Email Marketing

The Right Way to Calculate Email Marketing ROI in eCommerce

While most eCommerce businesses take the "open & convert" route of calculating email ROI, we're here to tell you about the RIGHT ALTERNATIVE.

The Right Way to Calculate Email Marketing ROI in eCommerce

77% of marketers believe email marketing drives insane value. 

The returns on email marketing are now proven and hence, undeniable—research pegs it at $42 for every $1 spent!

However, along with varied metrics, another factor that can make email marketing ROI calculations a bit of a dilemma is:


Most eCommerce brands assume an “open and convert” attribution works—when a customer opens and clicks through an email, conversion occurring within 7 days is attributed to it. 

Since we’ve repeatedly found this to be problematic, we’ll dissect how to calculate eCommerce email ROI the *right* way in this piece. 

Here’s what we’ll cover:

1. How is email marketing ROI usually measured?

2. What do you need to determine before calculating email marketing ROI?

3. Where does email marketing fit in marketing attribution models?

4. Click & Convert: the most sensible way of calculating email ROI

5. How is ROI data used for email marketing?

6. What is a good email marketing ROI percentage?

7. How can you improve your Email Marketing ROI?

Let’s jump in. 

1. How is email marketing ROI *usually* measured?

In eCommerce, when businesses attempt to calculate their email marketing ROI, the idea is to consider the revenue that email campaigns create and the costs that are required to run these campaigns. 

Email marketing ROI is typically calculated as follows:

Step 1: Email Marketing Revenue - Email Marketing Costs= Net Profit

Step 2: Net Profit âž— Email Marketing Costs * 100

So, in real time, it would look something like this:

If $100, 000 is your email marketing revenue and $20, 000 is the email marketing cost, then net profit would be $100, 000 - $20, 000 = $80, 000 

So, ROI then would be:

Net Profit âž— Email Marketing Costs * 100 = 80, 000 âž— 20, 000 *100 = 400%

2. What do you need to determine before calculating email marketing ROI?

eCommerce businesses need to consider cost and revenue factors before calculating email marketing ROI

To calculate email marketing ROI, it’s important to look at what makes up the costs, and WHAT you count as a return. 

In terms of revenue, a business needs to pay special attention to:

The metrics to assess campaign success

Which metrics you choose to analyze the success of your email campaigns are based on the goals you set for each campaign. 

At Convertcart, we consider the Click Through Rate (CTR), Conversion Rate, Revenue Per Email and Return on Investment to be the most effective metrics. 

Incremental revenue from email marketing

This is a very important factor to determine before you set about to calculate email marketing ROI. 

Here are a few ways we’ve seen being effective in assessing incremental revenue that can be attributed to email marketing:

  • Use time frames for comparison:
  • Perform A/B testing

In terms of costs associated with email marketing, here are a few key areas you’ll need to look into:

- Email service provider fees

- Email marketing staff salaries

- Spends on automation tools for A/B testing, personalization etc. 

- Segmentation & data management costs

- Spends on performance analysis & optimization

- Spends on deliverability & monitoring tools

- Content creation costs (including copywriting & design)

- Additional costs for buying templates, licenses, software etc. 

Check this out: 13 Solid Ways To Improve Marketing Email Delivery Rate (eCommerce)

3. Where does email marketing fit in marketing attribution models?

the success of email marketing ROI depends on the attribution model you choose


Marketing attribution is an integral part of calculating an eCommerce business’ email marketing ROI.

The task of an attribution model is to assess which channels are contributing to overall conversions and in what way. 

In terms of email marketing, the attribution models that are typically used include: 

First click Attribution

In the journey towards a successful conversion, the first click attribution gives the full credit of the conversion to the CTA the shopper first clicked on. 

For example, a shopper first clicks on a landing page CTA and lands up on the “sale” page. However, they don’t buy immediately. 

Two days later, they receive an email featuring a limited period sale, click on it and finally buy. 

In first click attribution, the landing page the shopper opened in the first instance would be credited for the final conversion. 

Last click Attribution

This takes into account the last click the shopper makes before converting. 

Let’s consider an example where a shopper steps into an eCommerce website for the first time through the brand’s “link in the bio” on Instagram. 

Though they browse through multiple pages in this session, they eventually drop off.

A few days later, they see a Facebook carousel ad with three of the products they had seen the other day on the website. 

They click on one of the CTAs and buy a product. 

In last click attribution, the Facebook ad will receive the brownie points for making the shopper convert.

Custom Attribution

As the name indicates, custom attribution helps eCommerce businesses apply their own subjective weightage to touchpoints as far as conversions go. 

The weight a business ascribes to a touchpoint depends on the following:

- Rate of engagement

- Conversion rate (for each touchpoint)

- Customer feedback on CX & preferred channel

- Demonstrated customer behavior (how they interact with each channel)

- Objectives of the business

So, how does email fit into this structure?

Let’s say, social media consistently helps you get new customers and then engage them repeatedly. 

But you’ve repeatedly found the same customers relying on your Whatsapp messages to add to cart beyond the first purchase. 

However, you may have also seen people adding to cart after the Whatsapp messages but not buying—and buying ONLY AFTER you send them abandoned cart emails. 

In this case, based on the factors mentioned earlier, you may want to fix 40% weight to social media, 20% to Whatsapp marketing and another 40% to email marketing. 

Linear Attribution

In a linear attribution model, an eCommerce business gives equal credit to all the channels that were in the customer’s journey up to the conversion. 

Let’s look at an example: 

The shopper first lands on your website through an ad on Instagram and signs up for emails.

Next, they find an email offer to make their first purchase sitting in their inbox. 

But finally they convert, when a search enquiry they typed on Google returns the website as an ad, and they click on it. 

In linear attribution, because there have been three touch points before the shopper became a customer, each of them will get 33.33% of weightage. 

Position Based Attribution

The assumption used in this marketing attribution is that the first click and the last click are the most important in determining conversions—it also gives secondary credit to channels that may have played a role between the first and last clicks to make the conversion happen. 

This is why in this attribution model, a business gives 40% conversion credit to the first and last clicks and 20% divided amongst the channels in between. 

For example, a shopper expressed interest in a product because of a Google ad but then only signed for your business newsletter. 

Next time, they saw an Instagram ad from your business, clicked on it but didn’t convert. 

But finally, you sent them an email with a simple message saying “Want a 15% off on a favorite you’ve been checking out?” and they converted. 

In this case, position based attribution would give 40% weightage to the Google ad, 20% to the Instagram ad and 40% to the email. 

Here’s what you need to do to choose an attribution model:

Assess the customer journey 

How complex your typical shopper’s journey towards a conversion is, will be the first step to figuring out an attribution model. 

So, let’s say your primary channel of communication is email and you’ve seen consistent conversions on your storefront through email discount announcements & offers, a first-click attribution would work well. 

Assess the available data

Both the availability and quality of data become important when you’re trying to arrive at an attribution model. 

Typically for more complex attribution models like position based attribution, you would need access to more complex and varied data. And for this to happen multiple platforms need integration and customer data tracked in detail. 

Focus on what you’re trying to achieve

Is it to generate new leads? 

Is it to make the most of existing email subscribers list & drive them towards conversions? 

Or are you trying to reduce your ad spends & see if email can jump in to do most of that work? 

What your primary business and campaign goals are will tell you how to arrive at an attribution model. 

Research on category/industry level practices 

There’s also that bit about not reinventing the wheel. 

If something has already worked for other businesses in the same category or industry, look for the “why?”

You might like: 50+ eCommerce Email Marketing Statistics (2023 Data)

4. Click & Convert: the most sensible way of calculating email ROI

While many eCommerce businesses are continuing to go the “open and convert” way, at Convertcart, we’ve noticed ONE major flaw with this approach. 

Insanely misleading numbers. 

So, let’s say 100k emails are sent, of which 40k are opened, and 300 from the 40k convert (In any session on the website 7 days from opening the email)—the email send/campaign will get the credit for all 300 conversions.

This is attribution gone haywire because A LOT can happen in 7 days in terms of customer behavior and the touchpoints they access—in which case, attributing it all to email can offer attractive numbers but not let you finetune your overall ROI strategy in the long run. 

Instead imagine the following scenario:

A shopper clicks on an abandoned cart email and lands up to find their cart waiting for them. 

They see the brand’s making them a new offer of 15% off— the instant price drop makes them successfully checkout. 

At Convertcart we champion this as the “CLICK & CONVERT” attribution. 

Here’s why we’ve seen it working again and again:

- It makes measurement precise because it sticks to the SINGLE SESSION model

- It avoids measurement errors that comes with weightage % approximations 

- It is HIGHLY TRANSPARENT & allows businesses to grow their email marketing strategy in a more targeted way

So, like earlier, if we have to crunch numbers, with Click & Convert attribution:

100k emails are sent, of which 40k are opened, 4k are clicked, and 100 from the 4k clicks convert in the same session—the email send/campaign will get the credit for all 100 conversions.

No confusion about how long the attribution window should be and why it should be. 

No unnecessary attribution biases towards certain channels over others. 

No unnecessary wait time to calculate how email is performing in REAL TIME!

No flaws when it comes to ROI data—which means better email marketing strategies in the future as well!

You might like: 16 proven ideas for improving email conversion rate (+ examples)

5. How is ROI data used for email marketing?

The right kind of ROI data is critical for email marketing success, both in the short and long term. 

Here’s how eCommerce businesses use ROI data to improve their email marketing efforts:

To improve campaign performance

Looking at existing ROI data, you can assess the ratio between what you invested into a campaign and the returns it gave. 

When you assess email-related metrics such as revenue per email, average order value and conversion rate, you’re better able to see which aspects of the campaign worked. 

ROI data helps businesses improve the performance of email marketing campaigns
To allocate resources more effectively 

The more precise your ROI data is, the better it’ll be able to guide you with resource allocation. 

For example, if you consistently find email marketing giving you higher ROI than other channels for 6 continuous months, you can decide to allocate more resources to it. 

To support A/B testing efforts

When you assess ROI data, you’ll be able to better understand which aspects of an email worked for shoppers and which didn’t. 

This can make you see patterns around well-performing subject lines, CTAs that helped convert within the same session as well as content & visual elements. 

This is ideal for you to come up with more A/B testing ideas to put into action and build hypotheses around. 

To decide on long-term email marketing strategy

Once you begin to see the right ROI data, you’ll be able to gather a clearer picture of how to use resources for this marketing channel. 

In addition, knowledge of what elements have repeatedly worked will help you apply them across more instances. 

Check this out: Email A/B Testing: Elements to Test + Mistakes to Avoid

6. What is a good email marketing ROI percentage?

While most businesses effectively using email marketing see massive ROIs ($42 for $1 spent), it’s usually said that a 5:1 ratio between what’s earned and what’s spent serves well as a beginning point. 

Email marketing is able to fetch much higher ROI than other channels, for a variety of reasons:

- Email has one of the highest deliverability rate—it stands at 96%

- Email is easier to measure when the right tools are in place

- Email lends itself for great pairing with all other marketing channels (for both transactional & informational content)

- Email marketing is known to drive 9% of a website’s traffic

- 60% of shoppers have confirmed that they’ve made a purchase because of an email (contrast this with 12.5% who said the reason was social media)

With precise ROI data, campaign optimization and effective A/B testing, this number can see massive improvements in little time (experience speaking!)

7. How can you improve your email marketing ROI?

There are multiple direct & indirect ways to make sure your email marketing ROI isn’t just an attractive number but really pays as well:

a. Build a relevant email list (through segmentation)

Segmentation will allow you to finetune messages, personalize offers and make recommendations in a way that shoppers feel inspired to convert—again and again!

To improve your email marketing ROI, it’s necessary to target only those who’ve shown interest in your brand and products. 

In your segmentation efforts, create sub-groups based on browsing history, preferences and buying behavior. This makes it easier to craft precise messages and make offers that increase the chances of conversion. 

Here are a few other to-dos to build a great email list:

Make your email opt-in prompts engaging

Opt for non-intrusive pop-ups and locate them on high-intent pages like product pages for better impact, and offer sign-up forms that are quick to fill. 

Lou & Grey, a loungewear brand, offers prompts that are easy on the eyes and uses language that’s unabrasive—one look at the way their CTAs are designed, and you’ll know they’re prioritizing one over the other!

Lou & Grey creates engaging email opt-in marketing prompts
Weed out inactive customers & subscribers regularly 

Check metrics like open, click-through and conversion rates to determine the extent of inaction—pick those who’ve gone quiet for a while for retargeting campaigns. 

Get rid of hard-bounce emails & email addresses 

For addresses check for the frequency—if it’s repeated a few times in a row, then it’s probably invalid. 

Look into multiple subscriptions from the same user 

Especially when businesses import contacts, duplications happen—ensure a user receives an email just once. 

You might like: 7 surefire ways to grow your email list in 2023

b. Run UX checks on content & design

UX audits on content & design will tell you if customers are convinced enough to convert. 

A/B testing will further enable you to prioritize elements that are working smoothly. 

Here’s a checklist you can refer back to whenever you’re trying to optimize email design for improved ROI: 

Prioritize “responsive” for mobile 

Mobile customers contribute to the opening of 41.6% of emails, which makes it necessary for them to be scannable, designed to adapt to various screen sizes and feature ONE prominent CTA. 

Feature simple yet visually rich CTAs 

This offers direction on next steps and speeds up action, enhancing chances of conversions—well-designed CTAs also help businesses track & measure email campaigns more effectively. 

Made features simple yet distinct CTAs in their email marketing campaigns
Use subject lines that create curiosity, quickly 

Email subject lines that don’t exceed 10 characters, have the highest open rate of 58%. 

A/B test important variables frequently 

Run tests on content variations, CTA color, size and placement, subject lines, nature of image, image placement etc.

For more ideas: Email A/B Testing: Elements to Test + Mistakes to Avoid

c. Assess the effectiveness of offers

Why must you replace a 10% discount with a $50 cashback?—your ROI data will tell you why. 

Look into the following to make your email offers more compelling:

Craft offers based on motivations 

Look at what drives each of your customer segments—for example, a seasoned customer might appreciate first discounted access to a product launch, while a new one may get excited when you feature on offer on their wishlisted items. 

Use urgency & exclusivity to inspire immediate action 

Feature the number that’s remaining in stock, the number of people who’ve been buying the product, mention if it’s a rarely restocked item to create urgency etc.

Support offers with helpful content

A 10% off on one of your hero products might sound flat to the common person—but imagine substantiating the same email communication with content that showcases while that product can make a REAL difference. 

Check this out: Top 20 lead nurturing emails in eCommerce

d. Automate, automate, automate!

Come up with bulk & personalized email strategies backed by the power of error-free automation. 

Here are a few aspects email automation can instantly help you with:

Post-purchase updates

Create a sequence that takes the worry out of tracking delivery & fretting about shipping—given that 72% of shoppers prefer convenient delivery windows over fast shipping, this is something to include in your email marketing efforts. 

Birthdays, anniversaries & surprises

Research proves that birthday emails do wonders for customer nurturance & engagement—they get 342% more revenue per email as well as earn 179% more unique clicks. 

Quizzes & surveys

Automating quizzes & surveys based on segmentation is also a great idea—automated quizzes will ensure you’re able to match the customer’s journey and surveys will fetch you data that you can use to empower your email marketing strategy further. 

e. Ensure the right attribution model is in place 

Looking at existing ROI and associated data, you’ll know if your current attribution model is falling short—you need something that’s quickly quantifiable, measurable yet error-free!

Here are a few things to consider before you swear by one attribution model or another:

Clarity on marketing goals

What you’re trying to achieve through marketing and where email fits into will give some crucial answers.

Are you looking at improving customer lifetime value or is your goal more immediate conversions?

When you know what outcomes you’re looking to achieve within a period of time, you can see which attribution model offers you the depth, consistency and precision you need. 

Customer interactions across the conversion funnel

Where email comes into contact with your unique conversion funnel is a key area. What kind of touchpoints are you looking to design or refine for customers across the 5 stages of conversion? 

This will tell you the weightage that’s to be distributed among channels and what kind of weightage email independently deserves. 

The quantity & quality of available data

When it comes to the relationship between data and attributions, it’s a bit of a chicken and egg situation. To land the right attribution model, you’ll need enough data to study.

If you don’t have a lot of data quantitatively or qualitatively, you may not be able to leverage all kinds of attribution models. 

Attribution timeframes 

To lock into a timeframe for a campaign, the idea is to look at:

- The impact you want the email campaign to have

- What the typical customer journey looks like (at different stages)

- What kind of role email plays in making shoppers convert and be loyal

More on emails:

30 easy-to-copy confirmation email templates (+ best practices & FAQs)

Turn boring transactional emails into cash cows: 10 proven ideas

24 amazing drip email campaigns that actually drive sales

25 product launch email examples that drove massive sales (+ templates)

Transform Email Marketing Into A Revenue Machine

Most eCommerce store owners don’t see email as a serious revenue stream.

Ask them about the importance of email marketing, and you'll hear: “we don’t really have a major strategy,” “we mostly use generic templates,” or “we just send emails to people on our list.”


There are stores out there that drive 30%+ of their revenue from email marketing.

Engage can help you do the same - Book a free demo.

We’ll show you:

  • workflows we can create for your store,
  • proven ways to drive 30% or more $$ from email alone, and
  • successful templates and strategies from your industry (and others).
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