Last Update: March 4, 2015
Every day I hear about failed launches or sales droughts and I want to help. But, most often, these “failures” are the result of lax lead generation.
The biggest misstep many small business owners make is leaving email list-building as an after thought — a secondary priority. There is nothing more critical to the success of your business than an email list of engaged, qualified, and interested prospects. This is true whether your business is service-based or offering more leveraged solutions through products. It is true whether you are creating work on a commission basis or selling products to wholesale clients.
Unless you have a multimillion dollar advertising budget, you need to prioritize acquiring email addresses from qualified prospects.
Lessons in Effective Email List Building
Every business needs a prospect list and the best prospect list you can have at your disposal is a list of people who have deigned to give you their email addresses. List building is important because sales is a numbers game.
Let’s do the math:
I completed the launch of a high-end group coaching program. I offered it first to a group of 130 people on an interest list and then opened it to my main list, which at the time was approximately 5,600 subscribers strong. We registered 3 from the original interest list. That’s a 2.3% conversion rate on the list. Pretty good. The other 12 registrations came from the main list. That’s a .2% conversion rate. While it looks abysmal, it’s actually pretty good, too.
The interest list averaged over a 50% open rate on the promotional emails. That is par for the course when it comes to people who opt-in to learn about something specific. Since the change in Gmail inboxes, I’ve been averaging approximately a 29% open rate for emails to my general list.
On the best performing email to the interest list, 88 people learned the program was open and 62 people click through to the offer. An offer like this isn’t likely to get better than a 1% conversion rate. That means I could expect about .6 people to register based on the interest group alone!
For the main list, the main direct sales email had a 30% open rate and a 4.1% click thru rate. That means 232 people saw the offer that day. So I could expect another 2.3 registrations.
Great, I’m up to almost 3 whole people!
In the end, we had 15 registrations on this program. We generated approximately $40,000 in revenue. So, clearly, I had more than almost 3. But the point is simply: with a list of 5,600 prospects, an engaged readership, and solid conversion, I filled the program. I’m incredibly pleased with the results and the position we’ll be in when the program launches again next year.
But it could have gone very differently.
For another example, when I launched The Art of Growth in January, my announcement email received just over a 40% open rate and a click rate of almost 11%. That means that, from my list, 537 people saw the offer that day. I sold 48 copies on the first day and 134 total over the next 3 weeks. That was a 2.6% conversion rate based on the list size. Though, that also included social media traffic.
Playing a Different ‘Numbers’ Game
You will likely find people who have rocked 100 conversions on a 1,000 person list, or filled their client roster with a list of 200 people. That’s fantastic! But if you’re looking for the ease and scalability of a solid launch, you need to count on a different numbers game.
You should figure on a 40% open rate, a 10% click rate, and a 2% conversion rate (based on an offer) for an engaged email list. Which means to get 20 sales, you need to drive 1,000 views of the offer, over the course of several emails from a list of several thousand. And, frankly, that’s optimistic. For a lower priced, highly targeted offer, you might get a better conversion rate. For a higher priced offer, you’ll need more.
These are the kinds of numbers I use with clients to help them set sales goals. But it’s more important to set list-building goals before the sales cycle starts. If you really want to get 20 sales, how many people do you need on your list? 500? 1000? More?
Ultimately, I am not saying that everyone needs to build a 10,000 or 50,000 subscriber list. On the contrary, I believe you need to build a list that is appropriate for your business type. For instance:
- If you run a business focused on volume, where selling more means making more money and working less, you need to grow as big of a list as possible that is also focused, engaged, and ready to buy.
- But if you own a business geared to 1:1 service, customized solutions, or commissioned work, you need to grow a list that supports one sale at a time, understanding that your kind of clients don’t necessarily jump when you “launch.” You’ll use your list to nurture leads and keep them warm until both of you are ready to work together.
Either way, a constant focus in any business is lead generation, ahem — list-building.
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