How to Determine the Budget for Your Email Marketing Campaign: 4 Keys to Consider
Master your email marketing campaign budgets for maximum ROI
Published October 21, 2023.
As marketing managers and business owners, we’re always grappling with our marketing campaign budgets. While platforms like Facebook, TikTok, YouTube, and Google ads are popular choices and can be effective, they come with a significant cost that can eat into our profits. However, there's a cost-effective alternative that has proven to be incredibly valuable: email marketing.
Email marketing is remarkably cost-effective with minimal cost per subscriber. Plus, with its potential for significant ROI, it’s a no-brainer for businesses, especially direct-to-consumer (DTC). In this blog, we look at 4 keys to help you determine your email marketing campaign budget:
- Understand the cost efficiency of email marketing
- Measure your ROI
- Look for industry benchmarks
- Track your email marketing progress
Meet the expert
Yaron Been is a renowned growth coach and eCommerce entrepreneur, having built and scaled multiple 7-figure stores. He also hosts The EcomXFactor Podcast and has managed over $10 million in Facebook ad campaigns for various DTC brands while enhancing his expertise on email marketing.
1. Understand the cost efficiency of email marketing
The main cost associated with email marketing is the fee email service providers (ESP) charge. Leading ESPs like Klaviyo and MailChimp usually charge based on the size of your email list. Plus, you may have initial setup costs, such as designing email banners and hiring a skilled copywriter. However, the actual cost of sending an email to each subscriber often amounts to just a few cents. Consider this:
- As a digital form of communication, you completely eliminate costs associated with printing materials, postage, or physical advertising space.
- Many ESPs include automation in their packages, meaning you can save time and money by side-stepping manual interventions.
- Email marketing is scalable and can grow with your business.
What does this mean for your email marketing budget? You have more flexibility. Based on previous campaigns' performance and ROI expectations, you can make an informed decision about your budget allocation. If a particular campaign is performing well, you can allocate more resources to it. If not, you can reallocate those resources.
Try these tips to make sure your email marketing is cost-effective:
- Build and maintain a high-quality email list.
- Craft engaging and relevant content for your subscribers.
- Use A/B testing to optimize your email campaigns.
- Avoid sending too many emails. It can lead to email fatigue and unsubscribes.
- Ensure your emails are mobile-responsive.
2. Measure your ROI
ROI provides insight into how well your email marketing efforts are performing and also guides your next steps for optimization and growth. It comes down to whether the campaign is profitable or not. As we already mentioned, email marketing has the potential to deliver a high ROI. According to the Data & Marketing Association, it can be as high as 42:1.
Why?
Because email marketing offers a direct line of communication to engaged customers, fostering brand loyalty and driving repeat purchases. Plus, if you personalize your emails according to individual customer preferences, you can increase engagement and conversions.
So, using ROI figures from past email marketing campaigns can help you forecast future ones and influence your budget decisions.
Note: Tracking your ROI for email marketing can be challenging due to attribution issues. To overcome this, incorporate strategies like custom UTM parameters in your email campaigns to track and analyze ROI.
Plus, analyzing campaign-specific revenue data rather than relying solely on overall revenue can provide better insights into the impact of email marketing on driving results.
3. Look for industry benchmarks
Industry benchmarks provide valuable insights into what’s considered standard or exceptional in email marketing metrics. This can help inform your budget, gauge your progress, and give you something to compare your activities to, especially if you're just starting out and don't have an extensive history yet. CampaignMonitor offers a comprehensive industry breakdown:
But don't refer to industry benchmarks in isolation—you have to use it in conjunction with other factors and considerations.
Industry benchmarks are a helpful reference point, but you should take your goals, target audience, niche, and circumstances into consideration. If you can, self-comparison over time is also very effective.
4. Track your email marketing progress
Tracking the effectiveness of your email marketing campaign is vital for making data-driven decisions regarding your budget and achieving continuous improvement. You can gain valuable insights into what’s working and what’s not by closely monitoring performance metrics such as:
- Open rates
- Click-through rates (CTR)
- Conversion rates
- Revenue generated
This way, you can justify your budget allocation and ensure your marketing budget aligns with your objectives. By regularly analyzing your email marketing metrics, you can gauge progress, identify patterns, and uncover opportunities for further enhancement.
Sealing success in email marketing
Email marketing provides a cost-effective strategy for businesses to reach and engage their audience. By understanding cost efficiency, measuring ROI, considering industry benchmarks, and tracking campaign progress, you can determine an effective budget and maximize the impact of your email marketing campaigns.
At Mayple, we understand the importance of email marketing in driving growth and achieving business goals. We can help you find a top-vetted email marketing expert to help you set up email marketing campaign budgets, build an email list, segment your target audience, and more.
