Cost Benefit Analysis in Email Acquisition

Posted by admin at 10:26 AM on Aug 31, 2023


Email marketing is still one of the most solid, worthwhile channels of digital marketing. Maintaining your email database is a worthwhile activity that we've written about before, as it makes any other analysis of your email marketing much more accurate. How do we tell how valuable an email list is?

There are a number of ways of getting email addresses, of getting people to opt-in to receiving your marketing communications. There may be newsletters, which people often use their main email address for, if they see it as a proposition of value. Free white papers or discounts may mean that people use their junk email address*, and this is less valuable as a piece of data as it's unlikely that emails sent to that address will be opened, let alone acted on.

Email addresses that come with purchases are valuable as they are existing customers, but only if they have opted in to receiving marketing communications from you. Email addresses from personal contacts are likewise very valuable but only if those come with a positive opt-in. Each of these ways of acquiring email addresses will give you records with a different monetary value.

To calculate the overall value of an email address we look at the revenue brought it from each email divided by the number of emails sent. Of course, with clever segmentation and attribution we can assign a value of the email addresses of a particular type, but this takes some work. The basic formula is:

Number of delivered emails ÷ total revenue per campaign = value per record

The value an email address brings in may include ad revenue from partnerships in emails, from ad revenue from views or clicks on campaign landing pages, direct and affiliate sales attributable to a campaign, and lead generation. Some of these metrics may not be relevant to all companies but when we look at the value of an email address it helps to cast the net wide to understand all the possible sources of revenue that arise from each email.

Once you know the value of each type of email address, or of each address overall, you can start to compare the value of each one, with the cost it takes to acquire it. If a lot of the value of your email addresses is actually from white paper sign ups, then it pays to invest money in high-quality reports or surveys to give you this content. If email addresses from these sources return a low level of engagement, then you know not to direct budget towards these activities.

Working the cost benefit equation in a different way you can also see whether, if you have great in-house data and someone who can easily write a valuable white paper on company time, it is worth a negligible time investment to create content that will lead to adding high-value email addresses to your list.

We can use this insight to determine how much to spend on developing targeted email campaigns to each type of email address. A generic but attractive discount email campaign may be fine for newsletter and white paper sign ups, but if you have a segment of your list that bought a particular product or service, then it is worth spending more time creating a more targeted proposition that will lead to sales.

Once we know the value and the worth of each email address, we can streamline your email acquisition activities (and campaign content) in the most effective way.

*One created solely for the purpose of getting discount codes or access to white papers which could lead to unwanted further emails, which the person doesn't want clogging up their primary inbox.

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