Getting Your Money’s Worth: How Much Should Your Email Marketing Cost?

The primary concern of many business owners is attuned to how to improve the conversion rate. After all, without conversion, there’s no business in the first place. A company is built to cater to a demand that exists. That’s how it gains customers and keeps the business going. But when no one knows what your business is and what it can do for them, they won’t come to the door. That’s what marketing campaigns are for: they broadcast the brand, the company, and the products or services that it offers, so customers can realize that there is a problem and that the company is there to answer it. They convert from leads to customers.

A variety of marketing strategies are being employed by businesses all over the world. Everything from SEO to physical and digital campaigns is all set to one end goal: to improve business conversion rates. In the early years of digital marketing, when the online boom was still on the rise, email marketing was one of the primary tools in the arsenal of a digital marketer trying to put a business on the map. While its position on the top spot seems to have been usurped by social media marketing, email marketing is making a comeback in popularity.

You’ve Got Mail: Email by the numbers

Looking at the statistics alone is enough to compel anyone to give email marketing a significant budget for a campaign to improve conversion rates. The Radicati Group’s study has found that more than 34% of the world’s entire population uses email, and the world sends approximately 196 billion emails every day. That in itself is a vast audience, and businesses have taken advantage of it.

At least 81% of businesses claim that they primarily use email marketing to acquire more customers. It’s only logical: just about anywhere online, a person needs to have an email account to create an account. It’s a means to verify identity, and at the same time, it gives the business an instant avenue for direct communication with their customers.

Furthermore, the numbers don’t lie. Email marketing just works. Email campaigns tend to have an average ROI of 42:1, and if marketers drop anywhere within five to eight emails a month, it gets even better. So, when companies, large or small, try to improve conversion rate, email marketing works. Some 19% of revenue alone is attributed to the customers that come from email marketing.

Does it Work? Computing Conversions

Still, it may be a little challenging to define how many conversions come from email marketing comprehensively. While it’s true that the right email blast can work wonders, how it works for different fields may make the effects vary. What works for the automotive industry may not necessarily work the same way for the beauty industry. Moreover, the measurement may change between industries; software looks at conversion rates for demo sign-ups, while eCommerce puts its conversions on successful purchases.

The average conversion rate in eCommerce runs roughly 15.91% on average, with 19.8% of it coming from email. That’s not too far from the percentage of conversions from both paid search and organic traffic, which come in around the 20% mark. It’s an effective strategy worth investing in; it’s just a matter of the cost.

The Cost to Improve Conversion Rate: Is it Enough?

As with any marketing strategy, you need a budget to get the results. Statistics show that 82% of digital marketers spend up to 20% of their budget on the email campaign, with mid-sized companies allocating between $9-$1,000 per month. The average recommendation for how much a business should spend on email marketing should be around 16% of the budget.

The critical factors to consider when planning your marketing budget to improve conversion rates:

  • How much is the company’s average annual revenue?
  • How much of that revenue comes from online sales or business?
  • What is your business’ industry, and is it one that commonly uses email marketing campaigns?
  • What product or service do you sell or want to emphasize through email marketing?
  • What are the goals of your digital marketing campaign overall?

These questions allow both the digital marketer and the business owner to adequately assess precisely how much resources are needed for an email campaign. Above all else, the company must ensure that the budget will work for both the company and its intentions. Pouring a ludicrous amount of money into a campaign that might prove ineffective due to the business’ product or industry will be a waste of time and resources.

It’s good to remember that email marketing is at least cost-effective. It doesn’t cost as much money to set up an email campaign and reach out to customers through multiple emails. It can result in a very high return on investment.

The Who, the What And the Why: Factors to Consider

It’s time to consider the different areas contributing to how much an email marketing campaign should cost. There are five factors to bring to the table when considering how much money to allocate for the budget: technology, creativity, data, expertise, and knowledge. 


This aspect accounts for the tools and software that will be needed to run a campaign successfully. Just blasting out a mass email to every customer on the contact list would be a futile effort. At most, it will end up in spam boxes, or you might end up with a lot of customers unsubscribing or blocking emails that they weren’t looking for. Moreover, it’s inadvisable to simply send out marketing emails from a personal email, or a company email that isn’t strictly dedicated to a mailing campaign. To make the most of an email campaign to get the maximum yield to improve conversion rates, consider the different email marketing tools.

Tools to consider

  • Weed out the faulty or invalid email addresses with a “faulty email tool” like Kickbox or Neverbounce. These tools will seek out invalid or broken emails (even invalid ones across your customer or subscriber list), so you won’t have to waste time emailing these dead leads. You can also check their IP locations to improve customization.
  • Use an “automation tool.” Tools like AWeber or Mailchimp can automate the whole process for you. You can schedule which emails are sent and when. Better still, these tools can create an entire workflow of emails for you. They can automatically send confirmation emails to customers upon signing up, sending thank-you emails, and other email-related processes. They also have an array of templates that a business can use to customize those emails as needed if they have no experience in crafting one.
  • Consider the platform. Different platforms will have different costs. For example, if one platform costs approximately .03 cents per email, it will save company money if they condense their emails into one monthly digest instead of weekly email blasts.

Creativity and Expertise

With automation comes the need for creativity. All the tools and features that come from marketing tools are excellent for taking out the drudge work of email marketing, such as listing contacts, scheduling, and delivering the material. But any business will still need the creative touch of a real human to improve the conversion rate. Customers can tell when a robot has crafted an email. Digital marketing experts found that customers respond a lot better when the email campaign is carefully streamlined to fit both the brand and the appeal they’re trying to project.

Businesses can either do this in-house with their marketing personnel or hire a digital marketing company to do it for them. Doing it in-house may save money in the short term, but a lot of time and effort is saved when thinking of variations in the emails if they hire professionals for the job. Furthermore, hiring a creative team for digital marketing gives them the room to carefully track and test the emails, finding out which ones work for the customer base.

Data and Knowledge

But what does work for the customers? Understanding your customers is one of the most critical aspects of crafting an email campaign and determining its budget. For a strategy to be effective, the mailing list needs to be strong. A staggering 99% of consumers check their email daily, so you want to make sure you reach the ones you’re confident will be lured in for conversion. Creating a strong email list means:

  • Gated content – This allows you to track which consumers click through.
  • Customized calls to action and landing pages – This way, consumers clicking through see something interesting every time.
  • Offer something – Free goodies are always an excellent lure for consumers.

Above all, combined with the right tools, a business will get a better image of its customers when it can get enough data to understand why they’re interested, how to engage them, and what works for them. Understanding your own IP location can help too.

Is it working yet? Measuring success

So how do you know if the campaign is working? Marketing tools will help a business get a better feel of the metrics of an email campaign. A business needs to look at specific responses from customers to see if they’re getting an average return on investment for what they’ve put into the campaign.

  • Open rate – This is how many email recipients opened the mail and how many had “bounced.”
  • Click-through rate – This is the percentage of the customers who opened the email and clicked through one of the links in the email. It helps you measure if the links or call-to-actions are effective enough.
  • Conversion rate – The goal to improve the conversion rate will target this specific metric; it accounts for how many customers not just opened the email and clicked through the link, but converted. They may have signed up for a demo, paid for a subscription, or made a successful product purchase.

A business also needs to monitor the mailing list’s growth rate (or new subscribers to the list), and the unsubscribe rate (or how many people have chosen to opt-out). The unsubscribe rate may suggest that the emails are not generating enough interest from the customers, and a change needs to be made in the campaign itself.

Is Newsletter Marketing Right For the Business?

A newsletter is one of the most common templates for email marketing. It could be a weekly or bi-monthly newsletter containing updates, information, or promos that the subscriber list is conceivably interested in. However, it may be costly. More newsletters mean more payment. And you also have to factor in how much an email management agency hired to run that newsletter campaign would cost.

But would it be worth it for your business? It will largely depend on the nature of the business itself. If it’s worthwhile to have an email which contains various topics or products and calls to action, and if the data from the customers suggest that they’re receptive to these emails, it may work for the company. Ecommerce businesses might get more out of it. Besides welcome emails, they can create drip campaigns: email prompts for cart abandonment and follow-ups, to remind customers if they have a purchase they haven’t completed. It’s an effective way to improve conversion rates.

Enterprise Email Marketing Strategies that Work

Segmentation Automation

For companies with broad user bases, personalizing or customizing each one may not be feasible. It may, however, be possible to segregate users based on previous interactions and data. This allows them to still target specific customer groups with content that may appeal to them.

Complex emails

Some companies may have sales that will take a long time to truly complete. By creating an automated email sequence, buyers are consistently reminded of the purchase they made, keeping them engaged. Simultaneously, it monitors their interest, so the company can determine what appeals to their user base.

Email blasts

This is an essential strategy for any enterprise: companies with large audiences use a single message and simply blast it into the entire list. These are great for introducing major products or software updates and promos. Better still, it can be used for surveys, gathering information from the entire group in one go.

To Email or Not to Email

Email remains one of the best and most direct lines of communication between company and customer. It may seem simple, but looking deeper into the metrics, the cost, and the customer data can be more complicated than it appears. It’s a balancing act of what works for the company and its field, the budget it can have, and what works for the customers. Wielded correctly, email marketing is a powerful tool to improve conversion rates and one that no business should overlook.

What is your company’s experience in using email marketing? Did you use specialized strategies for your customers? Tell us in the comments below.

Vincent Sevilla is a professional web designer and inbound strategist for HostingFacts. His goal? To innovate ideas, create good art, and to travel to all the best places in the Philippines.
You can follow him on Twitter @easyvince


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