Email marketing

Calculate revenue per recipient for small business email marketing

Phil Weltman, January 27th 2017
revenue per recipient

Open rate, click through rate, unsubscribe rate. Metrics you should be tracking but metrics that don’t tell you much other than that people are interacting with your emails. Good to know but not super helpful.

What you really want to know is how much money each email is making you. Hard numbers that you can take to your boss and say, “BOOM, I just made us a ton of money.” Alright, you might not want to say that, but you get what I mean.

This can be done in a number of ways. You can track your return on investment (ROI) and your revenue per recipient (RPR). Today we’ll be talking about the latter.

How do I calculate RPR for email?

You might be asking yourself, why not just measure your return on investment (ROI) or email open rates without the RPR?

Good question. ROI is a great metric to track but it’s very difficult to calculate. To calculate ROI, you have to have a complete knowledge of all your costs which may be tough task for a lot of organizations. On the other hand email open rates are sometimes hard to compare as they depend on the type of email sent out. A order confirmation email will have a higher open rate than say an email newsletter.

That is why revenue per recipient is (RPR) is a metric that is easier to calculate, while providing better baseline metrics for the effectiveness of an email campaign.

The way RPR is calculated is you take the amount of revenue your email send generated and divide it by the number of emails delivered. When doing this, remember to take out the emails that bounced.

Example of RPR calculation

Let’s use Phil’s Fake Company (PFC). Let’s say PFC sent 250,000 emails and 2000 bounced. That leaves 248,000 successfully delivered emails. The revenue generated from that send is around $60,000. The bolded amounts are the numbers that we need to calculate RPR.

So let’s do the math.

60,000 / 248,000 = $0.24 RPR

Now that’s a pretty good figure.

Having a tool, like Klaviyo, that does this for you will save you a ton of time. And as we all know, time is money.

Importance of the metric-revenue per email recipient

Revenue per recipient tells you how much spendable revenue you’re getting from each email on your list. This helps you find out what’s working and what might need to change.

The higher your RPR, the more each member of your list is worth.

It will also help you get better. Ecommerce stores are always looking for ways to better their email performance. Once you can successfully calculate RPR, you’ll have a new tool in your belt that will help you quickly evaluate and optimize each email send.

How do I optimize my email campaign strategy for RPR?

Easy. Be more targeted.

Blasting your entire list with the same email will give you zero information on how that email is performing.

Email research has shown that the more emails they sent, the faster the RPR drops.

Alarming, but very common.

Many companies try to increase revenue by sending more email. This might work in the short run, but it’s rarely sustainable.

The best way to boost your RPR and get the most out of your list is to treat each of your recipients as human beings.

There are two sure fire ways to do this. You can send triggered emails (flows) and you can segment your list based on what you know about each recipient.

Let’s talk a little about each.

Try using triggered emails to boost revenue per email recipient

Flows (automations) are triggered emails based on a recipient’s behavior or actions. These emails tend to drive the highest RPR because they’re almost always relevant.

Here are two series that every ecommerce store should send.

Make use of customer segmentation to personalize email sends

Segmentation is another way to get the most out of your list and is an easy way to raise your RPR. It’s being more targeted by breaking your customers into groups based on shared characteristics.

Sending targeted email will help grab people’s attention. You’re more likely to open an email if it’s something you’re interested in.

Again, sending the same email to everyone will only hurt your business. By sending targeted and relevant email, you’ll be able to maximize your email list’s potential.

Do this and you’ll be increasing your RNR in no time. Klaviyo has some RNR tips and tricks in their dashboard that can be implemented with other automation dashboards as well.

Find out how to set up email automations for better revenue per recipients in email campaigns.

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Phil Weltman
Phil Weltman
Phil was formerly on the marketing team at Klaviyo. Prior to marketing, Phil spent a year on the growth team helping lead the charge to build a digital marketing platform for nonprofits and fundraising organizations.