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Email marketing

Why Your Email Database Is Worthless And I Wouldn’t Give You A Cent For It

Your email database is worthless and I wouldn’t give you a cent for it! Do you want to know why? Because you wouldn’t be able to tell me how much each email record is worth to your business right now. And if you don’t know that, then we have to assume the value is R0. You see, sending email to your customers, because you think it’s the right thing to do, and actually monetizing your email database, are two different things.

Don’t get me wrong, if you simply stay in touch with your customers because that’s all you want to do with your email marketing strategy, that’s cool. I wish more companies would, at the very least, use email to “stay-in-touch”.

BUT

Businesses that know how to monetize their customers via email, understand that each record on their customer database has a Rand value attached to it. They look at the data as an asset and every asset has a value.

If you don’t know how to assign a value to your email database, listen up for a second.

  • Revenue Per Record Metric

If you generate R100 000 per month from your email marketing efforts and you have 100 email records on your database, then every email record is worth R1000 per month in revenue. And in a financial year that record would have generated R12 000 for your business. The important thing, when looking to apply a value to your email database, is the following:

You need to make sure that all revenue (product sales or services rendered) is tracked back exclusively to your email marketing efforts.

Here is a quick example to better illustrate my point:

John and Jess have a medium-sized insurance brokerage. They have 2500 clients on their books and have built up a great annuity based business. They only sell car and home insurance policies, so a company looking at marketing life cover approached them with cool cross-sell marketing opportunity. When John sends out his monthly client newsletter via email, they will pay him R100 for every client looking for a comparative life insurance quote.

No risk to John and Jess because they only do car and home insurance and it could be a nice value add to their clients, not to mention a new potential income stream in their business.

In his next email newsletter, John mentions the 3rd party life company and manages to generate 200 leads for them. Customers looking for a comparative life insurance quote filled out a call-back form on John’s website and their details were handed over to the affiliate business via email.

200 leads generated via John’s email newsletter x R100 per lead = R20 000 in revenue.

If we divide that revenue by the amount of email records John has on his database (his 2500 customers) that would be R8 in revenue per record.

This is a very simple example, but you get the point. Money earned from email marketing efforts, divided by the number of email records gives you a revenue per record metric.

  • Gross Profit Per Record Metric

But what about the costs? Doesn’t it cost money to send email?

Yes it does, and if you really want to sharpen your pencil and work out how much profit each email record is worth, then you have to knock off your costs (hard and variable).

You don’t get into business to make revenue, you get into business to make profit!

The good news is that sending email is pretty inexpensive. The cost of sending email is really cheap. That’s why it has such a high yielding ROI.

Let’s assume that it costs John 20c to send one mail. His last newsletter email send of 2500 would have cost him R500. If we knock that off the revenue earned, his gross profit would have been R19 500 and that means the gross profit of every record would be R7,80.

Again, this is a very simple example, but what you need to remember is that in order to work out your gross profit per record metric, you need to be able to account for all your emailing costs.

Those costs might include:

  • The cost of  sending your email
  • The cost of generating a great newsletter template
  • The copywriting cost

Before I sign-off, consider this:

If I gave you a bag of beans, it would be a bag of beans. But if I gave you a bag of beans and told you each bean was worth R10, what would you do next?

  1. You would count them to work out how much money you had in your hands.
  2. You would start asking yourself how you could acquire more beans.
  3. You would start working on how you could possibly make each bean worth R15 instead of R10.

If you have a customer base with email addresses and you don’t know the value of each record, you need to ask yourself why that is? Because all you have is a bag of beans at this stage.

And if it’s only because you haven’t started monetizing that email base, well then you can always drop us a line.

Until next time.

Brendan

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