Depending on a few external forces, calculating your email marketing ROI can either be a breeze or basically impossible.
It seems crazy, but, in many cases, understanding the return on investment of your email marketing spend in terms of revenue generation just isn't possible.
It all comes down to your industry, data and executives. Let's take a look at these three factors so you can confidently choose the best approach to ROI reporting for your organization.
Industry
Every industry is different. Some have a short sales cycle that can be completely digitally automated while others have a long, complex sales cycle that requires a lot of face time.
Calculating ROI for a short, primarily digital sales cycle is relatively easy. You send an email with a direct sales appeal. Contacts open, click and make a purchase. The campaign results in a quantifiable amount of revenue.
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For a long sales cycle, it can be difficult to determine exactly what combination and proportion of marketing and sales efforts closed the deal over the course of 3 months to sometimes over a year.
Data
There's a technological chasm that separates marketing and sales; the two traditionally siloed departments that paradoxically work to achieve the same goal of new customers.
That separation is both illustrated and perpetuated by contemporary automation software and database architecture. If you want marketing and sales to talk to each other, to share data and build a complete picture of marketing’s impact on revenue generation, then you need to spend a lot of time and resources to proactively integrate your martech with your CRM.
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Many organizations aren’t able to justify that spend, so their marketing departments either work without a complete picture or they hire some analysts to chase down the data and cobble together a dashboard that gets them as close as possible.
And even for those organizations that do bridge the gap, the ease of connecting email marketing campaigns with closed deals depends greatly on their industry sales cycle.
Executives
The final factor has to do with the information your executives want and need to know about your marketing efforts. That depends a lot on the first two factors as executives usually understand the inherent challenges of tracking a long sales cycle and improving technological capabilities.
But if they don't understand the challenges, it could be up to you to educate and set expectations about what's truly possible for ROI reporting in your organization.
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Marketing Impact
If you have a long sales cycle or you don't have the data you need, either because the data doesn't exist or because you can't access it from your CRM, then the best approach to ROI reporting for you is what we call Marketing Impact.
Marketing impact means you measure the email marketing impact in terms of marketing conversions, like completed forms. At the very least, you can chase down your email marketing budget and aggregate the total number of actions completed by contacts within a period of time to calculate the cost per marketing conversion.
Sales Forecast
If possible, you could go one step further by gathering a few key metrics from the sales department, like conversion rate and average purchase amount.
You can use this additional sales information to make a sales forecast based on your engagement and marketing conversion data. It's essentially a projection or educated guess based on as much hard data as you're able to gather.
Marketing & Sales ROI
If you have a short sales cycle and you have access to sales data, then most likely your executives will want a complete picture of email marketing ROI in terms of revenue generation. In this case, it's a matter of understanding what it will take to get the right data in the right place at the right time through an integration with your CRM.
If you're interested in learning more about communicating the impact of your email marketing, check out our post on the Four Points for a Great Business Story.
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