Do Your Email Marketing Campaigns Deliver Results?

Email marketing can help you interact with your customers, promote your brand and increase sales. However, it includes costs to be carefully considered.

Flavio Ubezio | Source: Courtesy Photo
Flavio Ubezio | Source: Courtesy Photo

There’s a lot to say when it comes to how to do email marketing well. We could talk for days about strategy, how to improve email response rates, and how to grow your email list with social media. However, it’s often helpful to cover the basics – and truly understand how a digital marketing strategy, like email marketing, can grow your business.

 

An inside look at email marketing

Imagine you have crafted an incredible how-to guide, placed it in on wonderfully designed landing page and promoted it to your audience.

People who land on your web page should opt-in with their e-mail address to download the pdf guide or to access it on a web page. As visitors leave their e-mail addresses and opt-in to receive marketing content from you, they are automatically subscribed to your list in your e-mail marketing platform. From this time on, they enter a flow of marketing e-mails aiming to build relationships and convert them into customers.

This process includes some costs to be carefully considered.

 

The cost of e-mail marketing

To compute the costs of e-mail marketing consider two types of costs.

The first is the cost of the technology you need to run your e-mail marketing campaigns. There are a number of email marketing services that offer comprehensive workflows designed to automate the email marketing process. Second, is the cost of the people working on the campaigns and the cost to buy or produce the resources needed to craft the e-mails (e.g. images, vector graphics, copywriting, etc.).

 

The customer aging factor

E-mail marketing platforms include a monthly cost. Once you close your list building campaigns, each subscriber will cost you a certain amount of money per month to be maintained in your e-mail marketing list.

When you consider the unit cost of maintaining each subscriber in an e-mail marketing list it’s not generally high. In our case, the monthly cost per subscriber is $0.008. Hence, a single subscriber would cost you $0.492 in 60 months.

While it’s not high, be sure to take a comprehensive view and should look at the customer acquisition cost of each subscriber.

 

The customer acquisition cost of e-mail marketing

The customer acquisition cost (CAC) of e-mail marketing can be calculated only if we introduce two other factors: the cost per lead and the conversion rate.

The cost per lead (CPL) is the figure we have spent to have the single person opt-in.

The conversion rate (CR) is the percentage amount of people we convert to a purchase, given a timespan.

Assume we didn’t spend any money to acquire leads, hence our CPL is $0. (This assumption is made to get straight to the point since the main factor determining e-mail marketing performance is the conversion rate.)

We can also assume a conversion rate ranging from 1% to 3%, regardless of the timespan. In a real business use case, we can imagine we have higher conversions rate for longer timespans because we have more time to work on the list.

The CAC turns out to range from $3.2 to $48, depending on the conversion rate and time it takes to convert the leads.

The customer acquisition cost is important because tells us everything about how successful the process is (or isn’t).

 

The important role of an e-mail marketer

This quick and dirty case study makes it clear why you should take e-mail marketing seriously. E-mail marketing can play a relevant and vital role in the growth of your business.

When you can determine the conversion rate and the time-to-conversion, it will dramatically reduce your CAC.

Since long-term business sustainability is mainly due to life-time value (LTV) and customer acquisition cost (CAC), it’s better to master e-mail marketing sooner than later.

 

Flavio Ubezio, the creator of Zioube, is a financial designer who helps entrepreneurs run financially sustainable digital projects. Connect with @NinjaUbe on Twitter.

 

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