#55. How Do You Calculate Email Marketing ROI? | Podcast

Vira: 0:16

Andriy Boychuk with us here again today. Again, Andriy? Well, anyways, he’s gonna talk about all of the juicy stuff and return on investment of email marketing and stuff like that.

Alissa: 0:50

Hello everyone, and welcome to episode number 55 of Email Einstein. Vira and Alissa here with a special guest. We are two email marketers at an email marketing agency called Flowium. We are so passionate about email marketing, and because we love what we do, we wanna share our insights with you. Flowium is one of the fastest growing email marketing agencies in the world. We specialize in providing a premium full-service e-commerce email marketing experience for all of our wonderful clients, and our service is tailored specifically for your business and is designed to help increase your online retail revenue by 20 to 50. That’s 5-0%. We deliver the right message to the right person at the right moment. That’s what we’re all about here at Flowium. And today’s episode, let’s get it started.

Vira: 1:53

Cool. I’m really excited about today’s topic, and that’s something that we get asked all the time, like how do you calculate email marketing return on investment and is it worth it to invest in email marketing at all? Spoiler alert, yes, it does make sense to invest in email marketing. Otherwise, why would we be talking to you for the 55 episodes in a row? But anyways, Here are some fun facts, you guys. I’m sure you’ve heard it before, but here’s a quick recap. Did you guys know that email is the third most influential source of information for B2C and B2B audiences?

Andriy: 2:29

So no way.

Vira: 2:30

Yeah, behind— oh, by the way, say hi to Andriy. Andriy is back. We forgot to introduce you, Andriy.

Andriy: 2:38

It was fun.

Alissa: 2:39

Andriy, I am done.

Vira: 2:41

Oh my God.

Andriy: 2:42

Alissa just removed me this week from senior account manager channel, so I’m Used to it. Like, you’re trying to remove me from all positions now.

Vira: 2:52

Yeah. Oh my gosh, that is so funny.

Alissa: 2:55

By the way, everyone, that’s our special guest today.

Vira: 2:58

That’s our special guest. Okay, the 5 minutes ago we recorded another episode. That’s why I didn’t even think.

Andriy: 3:05

So it’s not next Thursday yet?

Vira: 3:07

Yeah, no, it’s not next Tuesday yet.

Alissa: 3:09

We haven’t reached it yet.

Vira: 3:10

Fun, fun Tuesday.

Andriy: 3:11

Tuesday.

Vira: 3:13

Fun, fun.

Alissa: 3:14

We clearly have no, no fun at all when we record this podcast.

Andriy: 3:17

No, no, we don’t, we don’t.

Vira: 3:18

Boring, boring. Yeah. So Andriy Boychuk with us here again today. Again, Andriy. Well, anyways, he’s going to talk about all of the juicy stuff and return on investment of email marketing and stuff like that. But let’s get back to the fun fact because I found it, I Googled it, so I’d better read it now. So email is the third most influential source of information behind only colleagues’ recommendations like word of mouth and industry-specific thought leaders. So basically it’s only behind mind word of mouth. So email marketing is the way to go. We might be biased, but I don’t think we are. Here’s another fun fact 73% of millennials identify email as their preferred means of business communication or like of communication at all. And 73%, it’s like a lot of, a lot of people, if you, if you ask me. And here is like the last one. I know I have like a ton of this fun fact. I’m a fun fact kind of girl. Consumers who purchased products through email spent 138% more more than those who haven’t received any email offers. So this last fact was like super, super interesting for me to learn. So let’s talk about some like return on investment. Alisa, what is email marketing return of investment and how to sort of like calculate it?

Alissa: 4:41

Well, Vira, I’m so glad that you asked. And luckily I’ve prepared for this question.

Vira: 4:47

Oh, surprise, surprise.

Alissa: 4:49

No, not planned at all.

Vira: 4:51

Spontaneous. We’re so spontaneous.

Alissa: 4:53

Not planned at all. So email marketing ROI. So just for those who are kind of new to the lingo, ROI is return on investment, as Vira has mentioned. So email marketing ROI is really understanding how much it is, whether it’s time or money you are paying out and how much you’re getting in return. So one of the factors that we like to look at here in Flowium for our clients is how much are our clients paying us as an agency and how much are they paying Klaviyo, which is usually the email marketing platform or the email sending provider that they use in order to send those emails. Combine those two numbers and then determine how much money they’re actually making from their emails. Do a quick math calculation, and then you understand how much money you’re actually making on top of what you’re actually spending. So the higher your RPR, or otherwise known as return per customer, the more each member of your actual subscriber list is worth. And this is me kind of just breaking down the ROI for everybody. So tracking your email marketing return on investment, or ROI, is not as straightforward as it may seem. So that calculation That I mentioned before sounds really simple, but there’s a lot more that’s involved in it, right? Because you actually have to understand how much money your emails are driving. And that number, though we think it may be really simple, it sometimes isn’t always as simple. And the reason for that is because email is a versatile marketing strategy that can be used to achieve a number of different goals, such as raising brand awareness, lead nurturing, increasing sales and revenue, or website traffic. So the thing that you have to understand with email marketing ROI is it’s not always, I sent an you sent an email and 50 people opened and 25 people clicked on it. And then 20 people actually made a purchase from that email directly. There is a lot more that’s involved that we can’t always kind of tangibly calculate. So for example, and this is something that Vira have mentioned in like numerous different episodes, so I’m not even going to bother mentioning which episodes they are. ‘Cause again, it’s probably in the last 55 episodes, which is most companies. And this actually, this number that I’m about to give you increases as your price point of your item increases. Most brands, they need 17 touchpoints with a potential customer before the person actually ever even buys from you. And it’s very likely that one of those touchpoints is going to be your email. So what does that tell us? Just because someone didn’t click in an email and directly purchase from that email doesn’t mean that the email that you sent out didn’t have an active role in that person eventually making a purchase from a Facebook ad. Or one night they woke up at 1 o’clock in the morning and they were like, you know what, I’m going to hop on my laptop right now and make a purchase from that website because I was just dreaming about it. There are So many different contributing factors to that. So it’s really, really hard for you to gauge officially, like, this is the number that of, this is the value or the number of money, the amount of money that I’m making from this one particular email. It’s really impossible for you to know that because you’d actually have to get into the brain of your customer. And that’s, unless there’s something that I’m missing here, that’s like way futuristic kind of stuff, like Manchurian Candidate kind of thing. So there’s really no official way to know a concrete number. You can have an idea and you’re— Oh, go ahead, go ahead, Andriy. Go ahead. Andriy’s about to—

Andriy: 8:11

Yeah, one thing I would like— No, no, no, no, you’re 100% correct. I just want to say that one recommendation that we even do it internally in our agency, just to define as a company one way of revenue attribution. Doesn’t matter which software you use, but Google Analytics or something like Glue.io, use that for all of your channels because Currently, if you add up all of your channels, Facebook attributions, like loyalty program attribution, email attribution, and all like revenue attribution, it will come up to 300% revenue, which I mean, it’s not possible.

Alissa: 8:50

Yeah, right, right. Because everyone wants to take more credit for the ROI that’s on them than in actuality.

Andriy: 8:59

And so there’s like SMS platform, let’s not name it, but they do 30 days.

Alissa: 9:04

Yeah, yeah. Attribution, which we talked about on our SMS I think it was episode 49 or 50 where we talked with Klaviyo SMS. What would you say, Vira?

Vira: 9:16

Very helpful. That was episode 41 or 42.

Alissa: 9:19

Yeah, it was something like between like 35 and 50.

Vira: 9:22

Go and check it out, you guys. But yeah, but I totally agree with you, Alissa. Like there are some things that you just can’t put a price tag on. Like you can’t put a price tag on love, right? Lead nurturing, like—

Andriy: 9:34

Or Flowium socks.

Vira: 9:35

Or Flowium socks.

Alissa: 9:36

Exactly. Yeah, exactly. Flowium socks are the most invaluable.

Vira: 9:39

They’re like increasing brand awareness or like increasing your connection with your customers. That’s why, like, the metric that I personally love when it comes to like email marketing is RPR.

Alissa: 9:52

Yes.

Vira: 9:53

Like return per customer. And just like to give you some understanding, what is RPR? It’s a revenue per recipient and it basically tells you how much revenue you’re getting from each email on your list. And it is very valuable because, for example, if one month your list is growing like crazy and you’re making more revenue, but that revenue comes from like new customers. And so you like don’t know how valuable your email marketing is to like each and every customer. So that’s why we’re usually using the RPR, revenue per recipient. This helps you to find out like what’s working and what’s not working, what might need to change with your overall email performance. And obviously the higher your return per recipient, the more each member of your list is worse and it is very easy to calculate actually. But Klaviyo even does this for you and it will save you like a ton of money. And what I also like about RPR with Klaviyo that like when doing this, Klaviyo I think takes out the emails that bounced. So it does not calculate those emails towards your RPR. And that’s personally like one metric that I’m like obsessed over and I’m like, I’m looking, I’m trying to achieve like a higher RPR every month. So that’s like the big one for me. Yeah. So Andriy, let’s go to the juicy, to the juicy stuff until— so you’re here and tell us a bit more about like email marketing agency pricing, like, because obviously that’s part of the return of investment formula as well.

Andriy: 11:30

Yeah. And in 2021, we updated our pricing a few times. We did a lot of research on this topic because we want to be competitive on the market. We don’t want to be the cheapest one and the most expensive. So to understand how to price ourselves. We need to, like, we did a lot of research. So I just want to describe 5 pricing structures that agencies or freelancers charge for email marketing services. So first one is per hour, which is very self-explanatory. They charge you, let’s say, $50, $100 per hour. If they work 5 hours, you pay them for 5 hours. If they work 20 hours, you pay them 20 hours. Sometimes agencies or consultants like to sell packages of hours, let’s say 10 hours per month. And if you don’t use them, will roll over or so forth. So this is per hour, one structure. Second structure is per project. We used to do this a lot, probably 2 or 3 years ago. So we had defined scope and we had set price and set timeline to do the project. Typically it’s a good idea for somebody who getting started and they want all automations to be set up and they don’t want any other service moving forward. They might do it themselves. Another popular option is revenue share. So They either charge you something monthly and the rest is based on performance, or they strictly do the performance-based. But this model, we used to do that, but we don’t like it to continue doing this because it’s hard to define and explain if it’s email generated or any other channel generated that revenue. And two more. The next, this is where how we do our service is retainer service. So you pay specific amount monthly for specific service you pick. And the last one is per email. A lot of agencies, like bigger agencies, they charge per email. So for example, you have 10 emails and you pay like, I don’t know, like $5,000 for 10 emails and you pick as a customer, you decide where to place that email. It’s in automation or in a campaign or it’s up to you. Yeah, like that.

Vira: 14:05

Right. Tell us more about the benefits of retainers. I’ve seen like the biggest, biggest change with my clients when we switch to the retainer model, just because it takes time. Email marketing always takes time, like optimization and like setting up the flow. It’s just like a small part of it, but so much is happening like behind the scenes. So tell us more about the retainer thing.

Andriy: 14:29

I’m trying to research what is a podcast episode, what is So the podcast episode was Tim Kerouac. I like his example. He said if you do project-based service, you’re helping a client build a bicycle, but you do not teach them how to ride it. So that’s why retainer is much better because you build that bicycle and you are with them teaching them how to ride. When they learn, they are riding with you, and then when they are good on themselves, like we discussed in previous episode about next level, then you can hire somebody internally to take care of the emails. So that’s why retainer is the best. And I personally believe when you work with somebody on a retainer basis, it’s a partnership, not you work for me or something like that. It’s a partnership, it’s a collaboration, and each party will benefit.

Alissa: 15:20

And we had a conversation about that internally as well, where it’s like we work in partnership with you. We’re not your personal assistant to do whatever you want. Like we’re the experts. So let us do what we’re— and what we have an expertise in anyways.

Vira: 15:33

And then you’re getting invited to all of these fancy rooftop parties, right, Dolly? We have a coworker who started working with this new brand, and yesterday she was invited to their internal party. I’m like, woo!

Andriy: 15:46

Name the brand. They actually, like, very famous. We’re getting those famous brands, and I’m like, even not aware that they are famous.

Vira: 15:54

I don’t know how to pronounce their name.

Alissa: 15:56

Maison Kitsune. I think is how you pronounce it. I apologize if anyone who works there is totally offended by how I just pronounced that.

Vira: 16:04

I think it’s Kitsune because it’s like a Frenchy.

Alissa: 16:07

Is it Kitsune?

Vira: 16:08

Yeah. Uh, let’s, let’s just like ask them. I, I’m pretty sure it’s like a Frenchy something.

Alissa: 16:13

Maison Kitsune. Oh yeah, no, this is me. I speak French. Maison Kitsune.

Vira: 16:20

Kitsune.

Alissa: 16:20

However, however you say it.

Vira: 16:22

Yeah.

Alissa: 16:23

So yeah, rooftop parties.

Vira: 16:24

She was invited to their rooftop party and few weeks ago I got like a package from client and I received the serum for baldness, like when you’re bald and you’re like putting— I’m not. I’m like, it’s a hair— it’s a hair growth serum, but that’s like the only thing that they are selling. So that’s— send it to me.

Alissa: 16:45

I’m not bald, but I’m balding. It’s postpartum life. It’s not good on your hair.

Vira: 16:49

Yeah. So I mean, the point that we are trying to deliver for so long now is that when you work as a retainer with a client, you build the relationship with them. That’s the first thing and you get to know their business so well. Yeah. And you have like enough time and energy and resources to go deep and to tackle those like big things. Yeah.

Alissa: 17:13

Yeah. I love it. I love it. Okay. Andriy, before we end this episode, we do want to know, can you explain the difference between the packages that like we offer in terms of retainer and like what that looks like and what the benefit is between one and the other? And why there’s such a differentiation in the pricing as well.

Andriy: 17:31

Sure. I wish Amara’s here. She’s the best selling those packages. She’s like few words into explanation and the customer’s like, sign me up.

Alissa: 17:40

Yeah, she’s amazing. And she explains everything like so calmly as well. She’s like, well, that’s very simple. Let me explain. You’re just like, you’re like almost hypnotized by her voice. It’s amazing.

Vira: 17:51

She knows how to explain stuff.

Andriy: 17:53

Alissa, so we’ll see how you will—

Alissa: 17:55

No, don’t put that on me.

Andriy: 17:57

No, no, after 4 kids, I’m done.

Alissa: 18:00

Yeah, I thought you were gonna ask me to explain. I was like, don’t do that to me. Yeah, after 4 kids, yeah, yeah, for sure.

Vira: 18:08

Yeah, for sure.

Andriy: 18:09

So basically what we believe, one of the, our values, company values, is embrace integrity, which I mean subcategory is like transparency. That’s why we put our pricing on our website. Our business coaches, consultants advise against it because if somebody making 100 million a year, you can pitch them different, more expensive package versus somebody who making only 1 million. But we said, no, let’s put it on our website and we have 3 packages and packages include the same kind of service. There’s only one differentiating factor. How many campaigns are you getting per month? So in the first package, bronze one, we include all automations and almost unlimited emails. Typically it’s between 35 to 50 emails that we put in our email marketing strategy. Strategy, but no campaigns. That’s the next one, silver and gold packages, which include all automations plus X number of campaigns. So in silver, we have 5 campaigns per month, and in gold, we have 10 campaigns per month.

Alissa: 19:14

What’s the benefit? What’s the most popular? Let’s get into that as well.

Andriy: 19:18

I mean, for us, of course, the most expensive ones are US.

Alissa: 19:22

Not for us, I mean for other businesses. What makes the most sense for a business? Because we have, we do have a lot of clients who come on and they’re like, well, we just want to do campaigns or we just want to do flows. We don’t need all of that.

Andriy: 19:34

Yeah. So the silver one, this is like our typical marketing trick. Like you put the middle one, the most attractive plan, and if you calculate how much it costs, what kind of benefit you will get, it’s more the most beneficial one. The silver plan is 5 campaigns per month.

Alissa: 19:51

And the campaigns are really important for us to oversee as well because we do have that bronze package where we just look at flows and we optimize over the course of time. But for us as email marketeers or email nerds, as I like to call us, it’s really important for us to see like the entire view of everything that’s going on. Because even though when we’re just doing flows, we do tend to look at very briefly and definitely not in depth the campaigns that you’re sending out. We don’t have any control over who you’re sending to, how you’re sending, what those emails look like. And so we’ve actually had it in the past where clients ask us, hey, just touch the flows. We don’t want you touching campaigns and their sender’s reputation. Actually goes down or their email marketing revenue goes down. Just overall things aren’t matching up and the flows are performing really well, but their campaigns are not. And then it becomes problematic because now the flows aren’t sending out properly because the campaigns are negatively impacting the sender’s reputation, deliverability, all that good stuff. So having like a full approach to the email marketing and understanding that when you hire an agency or you hire a freelancer, you need to give them access to look at all aspects of your email marketing. Because when you just kind of pick and choose, there end up being these little holes that come up and those little holes turn into giant black holes and then it becomes really problematic for you. Not to scare anybody, but yeah.

Vira: 21:06

Yeah, I agree. And ideally, if you can have like one person or like one firm or agency overlook your entire, say, Klaviyo account, SMS and email marketing, that’s like even better because in this case you have this like omnichannel marketing, right? Pretty much.

Andriy: 21:25

Yeah, you’re— but remember we said not to sell SMS service on publicly.

Vira: 21:31

Oh yeah, yeah, we are not doing it, you guys, not yet anyways.

Alissa: 21:40

No, we’re past that, Andriy. We like SMS now.

Andriy: 21:43

We don’t offer that publicly on our website. We, we are very niched, you know.

Vira: 21:49

Yes, so this is true, this is true.

Alissa: 21:52

So for all of you listening who don’t work with us, we do not offer SMS SMS. But if you are a client and you work with us, I’m winking, I’m winking right now. I’m not saying anything, but I’m winking.

Vira: 22:01

Or if you’re doing your SMS or if you’re doing it internally, like, make sure that like one person oversees your entire strategy because SMS and email, they are really connected.

Alissa: 22:14

So they go hand in hand.

Andriy: 22:16

Yeah, I want to say that.

Alissa: 22:20

Sorry, go ahead, say it.

Vira: 22:21

Say it.

Andriy: 22:22

But you did it already.

Alissa: 22:26

You said you wanted to say it, so I’m saying now you can say it.

Vira: 22:30

Yeah, they are important. Long story short. And if you want to learn more about SMS, go back to the podcast episode that we have recorded with our SMS friends from Klaviyo. And it was episode number 51. 51.

Andriy: 22:47

Yes.

Vira: 22:48

Oh, 51.

Alissa: 22:48

There we go. 51.

Vira: 22:51

Yes.

Alissa: 22:52

So guys, if you heard me say that earlier in the episode, it’s 51. Vira just got the number.

Vira: 22:56

Episode 51. Go and learn more about SMS.

Andriy: 22:59

Yeah, but Alissa, I love it. Alissa, I believe we recorded in the previous episode where you were naming the episodes.

Vira: 23:06

Yeah. Oh, was it? Maybe it was the last one. Anyways, you guys, um, scroll down to the description box, scroll down to the description box for this podcast and you’ll find all of the good resources that we are mentioning in our podcast because our amazing team is doing a really good job with adding all of these resources that we mentioned in our podcast to the description.

Alissa: 23:27

Truly, truly, guys, thank you so much as always for joining us. Don’t forget to subscribe and share this podcast with your friends. We promise Andriy will not be here next week. So if you’re tired of hearing his voice, it’s fine. You have a break next week. No, I’m kidding. Andriy, we love having you on here. You add a fun dynamic on here.

Andriy: 23:45

Yeah. If you’re not tired of hearing me, so go to YouTube. We have over 200 videos. Videos where I explained weird stuff.

Alissa: 23:55

Weird but very relevant stuff. Yeah, um, and guys, as a reminder from our episode last week, make sure that you leave us a review. If you do, take a screenshot, send it to myself or Vira via email. Our emails will be in the podcast description, and, uh, once you do, we will send you a free pair of Floam socks. No mattresses yet, we’ll get there one day, but Floam socks if you want them, leave us a review. And also if you are interested in getting some more advice on just email marketing as a whole, how to establish a marketing plan for yourselves, for your e-commerce store, make sure that you visit flowium.com/contact. You can sign up for a free consultation and we will provide as much insight as we can for you. And yeah, we love having you guys on here with us.

Andriy: 24:41

I have to ask something.

Vira: 24:42

Yes, go ahead.

Andriy: 24:43

Vira, why’d you not You never mentioned your podcast here or your YouTube channel. You’re going crazy, but you’re not promoting, cross-promoting.

Vira: 24:53

Well, let’s do this. Let’s do this, you guys.

Andriy: 24:55

No, first answer why.

Vira: 24:57

Why? That’s a good one, Andriy. I wasn’t sure if it’s professional enough to mention all of my side gigs because I also bake stuff. That’s something that I like to do. Cook really well. I do hikes, but whatever. Yeah, sure. Let’s cross-promote my podcast.

Alissa: 25:19

Do it, Vira.

Vira: 25:19

I’m actually working on this really exciting project. It’s called Adore Blends, adoreblends.com. So this will be matcha and mushrooms blend. And it’s sort of like our internal team joke already. All of the mushroom jokes, guys, I hear them all the time.

Andriy: 25:35

Send it to Vira.

Vira: 25:36

Yes, yes. They are all towards, towards me, all of the mushroom jokes. But I’m also working on this exciting project, on this exciting podcast a podcast for women that is called the Women We Adore. And this is a podcast about all of the baddest women from all the different walks of life— entrepreneurs, mompreneurs, people who want to achieve more in life. And I already have posted 7 episodes, so go and check it out. It’s called Women We Adore Podcast, and I have recorded a few really good ones there. And spoiler alert, some guests from Women We Adore Podcast are going to be on our Flowium podcast. Yes. So you can have more of them. So thank you so much for giving me this opportunity to talk about my project, Andriy. Wow.

Alissa: 26:20

I’m literally on your website right now, Vira. I just signed up because I want to win a free—

Andriy: 26:25

Yeah, but you will receive nothing.

Vira: 26:27

Yes. For now.

Alissa: 26:29

What the heck, Vira? What kind of email marketing is this?

Andriy: 26:32

Yeah, I told her.

Vira: 26:34

That’s why I’m thinking about hiring you guys to do my email marketing.

Alissa: 26:38

Yeah, I would totally do it for you. I’m not even supposed to take clients on anymore and I would totally do it.

Vira: 26:44

Same.

Alissa: 26:44

Anyways, that’s besides the point. Okay, what are we talking about next week?

Vira: 26:47

Next week, timing. We will be talking about timing because timing is probably like the main resource in email marketing. Time isn’t the main thing, it’s the only thing, as they say. So what is the best time to send emails, when to send emails, and like what kind of emails you should send when? Come back next week, next Tuesday, and share this juicy podcast with us. Thank you so much for listening, you guys.

Alissa: 27:12

Bye, everybody.

Vira: 27:13

Thanks again.

Andriy: 27:13

Bye.