REPLY TO ALL: How Can We Better Report Email Channel ROI to CXOs?

How do you value and report your email channel ROI to C-level executives? Some companies have been very successful in reporting how email channel initiatives generate incremental revenues—such as the average ecommerce business with 10%-30% of annual sales revenues from its email marketing program (i.e., for a large retailer that is $25-35 million per year). However, most organizations have still not accounted for the many cost-savings email breeds nor do they include, for example, hold out groups to demonstrate the impact on Lifetime Customer Value when email is removed.

The time is now to advance our accountability and success in showcasing the full value of our efforts and their impact across all channels in the marketing landscape. The Direct Marketing Association published an economic-impact study which stated, “The ROI for email marketing was $57.25 for every dollar spent. The ROI of all non-email-related online marketing was $22.52, less than half. And yet marketers only spent around $300 million on email marketing efforts, compared to $12 billion for non-email-related marketing—$12 billion to get a return that is less than half of what can be achieved in email.”

How can we come together across media channels to report a more complete picture to C-level executives (CPA, Revenue, AOV, Satisfaction, LTV)? Thoughts? Ideas? Comments? —Barry Stamos, senior director of strategy, Responsys

The Voices of Email had this advice:

Chip House: This, I believe, is all about human nature. We all gravitate to the things we know—to our comfort zone. So when the DMA reports the latest in a string of statistics that shows higher ROI for email, it doesn’t really surprise me. It also doesn’t surprise me that C-level execs (often even CMOs) seem to forget email when it comes to doling out marketing spend. Their comfort zone drives their marketing spend allocation, and unfortunately their own CFO’s aren’t calling them on the disconnect. Ultimately, shame on both of them.

Direct marketing, and online marketing specifically, is inherently very measurable. Take keywords; you can easily track impressions, clicks, conversions etc.—and choose from multiple tools with which to do so. Banner ads—same thing. In fact, with banners, your media buyer/or network takes care of most of the targeting hassle. Perhaps offline media, as well as other online media, get more respect from the CMO simply because they are easier to grasp and don’t require the strategy, planning, list-building, deliverability expertise, etc. that a successful email campaign requires. So, not only do we gravitate to our comfort zone—we do what’s quick and easy. Email marketing often isn’t quick or easy, and to many it carries a stigma.

So how do we value and report the high ROI of our email channel in a way that resonates with a C-level exec? First, you’ll need to show him the stats. Show him all the stats. The DMA number above is just the starter. Another showing the disconnect for online vs. offline spending, from the folks at Forrester, shows that though people spend 29% of their time online, it gets just 8% of the marketing dollars. Disconnect? Umm, yeah!

Second, prove it to your CMO yourself. Monitor your own spend on a handful of offline and online media and see it for yourself. If you’re not tracking ROI individually yet, you’re not doing yourself any favors.

Stephanie Miller: Good for you, Barry—this is exactly right. We as marketers have hidden behind the “email is cheap” myth for too long. We’ve dug ourselves into a budgeting hole. We promoted email as cheap, so it got a small budget. When we were charged with making the channel earn higher return, we just sent more email—not better, more targeted, more relevant email, just more email—because there was no significant budget hit. Now, when revenue expectations for the channel are growing, we find that we have to apply our marketing skills again—inventing and optimizing compelling subscriber experiences in order to generate growing revenue. This requires a budget for creative, testing and analytics in addition to the commoditized fees for delivery and list hygiene. It requires that we consider the email channel for more than just broadcast promotions, but as part of a multichannel experience that includes web and offline experiences and direct sales and education touchpoints. That means we need to measure it and budget for it just like other direct channels. All this should be welcome for both marketers and subscribers.

Have some good advice that we missed? Please add a comment and take part in the conversation.

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