March 15, 2017, posted by Kevin Smith
Ad Math: The Value of Email Subscribers
Email has been around a long time, but for many people, there is still a great deal of uncertainty surrounding it. We’ll today; we’re going to address some of that by figuring out how valuable a subscriber is anyway.
- Determine how many active email subscribers you have, removing any emails from your list that have bounced or are really old.
- Estimate your sales from email. Depending on your business model, this will be trickier to do. Ideally, if you can’t track direct sales, you’ll want to look at any promo code use, an increase in sales from products or services during the time they were featured in your email, or just the average bump in sales after an email campaign is sent.
- Once you’ve identified sales for a given period, let’s say 12 months, divide your total sales for that period by the number of email subscribers for that same period. (Note: this is assuming that you didn’t buy a list, or dramatically add to your email list in some other way that would skew the numbers. Regardless, anticipate using your subscriber value number as a directional guide vs. cold, hard fact)
Now that you understand the annual value per subscriber, you can begin to estimate the lifetime value of a subscriber by looking at the size and time between their first and last purchases, assuming you keep track of that sales data.
Knowing the value of a subscriber should help you understand how much of your marketing budget you should be allocating to growing your list and whether it’s currently an effective channel for you. If you have a really low subscriber value, consider how a change to your list, content, or cadence could improve it and then track the number as you go.
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