are going to vary wildly from business to business. But you can see how all this work can start to add up. Creating an email and sending it out just the once seems to be a bit of a waste of potential.
However, there is one sure-fire way to boost your ROI in almost all instances of email marketing. And that’s through automation.
Automation and ROI
Let’s say you’re looking at ACME Widget Corp’s quarterly marketing budget. Last month, you ran a few 10% off sales on widgets, and promoted them with some once-off email campaigns to your entire subscriber base. The return was positive, but you’re wondering if there’s a better way than the ‘spray and pray’ method.
What if you were able to build out the same 10% off campaign, but send it automatically to the right people at the right time? Say, people who you know are interested in purchasing, but require one last little push. Sure, this email campaign might not have the same big benefit up front. But over time your sales profits will grow, while your initial investment stays practically the same. After a while, you’ll be looking at profitability you wouldn’t have dreamed possible from a single email campaign.
This scenario is completely possible with email marketing automation software and lifecycle marketing principles. You can automatically engage customers and leads at exactly the right time to win sales.
Marketing automation is now used by thousands of successful businesses. Econsultancy asked over 1000 respondent companies what they perceived the main benefits of marketing automation were for their Email Marketing Industry Census, 2015. The results were as follows:
- More relevant communication (78%)
- Increased customer engagement (76%)
- More timely communication (72%)
- More opportunity to cross-sell and up-sell (61%)
- Saving time (59%)
- Increased revenue (51%).
All of these add up to better service, more sales, and higher efficiency for your business.
3 email marketing automations you should be using to boost ROI
Now that you’re no doubt convinced that email marketing automation is the undisputed king of the ROI castle, you’re probably wondering where to begin. What sort of email automations can you implement for your own business?
Let’s take a look at a few automations we’ve implemented for some of our clients to give you some ideas.
Welcome email series
The ‘Welcome’ email series is a great way to engage your new leads right out of the gate.
Subscribing to your newsletter is a clean indication of a lead’s interest in your business – but it might not last forever. By setting up an automated email campaign to touch base with new subscribers as soon as they sign up, you can keep that spark alive until their first sale.
We set up a Welcome series for one of our recent clients, Fae Swim. The goal was to engage new leads with quality, on-brand content, and nurture them towards a first sale with incremental discount incentives.
The results were pretty amazing. In the first four weeks of implementation, the Welcome series had an open rate of over 40%, a click-through rate of 7%, and a conversion rate that paid off the initial set-up costs. This series continues to convert new leads in the background with similar results – the only recurring cost being the subscription fee for the platform, and the occasional optimisation we run.
Post Purchase email series
Another great strategy to increase ROI: the Post Purchase series.
We’ve spoken before about how it costs 10 times as much to obtain a new customer as it does to retain an existing one. So for the best ROI, you need to make sure you don’t let the relationship fizzle out once a customer has made their first purchase with you. Hence, ‘Post Purchase’ emails.
A few weeks after a client has bought with you is the perfect time to go for the cross-sale or up-sell – and with an automated email campaign, you can ensure every one of your customers receives incentive to buy again, at exactly the right time in their journey.
‘Replenishment marketing’ is another great example of ‘Post Purchase’ practices. If you’re selling a product that a customer will eventually run out of (for example, our client The Vet Shed, who sell pet supplies), then sending out an automated email to remind them to stock up again just before they will need to restock is a fantastic way to generate repeat business.
Abandoned Cart email series
Last but certainly not least, once you’ve connected your ecommerce and email platforms, you’re going to want to set up an ‘Abandoned Cart’ series.
Having a client visit your online store, then add a product to their cart is a pretty clear indicator they’re a hot lead. But what happens when they leave your website without checking out? Are you going to give up when you were so close?
You don’t have to. With the right integrations, Abandoned Cart automations can send out reminders to your customer that their items are waiting for them. And why not offer a small discount if they still haven’t returned a few days later?
We also implemented this strategy for Fae Swim – again with a continuous, incredible return on their initial investment. In the first three months, this automated series recovered a huge 7% of abandoned carts to reclaim thousands in revenue that may have otherwise been lost. Like the Welcome series, this has now paid for itself, and continues making steady money quietly in the background.