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How to Measure Cold Email Marketing ROI: From Metrics to Money

How to Measure Cold Email Marketing ROI

Table of Contents

Cold emailing is a powerful outbound marketing technique.

It connects your business with strangers and helps build meaningful relationships – leading to action. Such actions include anything – from making a sale to forming a partnership. 

Of course, you can use outbound marketing techniques across various channels. These platforms include LinkedIn InMail, cold calls, industry events, and direct mail. 

However, in our experience, cold emailing often yields the best results. 


Cold emails are less intrusive. With cold emails, prospects can respond at their convenience rather than in real time. 

As such, they get enough time and space to learn more about your product and make informed decisions. As a result, a majority of buyers, 8 out of 10, prefer to be contacted via email.

Yes, cold email marketing works. With 80% of customers still preferring to be contacted via email, you can’t ignore this approach. 

However, how do you know if your cold email outreach is actually working? Well, you can do this by calculating the Return on Investment (ROI) via your cold email efforts.

what are cold emailsSource

Now, your next question might be: how do I measure cold email marketing ROI? Well, this is where our guide steps in. 

We’ll explore how to calculate the ROI of cold emailing campaigns. Plus, we’ll also discuss how to improve your ROI. But before that, let’s get a few basics right.

What Are Cold Emails? How Do They Differ From Spam?

At its core, spam involves sending unsolicited, often poorly written messages to many people. However, not all cold outreach is spam.

Think about it. 

Suppose you receive two unsolicited emails:

  • The first email is from a stranger offering a pre-approved home loan, but you have no interest in buying a house at the moment. 
  • The second email is from a home loan provider offering a guide on how to improve your credit score and increase your chances of getting approved for a home loan.

Both emails are unsolicited, but the second email is more likely to catch your attention. Why? It offers something of value to you that could potentially help you achieve your goal of buying a house. 

In contrast, the first email may not be relevant to you if you're not currently in the market for a home loan. Hence, it may come across as spammy or intrusive.

Ultimately, a message's value separates spam from a cold email. If a message doesn't offer any clear value, whether because it's dishonest or simply targeting the wrong person, it's spam.

So how can you ensure your cold emails aren't in the spam folder?  Here are three key things you need to do:

  • Target only the audience that matters: Make sure you only reach out to those who fit the profile of your ideal customer.
  • Offer value: Deliver something that showcases relevant value to your buyers.

What’s the Importance of Cold Email Marketing?

For starters, cold emails offer unparalleled targeting capabilities. You can target your ideal customer down to the individual level. Plus, you can even personalize your message for them. 

Comparing emails with ads, the latter is broader and casts a wider net. As such, adverts make reaching the people who will buy from you more challenging.

1. Easy Access

Cold email outreach gives you access to the right decision-makers' details. Many high-level executives and business owners still manage their inboxes. 

Therefore, as long as you have their correct email address, you have a direct line of contact with them.

2. Low Investment

Also, let’s not forget the low capital investment required to start cold email outreach. 

You can use multiple cold email marketing software tools – like Mailshake, Yesware, or Lemlist – to automate your outreach. But you only need an email account to get started. 

You can immediately reach out to potential customers, partners, or investors. You need not even spend cash before generating any revenue.

But let's be honest here. The cold email practice is tricky. 

These are a few advantages of cold emailing:

  • One common misconception is that a successful email should convert users right away. In reality, a cold email aims to start a conversation and build a relationship with someone. 
  • The end goal may be a sale or partnership, but that rarely happens after just one message. 

So be patient, be attentive, and don't be too pushy. Cold email marketing is a long game. And the ideal way to ensure its success is by calculating its ROI.

How Can You Calculate Cold Email Marketing ROI

When it comes to forecasting accurately, many companies we speak with don't have all the necessary information. It could be due to:

  • Missing historical data
  • Unclear Cost Per Acquisition (CPA)
  • Inaccurate pipeline data
  • Running campaigns for too short time
  • Having faulty tracking systems in their Customer Relationship Management (CRM) accounts

So, to help you out, we'll go through the exact steps to evaluate your cold email marketing ROI. 

How to Calculate Cold Email Marketing ROI?

You can use two methods to estimate your cold email marketing ROI. Here’s a detailed explanation of each.

Method 1: Focusing on Costs

The cost-based method for calculating ROI in cold email marketing comprises the following steps:
Step 1: Determine the cost of hiring SDRs

Metrics Value
Average base salary for an SDR in the US $45,000 per year
Total working hours per year 2080
Hourly rate for one SDR $45,000 / 2080 ≈ $21.63 per hour

Step 2: Determine the cost of cold email marketing tools

Type of tool Description Estimated cost
Cold email marketing software Used to create and send cold emails $50 - $500+ per month
Email delivery tools Used to ensure emails are delivered to recipients' inboxes $10 - $100+ per month
Email verification tools Used to verify the accuracy and deliverability of email addresses $10 - $100+ per month

Step 3: Calculate the total investment

Metrics Value
Number of SDRs 2
Total cost of cold email marketing tools $5,000 per year
Total investment (2 x $45,000) + $5,000 = $95,000

Step 4: Determine the number of leads and sales opportunities

Metrics Value
Number of leads generated 100
Number of sales opportunities generated 30

Step 5: Calculate the revenue and profit

Metrics Value
Average revenue per sale $10,000
Revenue 30 x $10,000 = $300,000
Profit $300,000 - $95,000 = $205,000

Step 6: Calculate the ROI

Input Formula Value
Net income Revenue - Cost of investment $205,000
Cost of investment Total investment $95,000
ROI (Net income / Cost of investment) x 100 = ($205,000 / $95,000) x 100 216%

Note: Actual results will vary depending on many factors, including the industry, target audience, and effectiveness of the campaign.

Now, as you can see, if you combine all of the above steps, it seems like a jumble of numbers and metrics. However, you can bypass this cumbersome process by simply handing over your process to Revnew!

Our experts will do all the hard work for you – with guaranteed results. In fact, our client Jobiak.ai saw 5X growth in their revenue when they implemented our foolproof cold email campaign strategy. For more details, you can contact us here.

Method 2: Tracking KPIs Through a CRM

The other approach starts by first getting your CRM tracking in order. You need to monitor the cold email conversion rates through your funnel accurately.

Once your tracking systems are in place, execute the following steps:

  • Benchmark your KPIs
  • Forecast KPIs every six months
  • Calculate the expected ROI using the LTV

Following these steps will help you better understand your cold email marketing ROI. You’ll also be able to make informed decisions based on your collected data. Let's take a closer look at each step.

1. Benchmark KPIs

Regarding cold email marketing, benchmarking is essential to forecast your ROI accurately. Set baseline performance levels for key performance indicators (KPIs) such as:

  • The number of emails sent
  • The number of emails delivered
  • The number of emails opened
  • The number of emails clicked
  • The number of emails replied
  • The number of emails unsubscribed

As such, you can get an idea of how well your campaigns are performing.

Track these metrics for 180 days using different copies and levels of personalization to gather sufficient data for forecasting. Here’s what you can do:

  • Create an initial series of email copies
  • Test them on a small set of decision-makers with different levels of personalization
  • Track their performance in terms of cost per reply or click

As you continue to test and analyze the data, narrow down your cold email campaigns each week by:

  • Focusing on the highest performing campaigns
  • Switching off the lowest ones 

– until you find the best campaign practices from a cost-per-result perspective.

Once you have this information, start creating your initial biannual KPIs and ROI forecast for the months ahead. 

Furthermore, by following these steps, you gain valuable insights into the effectiveness of your cold email marketing campaigns. Hence, you can make informed decisions about your future strategies.

2. Forecast KPIs Every Six Months

When developing the KPI forecast for the next quarter, begin by calculating the averages of the key metrics you gathered from your benchmarking or historical data.

Let’s assume you have a budget of $15,000 for the upcoming 180 days. In this case, you can allocate different budget amounts to each campaign – based on their performance during the benchmarking phase.

  • Let's say campaign 1 performed best. So, you give $10,000 of your budget to campaign 1
  • Using your historical data, you can forecast the expected number of leads, MQLs, SQLs, and customers you’ll likely receive from campaign 1
Campaign Budget Allocation Expected Leads Expected MQLs Expected SQLs Expected Customers
Campaign 1 $10,000 100 70 27 7

From the above information, we know that:

Metrics Value
Budget allocation for campaign 1 $10,000
Expected number of customers (N) 7
Cost of campaign 1 $10,000

3. Calculate the Expected ROI

  • CAC
To arrive at the final ROI, you need to calculate the CAC (Customer Acquisition Cost) first:
  • CAC = Cost / N
Metrics Value
CAC $10,000 / 7 ≈ $1,429
To calculate the LTV (Customer Lifetime Value), we need to know the expected revenue per customer (R) and the expected customer lifetime (T).

Let's assume that the expected revenue per customer is $10,000.
Metrics Value
Expected revenue per customer (R) $10,000

To estimate the customer lifetime, we can use historical data or industry benchmarks. For example, if we assume that the average customer lifetime is 3 years, then:

Metrics Value
LTV $10,000 * 3 = $30,000
  • ROI

Until now, we have the following data:

Metrics Value
LTV $30,000
N 7
Cost $10,000

Using the formula: ROI = (LTV * N - Cost) / Cost

Calculation Value
LTV * N $30,000 * 7 = $210,000
LTV * N - Cost $210,000 - $10,000 = $200,000
(LTV * N - Cost) / Cost $200,000 / $10,000 = 20

Therefore, the expected ROI for campaign 1 is 20 or 2000%. 

What Is a Good ROI for Email Marketing?

On average, companies earn $36 for every dollar spent on cold email marketing! 

That's a whopping 3600% ROI.

But did you know that not all email campaigns are created equal? 

Reports show that targeted and list-segmented emails drive 36% of email marketing ROI. That's why ensuring your email campaigns are well-targeted to your audience is essential.

In addition, industry-specific data from the above source shows that specific industries can see even higher ROI from email marketing. 

For example:

  • The software and technology industry has an average ROI of 40:1
  • The travel, tourism, and hospitality industry sees an average ROI of 53:1

These numbers are impressive. They demonstrate that cold email marketing can be an incredibly effective way to reach your audience and drive sales.

So if you haven't yet explored the world of email marketing, now is the time to start. With the potential to see such a high ROI, it's an investment worth considering.

b2b cold email marketingSource

Maximizing Cold Email Marketing ROI

If you want to improve your cold email campaigns, there are five essential steps to follow. 

  • First, you must create a compelling first impression with your email by optimizing the sender's name, subject line, and preview text. 
  • The next step is to craft a good email with a four-part framework that includes an opening line, context, value proposition, and wrap-up. 
  • Next, test your email before sending it to ensure it looks good and everything runs smoothly. 
  • When you're ready to send your email, consider using software tools like Mailshake or Streak to A/B test alternate subject lines and email body copy before sending it to a more extensive list. 
  • Lastly, you should measure your results to see what worked and what didn't. If you have a larger budget, there's an advanced tactic you can try to drive better results. 

Testing different versions to see which generates more opens, clicks, and responses is crucial.

Which Industries Should Consider Cold Email Marketing?

Which Industries Should Consider Cold Email Marketing?If you're wondering whether cold email marketing is a good fit for your company, you MUST consider a few elements. 

Based on our experience, cold email works best for companies with high-margin products that can afford a sales team. Cold email might be a good choice for you if:

Cold email can also be an excellent choice for early-stage startups that need to generate revenue at a low cost. 

While some labor is involved in cold email outreach, it's still cheaper than other forms of advertising. 

After all, you don't need to budget for design or distribution. All you need is an email address. So if you're just starting, cold email can be an acceptable option for growth before you have the means to test other marketing channels.

Moreover, we've also seen cold email specifically work well for:

  • B2B SaaS companies: Cold email can allow for highly targeted outreach to potential customers in specific industries or with specific pain points. Hence it boosts the chances of conversion. 

Also, cold email can offer demos, trials, or free consultations that can help build trust with the potential customer.

  • Products people aren't actively searching for: Cold email can be used to generate interest and awareness in products that potential customers may not even know they need yet. 

By introducing them to the product's benefits, features, and unique selling points, cold email can help create demand for something that wasn't previously on the potential customer's radar.

  • Agencies that charge thousands per month per client: Cold email can target high-value prospects who may not be seeking an agency to work with. 

Cold email can build trust and authority in the agency's capabilities by demonstrating expertise, case studies, and past successes. Hence, it leads to higher conversion rates and more clients.

  • Companies selling expensive physical goods: Cold email can target potential customers who may not have been aware of your company's product offerings or benefits. 

By highlighting the quality and unique features of the product, cold email can pique the interest of potential customers and lead to higher conversion rates. 

Additionally, offering exclusive discounts or promotions through cold email can incentivize potential customers to purchase.

Keep in mind that cold email is not a one-size-fits-all solution. Each company is unique, and what works for one may not work for another. Ultimately, the best way to determine whether cold emails fit your company is to test and see how it performs.

Wrapping It Up

Forecasting the ROI of your cold email marketing strategy is an essential but challenging process, especially in the B2B industry. Why? Here, sales cycles can last anywhere from six months to a year. 

Many companies need help to accurately forecast their cold email marketing ROI because they need the necessary data, whether lead-to-close rates or historical data.

However, with the help of Revnew, a B2B email deliverability service, you can achieve excellent and accurate forecasting. Our system takes into account important variables to ensure your emails reach customers when they're most likely to engage.

Also, check out how Revnew helped Natura reach 6K+ contacts in 18 months with the perfect email marketing strategy!



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