How Much Is Your Email List Worth?

Every good direct marketer knows the top company asset is the customer database. Almost anyone with marketing experience can turn that data into revenue. I say “almost” because there is still a social media movement trying to prove that direct mail and email marketing is dying. It’s doubtful that anyone in that group could create and execute an effective plan that delivers sales and profitability. But, for the rest of us, the people who understand that customer relationships are about the quality of service, a solid list is money in the bank

Every good direct marketer knows the top company asset is the customer database. Almost anyone with marketing experience can turn that data into revenue. I say “almost” because there is still a social media movement trying to prove that direct mail and email marketing is dying. It’s doubtful that anyone in that group could create and execute an effective plan that delivers sales and profitability. But, for the rest of us, the people who understand that customer relationships are about the quality of service, a solid list is money in the bank.

Direct mailers are very good at creating detailed plans that project sales and profitability down to the penny. When shifts in external factors like weather and politics affect sales, adjustments are made to keep the company operating in the black. Executing a direct marketing campaign requires a significant investment, making careful management necessary to corporate success. Customers and prospects are segmented, monitored and measured every possible way in an effort to increase lifespan and lifetime value.

Email Marketing Is Different
The investment required for email marketing is minimal when compared to direct mail. Returning a profit is so easy that marketers are lulled into complacency. When the revenue to cost ratio is that good, why invest additional resources in making it better? After all, there are always other areas that need more attention.

Email marketing can do so much more than generate revenue and profits. In the right hands, it increases customer loyalty and reduces operating costs. Emails offer the opportunity to create a personal connection that is unavailable in any other marketing channel. They can be used to economically provide high quality service on an individual level. Capitalizing on this requires in-depth analysis that begins with the value of email subscribers.

How Valuable Are Your Email Subscribers?
There is a direct relationship between the quality of your email marketing program and the value of your subscribers. Programs that build relationships using personalized promotions, education and service create substantially higher value subscribers than pure-play promotional campaigns. This really shouldn’t come as a surprise to anyone because better investments always yield stronger returns.

The first step in creating high value subscribers is analysis. How do the customers and prospects that participate in your email program differ from the ones who don’t?

Compare purchase history, time from first entry to purchase, times between purchases, average order, lifetime value, lifespan, number of orders in specific time frames and any other valuation information available. Segment customers and prospects as needed so you will be able to consistently evaluate the results. Seasonal, discount, and hit-and-run shoppers significantly skew the results. The information accumulated here is the benchmark that will be used to gauge the effectiveness of new campaigns.

Next, catalog all of the emails sent to each segment over the last two years. Include all available results so new emails can be compared to historical data. If you haven’t been segmenting subscribers, or segmented them a different way, capture the information that is available and move on. Don’t waste resources trying to analyze something that doesn’t have enough data to provide clear results. When finished, you’ll have a good idea of the current value of your email subscribers.

Creating a New Email Marketing Program
The analysis you’ve done tells you what has happened in the past. If you are happy with the results, keep on doing the same things. But, if you want more:

  • Look for gaps in your email marketing campaigns. Do they include personalized emails? Are the transactional emails optimized? Are you sending educational emails that teach subscribers how to use products and services?
  • Are you emailing often enough? Test sending emails more often to a sample of your subscriber list. If response increases without a significant jump in opt outs and spam reports, roll it out. Well targeted emails that provide value to recipients are rarely rejected.
  • Use your email marketing to improve customer relationships. Invest time in understanding your customers’ problems and creating solutions. The more problems you solve, the less likely they will leave. Email is an excellent tool for creating unbreakable bonds because it is effective, efficient and economical.
  • Measure everything on a regular basis. The better your data, the easier it is to improve results. Consistently digging through the data provides insight into how your subscribers behave. The more you know about their tendencies, the easier it becomes to create campaigns that motivate them.

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