How to Measure Email Marketing ROI: Metrics That Actually Matter for Indian Businesses

What’s ROI in Email Marketing?

A business’s growth and success depend on how effectively it advertises. Marketing involves investing money to advertise products or services a company offers. To measure success, the company calculates the Return on Investment (ROI). This is what helps you calculate what you are making through advertising.

ROI in email marketing is also the same. You calculate the overall cost of email marketing, including the cost of email software, design, content, as well as time and resources you put into delivering emails.

However, calculating ROI does not depend on the email open or click-through rates. While these metrics give you a basic idea of how your campaign is performing, ROI requires evaluating how your email drives valuable actions and contributes to your business goals. Therefore, you should track your email marketing metrics.

Email Marketing Outperforms Other Digital Channels

Most marketers do not realize this, but email marketing is still effective. It might be the most profitable channel for your business and helps build stronger relationships with customers.

But today, everyone is fighting in the crowded, expensive market, such as Facebook and Instagram. While these platforms help you get customers, smart businesses are quietly making money in the less crowded, cheaper market—email.

When you do social media ads

Social media platforms are very expensive. For example, to show your advertisement to approx. 1,000 people, they may charge Rs. 500 - 1,000. Suppose you pay Rs. 10,000 to Instagram ads and you get 20 orders. In each order, you made a profit of Rs. 500. Now, when you calculate your ROI (Return on investment), you will find that:

Your total earnings: 20 × 500 = Rs. 10,000.

You already spent Rs. 10,000 on Instagram ads, and you earned Rs. 10,000. This means you made 0 profit, or even a loss if you calculate shipping rates and other expenses.

When you do email marketing

Emails are almost free to send. You build your email list by collecting data from visitors who visit your website. You pay a certain amount to your email service provider. Let’s say Rs. 2,000 per month. Each email costs you approximately one rupee.

Suppose you send 5,000 emails. Only 40 people buy your product, and you make Rs. 500 profit in every order. You will calculate your profit, like

Your total earnings: 40 x 500 = Rs. 20,000

You spent only Rs. 2,000 for email services. So, you earned a total profit of Rs. 18,000.

Most startups and even traditional SMEs are investing in email marketing and making a marginal profit for every Re 1 spent on emails.

However, there’s a problem. Most businesses do not measure it correctly. They are just stuck at tracking open rates and, even worse, not calculating ROI at all.

If you can’t measure it, you cannot improve it. In this guide, we have elaborated the steps to measure email marketing ROI and track the metrics that actually matter for Indian businesses.

How to Calculate ROI

Now comes the most essential part of our blog: how to measure email marketing ROI. There are two formulas that every Indian business owner and marketer should know about.

Formula 1: Basic Formula

ROI = (Revenue Generated - Campaign Cost) / Campaign Cost x 100

Let’s understand this with an example.

Suppose you have an online clothing brand in Pune. Your email campaign generated Rs. 1,25,000 in revenue, and you spent Rs. 4,500 on marketing. Let’s calculate the ROI using the same formula.

ROI = 1,25,000 - 4,500 / 4,500 x 100 = 2,677.78%.

This means, for every Re 1 spent, you made Rs. 26.78 in profit, which is an excellent email marketing ROI.

Formula 2: Revenue Per Email (RPE) and Revenue Per Subscriber (RPS)

ROI tells you the overall profitability, but RPE and RPS tell you how much revenue each email and subscriber generated.

RPE: Total Email Revenue / Total Number of Emails Delivered

RPS: Total Email Revenue / Total Number of Active Subscribers

Let’s calculate RPE. If you sent 10,000 emails, your RPE = Rs. 1,25,000 / 10,000 = Rs. 12.50

So, each email generated an average revenue of Rs. 12.50.

RPS for 5,000 subscribers = Rs. 1,25,000 / 5,000 = Rs. 25

Each subscriber generated Rs. 25 in revenue on average.

However, for accurate email marketing ROI, you must consider other hidden costs, such as GST, lead magnets, landing page tools, and list-cleaning tools costs.

Why You Should Track Email Metrics

When a business in India builds and launches an email campaign, it wants to see the results. These results can be measured by tracking a few essential metrics that we will discuss below. But most businesses either overlook the importance of email marketing metrics or they just don’t know why it is essential to track.

Well, tracking these metrics is important because it gives you answers to the three most important questions:

• Is my email reaching people?
• Are people interested in my email?
• Am I making money from it?

If you are not tracking, you are just guessing. If your email campaign fails, you will never know what happened. Was it the subject line? Was it the offer? Metrics let you know the exact reasons and fix the issues efficiently. If you find tracking all these confusing and difficult, a proper analytics and reporting setup can show you everything in one simple dashboard.

ROI Is the Business Metric You Must Track

Apart from this, what you should know is that email marketing ROI is also a metric; in fact, the most important metric you must track. Most businesses think that metrics are technical terms like “open rate” and “CTR,” but ROI is a business metric.

The common email metrics tell you how your email campaign is performing, but the business metrics tell you how your business is performing because of email marketing.

ROI is the most important metric. It connects your email marketing to your bank account.

Let’s understand this with an example.

You send 1,000 emails, and the open rate shows 50%, which is amazing. But you have 0% ROI, which means you earned nothing from the campaign.

On the other hand, you have only a 10% open rate, which is low, but you have 50% ROI when customers buy.

At the end of the month, you won’t calculate how many people clicked on the link (CTR), but you will see how much money your business makes. However, every metric plays an important role in tracking the performance of your campaign. But most businesses make a common mistake of tracking everything. Tracking 15-20 metrics can confuse you. Instead, you should track only a few essential ones that we have discussed below.

Email Marketing Metrics That Actually Matter for Indian Businesses

You might have read several blogs on important email marketing metrics and KPIs to track. But tracking everything is neither possible nor logical. Here are the most important metrics that actually matter for Indian businesses you must track to know what you need to fix.

Open Rate: How Many Recipients Open Your Email?

One of the most common and obvious metrics that every business owner looks at when reviewing the success of their B2C or B2B email campaign is the email open rate. This indicates how many people received and opened your email. If you have higher open rates, this means your email subject line was compelling enough to grab customer attention.

Open Rates = Opened emails / Delivered emails x 100

Calculate the open rate of your email campaign using this formula. The Indian benchmark of 25-35% is considered good for open rates. During festive seasons, like Diwali and Dussehra, the rate can go higher.

However, you should not rely on open rates only, because factors such as the recipient, time of day, and spam filters affect the metric. Also, higher open rates don’t mean more conversions.

Click-Through Rate (CTR): How Many Clicked?

CTR tells you how many people clicked on the link inside the email. This is an indicator of how successful your email was in prompting actions. But it tells you, out of everyone who received the email, how many people actually clicked, which is different from CTOR (Click-to-Open Rate).

CTR Formula: Clicks / Delivered Emails x 100

CTOR Formula: Clicks / Opened Emails x 100

If the CTR is high, it signals your emails are good and resonate with recipients. But if it is low, this means your email has a problem from the beginning. Either the calls-to-action (CTAs) are not compelling enough, or they are not well positioned. 2-3% CTR is a good benchmark for Indian businesses.

Conversion Rate: How Many Bought?

It is one of the most important metrics to measure your ROI because it tells you how many people actually took a desired action after clicking on the link. From signing up for a webinar to making a purchase or downloading a guide, conversion rate tells whether your email campaign is driving value for your business.

Conversion Rate Formula: Number of Purchases / Emails Delivered x 100

1-2% conversion rates are a solid benchmark for Indian businesses, but if it’s above that, then it is excellent.

Bounce Rate: How Many Emails Fail to Reach?

This metric measures how many emails fail to reach the recipient. This can happen for several reasons, but two common ones are hard bounce and soft bounce.

0.3-0.7% is a typical indicator across the industry; having a bounce rate higher than this can indicate issues with the quality of your email list and even technical problems with email deliverability. Hence, maintaining a clean and updated email list is crucial for improving email deliverability and reducing bounce rate.

Revenue Per Email (RPE): Value of One Email

Open rate and click rates tell you how people are engaging with your emails, but RPE shows the real value of your email campaign. It shows if your campaign is generating real revenue. It is important because it makes the decisions very easy. You will exactly know how much you make from every single email. It is like the price tag of one email in your list.

Unsubscribe Rate: How Many People Left?

It is quite common to lose subscribers over time. But if you are facing a sudden spike in unsubscribe rates, there is probably a bigger underlying issue you are overlooking. If more subscribers are leaving, this means your content is not resonating with your audience.

A good unsubscribe rate is 0.5%. If it goes above 1%, either you are sending too many emails that are annoying recipients or sending irrelevant emails that subscribers aren’t interested in.

Therefore, you should always segment your email list so you can send more relevant emails to prospects based on their preferences, behavior, and stage of the customer journey.

Spam Complaints: How Many Marked You As Spam?

What is a spam complaint? When someone hits “Report Spam” instead of “Unsubscribe,” your email is treated as spam. This affects your sender reputation. If your spam score goes above 0.1%, Gmail and Yahoo will start putting your future emails in the spam folder because they are very strict. The ideal benchmark for Indian businesses is 0.1-0.5%. If you are above this, you are in danger.

Forwarding Rate: How Many Shared Your Email?

One of the easiest and most effective ways for Indian businesses to grow their audience is through family and friend recommendations. So, you should track the forwarding rate to know how often people have shared your emails. A higher forwarding rate means your email is so valuable and interesting that people are actively sharing and recommending it to their friends and family.

There is no good standard rate for this because even a 1-2% rate is excellent. This metric is helpful for businesses that want to grow organically because emails shared by recipients bring in more leads and potential customers.

Conclusion

We know that businesses in India prefer online advertisements, especially Instagram and Facebook ads. But let’s be honest: running ads is getting expensive day by day. Also, it is not the same as before. Even on e-commerce portals, no one shares the customers’ details with you, making it almost impossible for you to reach the same customer again.

Email is different. It is the only platform where you own your subscribers. The customer is yours; you have their email address and other relevant information. You can communicate with them without paying extra charges. This is why email marketing ROI is still higher than other modes of marketing.

You don’t need to be an email marketing expert. Just ask a few questions after every email you send, and your metrics will tell you what exactly to fix.

However, we suggest you don’t try everything at once. Begin with only 100 emails and gradually increase the numbers. And most importantly, invest in good email analytics tools in India.