How Much Revenue Should You Be Generating Through Email?

Automations and campaigns are the two main ingredients of email marketing. If you can whip these up nicely together, your email marketing can bring you the satisfying ROI you’re looking for.

Robbie Fitzwater
Updated on

You might be torn between deciding whether you should consider promoting your business through email marketing or should carry on with whatever it is you’re already doing. 

Or you might not be happy with what you’re already doing and have all kinds of questions regarding email marketing. 

Questions like, “do email marketing increase sales?” or “how effective is email marketing in generating a good revenue for the business?” 

If that is the case, you have come to the right place! In this article, I will walk you through the two main features of email marketing; automation and campaigns, and how they optimize your email marketing experience and assure you an ideal ROI. 

  1. How much revenue should be generated through email?
  2. Growth Multiplier – 3 Ways to Geometrically Grow a Business
    1. Driving retention 
  3. Revenue from Automations/Flows – Email and SMS
    1. Things take time to build up
    2. Experimenting with emails
    3. Optimizing 
    4. The business type  
  4. Revenue from Campaigns – Email and SMS
    1. The pipeline of content during peak times
    2. Maintaining attention and high-value segments
  5. How do these overlap?
  6. Ideal Percentage of Revenue from the Emails
    1. Acquisition/ top of the funnel
    2. Marketing stool
  7. Takeaways

So let’s dig in! 

How much revenue should be generated through email?

While it might be challenging to pin down the exact amount, however, it’s becoming a lot easier to narrow in on exactly where your business should be in terms of how much revenue your business should be generating through email marketing. 

So talking generally, most brands should be generating at least 25 to 35% of their total revenue from email. But to be in a good spot and feel confident, we want to be in the 30 to 45% range. 

Being in the 30 to 45% range assures you use automation effectively. The proper use of automation helps you drive a consistent amount of revenue, ensuring that you’re on the right track to content monetization.

This also enables you to get your repeat customers back in the door now and then by making a long-term impression on them through your content only, rather than making discount offers frequently and compromising on the margin. This consistent process of driving back repeat customers and a stable revenue means you’re building effective automation through your email flows and campaigns. 

Once you get a hook, you can start making changes in the process and try to move forward. For example, you are adjusting how you set the number of automation or changing how you segment your audience in a more improved manner. 

This can help your content reach your audience in a more impactful way – In a way that adds value to their experience throughout their journey and generates for you an improved incremental revenue throughout the customer life cycle.

If you want to know your potential revenue and see your baseline income level, we have an incredible calculator that might help you in many ways.

MKTG Rhythm Revenue Calculator

Growth Multiplier – 3 Ways to Geometrically Grow a Business

There are different ways we can grow a business. And I always talk about the three main growth multipliers, which are: 

  • Increasing the number of customers.
  • Increasing your average order value. 
  • Increasing the number of purchases or lifetime value.

If we see this in terms of how email impacts these goals, we can understand the growth of our business in a much broader sense. Email strongly affects mainly the numbers two and three on the list here. 

It impacts the number of customers, too but is more helpful in welcoming the customers and getting them onboard with your brand. It is to try to persuade them to make the first purchase. And once you can do that, it can lead you to the other two of your goals. The intelligent way to impact your customers, AOV, and purchases (LTV) is through your automation and campaigns.

Driving retention 

Most businesses underestimate the effect AOV and purchases have on the company’s growth. Most of them are mainly focused on ROAS (return on ad spend) only and on getting more and more customers. They believe this is the most effective way of measuring your business growth; however, this is not entirely true. 

AOV and LTV are underutilized resources because many businesses don’t think about the retention aspect of the company and the revenue that can be generated through retention.

Suppose you’re good at driving effective acquisition and bringing in new customers every season but not great at driving retention and keeping your customers interested in your brand. In that case, you have a glorifying and successful e-commerce business that lacks absolute loyalty and has no actual image that could give the customers the purpose to return. 

If you can effectively work on the second and the third goal, that will offer you many unique opportunities to help you grow your business more efficiently. 

Revenue from Automations/Flows – Email and SMS

We think earning a revenue between 10-20% from an automation perspective is good to go. This is an ideal range as you’re driving this amount by getting people onboard and driving repeat customers back in the door.

By using automation effectively, you’re not only driving customers back but also driving consistent incremental revenue monthly and yearly. And that revenue is an excellent foundation for a lot of the work you’re already doing.

But you can only drive that audience back if you look attractive to the users. As these are highly contextual, they would ensure a high engagement rate on the customer’s part. The more relevant and to the point you are, the more valuable of an experience it’s going to be for them.    

Things take time to build up

But it would help if you kept an open mind that these things and this rhythm build up over time. It’s not like you’ll set up 20 automation for work in a day, and they’ll build a millionaire business tomorrow. It’s like your 401k plan, for which you’ll be thankful once you’re old. 

It is a slow process that’ll take time to give you the return you want.

You should know that it will only give you the desired results if you keep working to improve your automation. For example, you may have 25 automation running at any given time based on different stages of their customer journey and other use cases. But when it is time to introduce them, you would want to prioritize the ones that drive the most revenue and have the best impact on the business. 

Experimenting with emails

In some cases, you may even want to improve this automation by tweaking a little bit and trying new things. I always say that this automation is like your digital Petri dish, on which you can experiment with all kinds of ideas. Sometimes single automation could run in three different ways to see which works best. 

You might experiment with the headings, the content, the openings of the content, etc. So this experimentation and testing help you to line up the most profitable and the value-added automation for working, enabling you to generate a good amount and grow that baseline level of the incremental revenue month over month.

Optimizing 

Also, one of your primary concerns as an e-commerce business is how much revenue your automation drives monthly. And more specifically, concerns like how much revenue each of those individual automation drives every month.

Once you get these numbers and figures, it may become easy for you to figure out places of problems. 

For example, if you see a giant and a steep drop in the numbers, you can easily find out what automation is not working up to the mark. Any time something doesn’t seem right, you can deal with it more efficiently and optimize your automation accordingly. 

The business type  

Lastly, the revenue you drive from this automation can also vary depending on your business type and the business stage you are in. For instance, dealing in multiple product categories may bring you a much more significant percentage of revenue because you may be drawing people back in at different rates through different means. 

These are all the vital areas to think about when working with automation, so you can build a significant asset for your business that compounds over time and fulfills your goal of generating revenue that has a stable foundation and is predictable and recurring. 

Revenue from Campaigns – Email and SMS

Unlike automation, campaigns are more common and utilized better in email marketing. SMS messaging could also be used alongside campaigns to update the audience more efficiently. These messages are lined up based on specific behaviors and are time specific.

The question regarding revenue generated through campaigns is another critical factor in email marketing. And to that, we’d say that having about 15-25% of your total e-commerce revenue coming through campaign emails is an ideal range. 

Of course, it varies from month to month, even more drastically than in automation. Campaigns are more likely to have frequent changes in their revenue around specific seasons and months, for example, in November. 

As a good marketer, you’d know why! 

The pipeline of content during peak times

Things start to get a bit dramatic around November due to the holiday season, precisely due to Black Friday and Cyber Monday. This is the time when businesses send the most consistent level of emails to the customers so that they have higher chances of being seen more frequently. So it encourages the audience to engage more. A content pipeline helps you stay top of mind and relevant without falling off.

This consistent sending helps ensure less volatility in the swings we usually see during the holiday season. It gives a little more predictability regarding the revenue and provides that these months are the most profitable throughout the year.

Understanding how to incorporate different sales peaks at other times of the year is also essential. 

For example, Amazon prime has prime day, so they can incorporate a sales peak in the middle of the summer, which gives them a lot of opportunities because they drive a higher volume and make more revenue over time. 

So again, building sales peaks in the year, continually capturing a bit more top-line revenue total and driving more during different windows of the year

This is where having a content pipeline helps you stay top of mind and relevant without falling off. It adds value to the customer’s experience and keeps them hooked on your business. 

Maintaining attention and high-value segments

As I always said, earning attention is only trumped by maintaining attention. 

If you manage to keep the audience’s attention without making offers that compromise your margin and commodity, you should consider yourself a successful business.  

Also, focusing on your high-value segments is a significant factor in maximizing your revenue. These are the segments that drive the most value for your business. 

For example, some of your customers are either gift-givers or are buying for themselves, and both drive the most revenue for you at different times. The gift-givers are most likely to drive revenue at one time a year, i.e., the holiday season, whereas people buying for themselves drive revenue consistently.

It would be best if you focused on each segment according to the time of the year. You may want to focus on enhancing their experience specifically. People that may be driving the repeat purchase during that specific time should be sent more campaigns, so they remain involved. 

Segmenting and prioritizing your best audiences, i.e., the most revenue-generating audience, is one of the most important keys to a high revenue generating business, hence a successful business. 

How do these overlap?

Automations and campaigns work so well together; both are considered BFFs in email marketing and serve as two different pillars of your three-pillar email marketing ecosystem.

Diagram

Description automatically generated

Where campaigns might bring people back to your site, the automation will make them take action and pull them back to the place the second time, the third time, and so on. 

Let’s say you send a campaign to your audience; they open the product page, browse a little, and may visit different product categories, and leave after a while. This is where automation comes into play. They may get an SMS or an email a half hour or an hour later regarding their searches on the page. This would be the way to get them back on the page. 

This works well in cart abandonment cases too. If someone leaves a cart full of items on your webpage, you might want to remind them about it. These automated messages are just a way of pulling back people to your site, so they engage more. 

So as we can see, these two work so well together; they create opportunities for you where you may have multiple levers to pull so you can get people to behave the way you want them to.

They complement and supplement each other well and provide for you the different ways of bringing people back in and fit this into the whole entirety of the customer experience. 

Ideal Percentage of Revenue from the Emails

So as we said at the beginning of this article, the ideal revenue from the emails would be up to 45%, and if you make use of all the stuff we talked about related to campaigns and automation, you might be able to reach 45%

Moreover, there is a good chance that you might even exceed that percentage. So it’s important to know what you should do in that case. 

Acquisition/ top of the funnel

Once you get above that percentage, you need to start thinking about what you’re doing on the acquisition side. You’ll need to focus on your acquisition efforts before you can get much more optimized on the retention side

The top of the funnel must fill fast enough, so you might want to invest in the bottom part of the funnel. 

Marketing stool

Then comes our marketing stool consisting of three legs; the emails, the paid, and the organic. 

Having generated revenue above 45% might be a good thing as long as you’re being smart about your investments. With this much revenue, you might be thinking about investing more in paid marketing which is well and good. However, you would not want to ignore the organic side completely.

Typically most businesses go crazy about paid marketing all the time. Still, they need to realize that getting your organic up and running is very important because all of these work together and complement each other.

For example, if your Google ads stop working for whatever reason, or you get trouble in Facebook ads, you would still have your organic and email driving revenue. That will help you through that rough patch and give you a stable foundation and a more anti-fragile ecosystem that you will not be as worried about.  

So, if you’re driving too much revenue through email, you should know what’s going to be profitable and valuable for the business and may reinvest some of that revenue in those areas of marketing. This way, you can have a more stable infrastructure for growth and a more stable system for expanding your business.

Takeaways

So to conclude everything, you now know that emails are probably your most robust retention channel in terms of how much revenue the business will drive.

You would be doing that through the three ways of growing a business. And those three ways were: increasing the number of customers, increasing the average order value, and increasing the lifetime value. 

If you can optimize number two and number three, it would be a big win for your business because most businesses don’t always focus on these.

So, this would be a significant advantage for your businesses if you focus on AOV and LTV. It will bring you highly profitable revenue, and your email marketing will become your most profitable channel.

However, there are other things to look at too. Some younger businesses may have many more customers coming in through a welcome sequence, giving off an overinflated new customer acquisition process.

But if you’re a little bit more established business and have an excellent recurring customer base, you should be in a place where you can drive a high percentage without being too overly dependent on emails.

Also, suppose you have multiple products category. In that case, you’d probably be able to drive a higher percentage. Still, if your business only offers one product, you may not be able to go a high percentage because you will have to work to acquire as you may not have a natural repurchase rate. 

So this was all regarding email and revenue for today. I hope this was helpful and answered most of your concerns. If you still have any questions or if I may have missed out on something, I would love to know in the comments below!

Leave a Reply