Email marketing is a direct communication channel where businesses send messages to a list of subscribers who have opted in to hear from them. At its core, understanding how email marketing works means grasping one simple idea: you own the channel. Unlike social media, no algorithm controls who sees your message. You send, the inbox receives, and the subscriber decides. That directness is a large part of why email marketing campaigns deliver an average ROI of 36 times, meaning businesses earn $36 for every dollar they spend.
This guide breaks down every layer of how email marketing works, from list building and deliverability to segmentation, automation, and measurement, so you can use it more effectively.
Key Takeaways
- For every $1 spent on email marketing, businesses see a return of $36, a 3,600% ROI.
- Despite representing only 2% of volume, automated messages generated 37% of all email-attributed sales in 2024.
- Segmented email campaigns generate 30% more opens and 50% more click-throughs.
- Email delivery and deliverability measure different things: delivery tracks whether your email reached the server, while deliverability tracks whether it reached the inbox. You can have perfect delivery with terrible deliverability.
- Personalized email subject lines can increase open rates by 26%, and marketers using advanced segmentation see a 760% increase in revenue.
What Email Marketing Actually Is
Email marketing is permission-based communication between a business and its subscribers. A person provides their email address and consents to receive messages. The business then uses an email service provider (ESP), such as Mailchimp, Klaviyo, or ActiveCampaign, to send those messages at scale.
Opt-in email marketing is the foundation of ethical and effective email campaigns. It ensures that your audience willingly subscribes to receive your messages. Unlike spammy, unsolicited emails that often end up ignored or marked as junk, opt-in marketing builds trust, engagement, and long-term customer relationships.
Global email users are forecasted to increase from 4.48 billion in 2024 to 4.97 billion by 2028, reaching over 60% of the global population. That scale makes email the broadest owned-marketing channel available to any business, regardless of size or industry.
Step 1: Building Your List With Consent
Everything starts with a subscriber list, and how you build it determines the quality of every campaign you send.
An opt-in list is a list of contacts that have explicitly stated their consent to receive email or text message communications from your business. When a customer provides their email and agrees to receive messages, they are opting in to your list.
There are two collection methods:
- Single opt-in: The subscriber enters their email and is added immediately. Faster to build, but carries higher risk of fake addresses and disengaged contacts.
- Double opt-in: After signing up, the user receives a confirmation email and must verify their subscription. This extra step ensures a more engaged and high-quality list, reducing spam and fake signups.
What you cannot do
Do not buy or rent email lists. Under GDPR and CASL, using third-party contact lists without direct, documented consent is illegal. Even in the US, this practice increases the risk of spam reports and reputational damage.
GDPR violations can result in fines of up to €20 million or 4% of a company's global annual revenue. Building your list organically through sign-up forms, lead magnets, checkout opt-ins, and gated content is the only sustainable path.
For practical guidance on growing your list with the right tools, see our guide to lead gathering tools for email lists.
Step 2: Understanding Email Deliverability
Collecting subscribers is only half the equation. Getting your emails into their inboxes is the other.
Email deliverability indicates whether a delivered message actually made it to a subscriber's inbox. It is also a key performance metric for evaluating the effectiveness of your email marketing and measuring audience engagement.
Deliverability and delivery are not the same thing. The email delivery rate measures the percentage of emails that receiving mail servers accept for delivery. A good average email delivery rate is typically above 95%. However, if you get a 95% delivery rate, it does not mean 95% of your messages reached the inbox, because getting "delivered" could also mean your emails were filtered into the spam folder.
Average email deliverability in 2024 was tested at around 83%, which means roughly 17% of emails never reached their intended destination.
What affects deliverability
Mailbox providers look at factors like your IP reputation, domain history, sending habits, and engagement levels. High open and click rates, along with low bounce and spam complaint rates, help build trust and improve deliverability.
Key technical requirements include:
- SPF, DKIM, and DMARC authentication: Gmail and Yahoo both implemented stricter requirements in 2024 around SPF, DKIM, and DMARC authentication, easy-to-find unsubscribe options, and spam complaint thresholds below 0.3%.
- List hygiene: Regularly clean your email list to remove invalid or inactive email addresses.
- Engagement signals: AI filters reward emails that people open, click, reply to, and keep, and penalize those that get ignored or marked as spam. Broad, one-size-fits-all sends are increasingly flagged as low value. Relevance is now a core deliverability factor.
Step 3: Crafting the Email Itself
Once your list is clean and your domain is authenticated, the content of each email determines whether subscribers engage or ignore it.
A marketing email typically has four components that work together:
- Subject line: The first thing a subscriber sees. Personalized email subject lines can increase email open rates by 26%. Strong subject lines are specific, honest, and relevant to the segment receiving them. For more detail, see our post on email subject line best practices that boost open rates.
- Preview text: The snippet that appears next to the subject line in most inbox views. Treat it as a second subject line.
- Body content: Clear, relevant, and structured around a single goal. Avoid clutter. Every email should have one primary call to action.
- Call to action (CTA): When you include a call-to-action button in your emails as opposed to a text link, conversion rates can increase by up to 28%.
Mobile optimization is non-negotiable. 65% of opens now occur on mobile devices, making mobile optimization essential rather than optional. A design that breaks on a phone will cost you conversions regardless of how good the copy is.
Step 4: Segmentation and Personalization
Sending the same email to your entire list is rarely the most effective approach. Segmentation means dividing your subscribers into groups based on shared characteristics or behaviors, then sending messages tailored to each group.
78% of marketers report that subscriber segmentation is the most effective strategy they use for email marketing campaigns.
Marketers using advanced segmentation see a 760% increase in revenue. Behavior-based emails generate roughly three times higher engagement than scheduled campaigns, as they are triggered by specific user actions.
Common segmentation variables include:
- Purchase history
- Geographic location
- Engagement level (active vs. inactive subscribers)
- Stage in the customer lifecycle
- Demographics
Personalization goes a step further than segmentation. Rather than just targeting a group, you tailor the content to the individual. Personalization in email messages improves open rates by 29% and click-through rates by 41%. Personalized subject lines increase email open rates by 26%.
For a full breakdown of tactics, read our post on email list segmentation strategies that boost ROI by 760%.
Step 5: Automation and Email Sequences
Automation is where email marketing scales from a manual task into a revenue-generating system. Instead of sending every email by hand, you set up triggered workflows that send the right message at the right moment, based on subscriber behavior.
Email automations deliver 30 times more revenue per recipient than one-off promotional campaigns. The average return per recipient for campaigns sits at $0.11, while automated flows earn $1.94 per recipient.
Automated emails drive 37% of all email-generated sales, despite making up only 2% of email volume.
Common automation types and their performance:
- Welcome series: The first sequence a new subscriber receives. The top 8% of programs, those hitting 45:1 or higher ROI, most commonly send newsletters and onboarding emails, not promotions.
- Abandoned cart emails: Abandoned cart emails achieve an average open rate of 50.5%, a click rate of 6.25%, and a conversion rate of 3.33%, with top-performing brands reaching conversion rates of 7.69%.
- Post-purchase sequences: Confirmation and shipping emails that build trust and encourage repeat purchases.
- Re-engagement campaigns: Flows designed to win back inactive subscribers before you remove them from your list.
Multi-channel attribution and MQLs jumped 22% year-over-year as email campaign reporting moves away from engagement proxies toward revenue accountability. Bot-driven phantom engagement has made open rates unreliable, pushing high-performing teams toward revenue per email, list churn, and lifetime value as the metrics that matter.
For a structured approach to your first sequences, read our post on welcome email sequence best practices.
Step 6: Measuring What Matters
Knowing how email marketing works requires understanding which numbers actually tell you whether it is working.
Click-through rate (CTR) in email marketing is a crucial metric that measures the percentage of recipients who clicked on at least one link within an email, providing insights into the effectiveness of the email's content and call-to-action.
The metrics worth tracking, in order of reliability:
| Metric | What it tells you |
|---|---|
| Revenue per email | Direct revenue impact |
| Conversion rate | Percentage of subscribers completing a desired action |
| Click-through rate (CTR) | Content relevance and CTA effectiveness |
| List churn rate | Long-term list health |
| Spam complaint rate | Sender reputation risk |
| Bounce rate | List quality and hygiene |
| Open rate | Use carefully, inflated by Apple MPP |
Open rates are largely the result of privacy-related changes, notably Apple's Mail Privacy Protection (MPP), which began registering automatic "opens" regardless of whether a person viewed the message. That means open rates now show inbox delivery and technical detection more than true engagement. They are still useful for spotting anomalies like a deliverability issue, but less reliable as a success metric.
Brands that regularly A/B test their emails achieve 83% higher ROI than those that never test. Companies that never test report average ROI of 2,300%, while those that often test achieve 4,200%.
For a deeper dive into tracking and interpreting these numbers, see our guide on email marketing analytics best practices.
How the Full System Works Together
Understanding how email marketing works means seeing these steps as a connected system, not isolated tactics.
A subscriber joins your list through an opt-in form (list building). Your ESP authenticates your send and routes it to inboxes (deliverability). The subscriber sees a relevant subject line and opens it (segmentation and personalization). They click a CTA (content and design). A follow-up is triggered automatically based on that action (automation). You review revenue per email and conversion rates the next day (measurement). You adjust the segment or the message based on what the data shows (iteration).
The teams seeing the best returns from email in 2026 are not doing any magic: they are building a stronger email foundation.
Companies achieving exceptional email returns invest more than 20% of their total marketing budget in the channel. Conversely, 75% of low-ROI companies spend less than 20% on email. Budget allocation correlates directly with returns.
Frequently Asked Questions
How does email marketing work for a small business with a limited budget?
Email marketing is one of the most cost-effective channels available at any budget level. The core investment is an ESP subscription, which typically starts at $10 to $30 per month for small lists. 53% of small business owners in the US, UK, Canada, and Australia used email marketing as the most frequent strategy for finding new and retaining repeat customers. Start with a simple welcome sequence and one regular newsletter. Volume and automation can grow from there.
What is the difference between email delivery and email deliverability?
Delivery tracks whether your email reached the mail server. Deliverability tracks whether it reached the inbox. You can have perfect delivery with terrible deliverability. A message that lands in a spam folder has been "delivered" to the server but failed deliverability. The goal is inbox placement, not just server acceptance.
How often should I send marketing emails?
Brands sending 9 to 16 emails monthly achieve an average ROI of 4,600%, the highest of any frequency bracket. That said, frequency should match your audience's expectations and the quality of your content. Sending more often with weaker content increases unsubscribes and spam complaints. Consistency and relevance matter more than raw volume.
Does email marketing still work in 2025 and beyond?
Yes. 52% of consumers made a purchase directly from an email they received, making email the most effective channel for driving sales. It beats social media posts by 13% and social media ads by 11%. Email remains effective because it reaches people in a space they check deliberately, without an algorithm deciding who sees your message. The channel is growing, not shrinking: the global email marketing industry generated $12.33 billion in 2024, growing at a 13.3% CAGR since 2020.
