Article | MarketingSherpa

May 29, 2012

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Marketing Research Chart: Formal methods for calculating ROI yield strong results

SUMMARY: We asked 2,735 marketers to tell us about their organization’s measurable ROI in 2011. Survey responses revealed an average of 77% ROI, with the largest number of respondents reporting approximately 100%.

What are the indicators for higher ROI? Our study suggests strategic processes for funnel optimization and a formal method for calculating ROI.

by W. Jeffrey Rice, Senior Research Analyst

Chart title: Email marketing ROI as a percentage reported by survey respondents

Q. What is the estimated ROI from email marketing programs for your organization?

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As we discovered in this year’s study, the email process of achieving or increasing measurable ROI was the third-greatest priority for marketers. A textbook calculation formula for return on investment is:

ROI = (Gain from Investment – Cost of Investment) / (Cost of Investment)

Each chief financial officer will vary slightly in how he or she calculates the gains and costs of the investment, so it is crucial to meet with the finance department before beginning the exercise to ensure consistency.

Respondents reported an overall average of 77%, while the largest percentage of respondents (22%) reported double the organization’s money for every dollar invested.

Our research suggests establishing a formal, repeatable process for funnel optimization and ROI. As an organization matures from the Trial phase to the Strategic phase, its email marketing program ROI will rise.

Marketers in the Trial phase of email marketing maturity report an average 50% ROI

Marketers in the Transition phase report an average 62% ROI

Marketers in the Strategic phase report an average 78% ROI

For additional research data and insights about email marketing, download and read the free Executive Summary from the MarketingSherpa 2012 Email Marketing Benchmark Report – Research and Insights for Engaging Email Subscribers.

Useful links related to this research

2012 Email Marketing Benchmark Report

Marketing Research Chart: Email marketers who quantify ROI are in the minority

Email Marketing: Show me the ROI

Email Marketing: The 3 most successful tactics of 2011 (with case studies)

Complimentary Download: Automated Email ROI Worksheet

Comments about this Chart

May 29, 2012 - Sandy of Exaudio says:
Jeffrey, do you really believe that you're getting honest, valid data by simply asking marketers what their ROI was? What's more, don't you think it's extremely difficult to measure the ROI of a single campaign? There are numerous factors that affect sales, purchase behavior, comprehension of an ad, etc. So, I'd be curious to learn how valid an organizations ROI calculation truly is.

May 30, 2012 - Martin Froescher of The Milner Group says:
Well said Sir. The devil is in the details for what is truly valid data. There is little information on the survey questions and methodology.

May 30, 2012 - Jeff Rice of MECLABS says:
Sandy, I agree with you that it is extremely difficult to measure ROI, and our survey participants agreed. The study revealed that 68% of organizations did not have a method to quantify their email marketing ROI. This is not surprising as the task requires the ability collect data; identify outcomes, and the resources to execute the project on an ongoing basis. In the survey question we cautioned respondents “Your responses will be reported in aggregate to protect confidentiality. If you\'re not able to provide a reasonable estimate, it\'s OK to skip the question.” I do believe that the other 32% of organizations did share to the best of their knowledge the ROI from their email marketing programs.

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Marketing Research Chart: Formal methods for calculating ROI yield strong results

Chart title: Email marketing ROI as a percentage reported by survey respondents

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