cking true value of an email address

often made predictions to the contrary, but email remains an effective and affordable tool for marketing and content delivery. It takes a lot to acquire new email addresses, and this raises questions about return on investment. What can you afford to pay for a new email?

Let’s begin with a simple calculation.

Value = Revenue from Emails / Deliverable Email Addresses

If your email program generates $100,000 in revenue and you have 100,000 names that can be delivered on your list, then each email is worth $1.

This is overly simplistic, and immediately raises the question: how do you calculate your email revenue and for what period of time?

Calculating email revenue

List all ways that your company generates revenue via email to determine the revenue generated by your email campaigns. You may want to include:

• Advertisement revenue generated by content emails
• Email campaigns can generate ad revenue on web traffic.
• Direct sales, including product sales, subscription sales, events, etc.
• Affiliate sales.
• Lead generation.
• Survey data is a good source of information.

You will never get everything right. It’s a fuzzy science. One of your emails that directs someone to your website could result in the person buying your publication at the newsstand. This is impossible to track.

You can estimate your monthly income from each of these sources or others that are relevant to your business.

How long should an email address be expected to last?

You can now calculate the number of months that an email is likely to remain active in your list.

Keep in mind that “active” is more than just a delivery status. You need to know who is reading and interacting with your email.

This calculation should be standard practice for all email providers, but it isn’t. There are many factors that complicate the calculation, and I will discuss them below. Here’s an easy way to estimate the cost.

Divide the percentage of email addresses that have been lost by 1 to get an average lifespan.

If you lose 5% of your customer list each month (0.05), your average client will remain on your list for a period of 20 months. Calculation is:

1/0.05 = 20 months

It gets more complicated

If you continue, you risk analysis psychosis. If you’ve been following this topic and have been paying attention to it, then I bet you have a inner interlocutor that has been shouting a lot questions at you.

• What is segmentation?
• Do I have to treat all email addresses the same?
• Do I use the lifetime value or the list price of a customer or subscription to calculate revenue?

Right. The more you think about this, the more questions you will have.

It is madness to keep asking all these questions. The hospital has an entire wing of people who’ve tried to answer these questions.

You will have to accept a rough estimation that may not be as accurate as you would like.

It would be a great time to review the difference between precision and accuracy.

It is impossible to give a precise answer. Multiple methods will never give you the same answer. Accuracy might be possible.

You’ll still need to answer tough questions if you follow my advice. Next, you will be prepared.

Fudge Factors

Email lists are like dragnets that catch fish, mussels and crabs. They also bring in old fishing lures or beer cans. Each email has a different value and quality.

You have:

• Emails from Companies
• Emails Personal
• Emails that you have acquired through a transaction.
• You can get a white paper for free by using the email someone sent you
• Emails sent by append services

It’s not possible to separate them all and do the calculations for each group. It’s not possible to separate each group and perform the calculations.

Can you, for example, separate your company emails from personal ones? And if so, are you able to get reports about the click-through rate of each category? Most likely not.

What do you think?

You can give yourself a discount.

Say you decide, based on the calculations above, that a brand new email address will cost $2. When people sign up for your white paper they are very likely to send you junk emails, which is on the lower end of this average. When someone asks “how much money can I spend to collect email for my free whitepaper effort”, you cannot say $2. They may only be worth $1.

A person’s email address that you receive when they ask a question and want an answer is much more valuable. This one might be worth $5.

You make a list.

• Subscribe to email newsletters
• Emails sent with a subscription.
• Emails sent with non-subscription purchases.
• Lookup service emails
• Emails sent from government lists
• Emails collected from the business cards at the annual conference.
• A white paper is given in exchange for the freebie.

Sort them in order of importance. Try to determine how much of your list is from each source.

Let’s say, for example, that I could create a graph like this.

You can assign a dollar amount to each category using Excel and your high school math skills.

You’re not doing it right, as you are just guessing the value of each column. You’ll have some numbers and some assumptions. This will help you answer questions from the C suite. If they can remember their high school math.

Effective email marketing strategies require that you understand the true value of an email address. You cannot afford to spend “the average value of an email”, on campaigns with low-quality results. You can’t also afford to cut corners on campaigns that will bring in your best performers.

If you follow these steps, or something similar, you will be able to determine how much money to spend on different types of email marketing efforts.

Dig deep: Send more emails to grow your subscriber base

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