Emails predate almost everything on the Internet: Facebook, Twitter, Yahoo, Google, and, believe it or not, even the web itself. Though we have many digital marketing tools available, emails still retain their lead-nurturing, profit-generating power. That is, an email can easily convert a lead into profit. Just consider, for instance, these numbers released by the Sales Force blog:
- 40% of B2B marketers rated the leads generated by email marketing as high quality.
- For every $1 spent, $44.50 is the average return on email marketing investments.
- 44% of email recipients made at least one purchase last year based on a promotional email.
- 7 in 10 people say they made use of a coupon or discount from a marketing email.
- Email ad revenue reached $156 million in 2012.
So, yes, email marketing can be powerful. The question, then, is how powerful are your emails? Are you converting your leads, your email list, into profit? If you don’t know the effectiveness of your email marketing, if you want to know how much your emails are worth, read on.
What’s a Lead?
In marketing, a lead is a potential sale. In email marketing, however, a lead has a similar but more specific definition: a lead is an email address that clicks-through to your website from your weekly, biweekly, or monthly newsletters, eBlasts, or emails.
Notice that distinction: you don’t have leads if the recipients of your emails don’t click through. Your recipients must click, must open, must read what you’re offering. Then, they must click to your website. Then, and only then, does an email become a lead. Email marketing simply sends people to your website. Your website, then, acts as your salesman, further qualifying your lead and, hopefully, converting the lead into a sale.
Having an email address, however, is a great step toward lead generation. In times past, leads were not potential sales but potential sales contacts: phone numbers of people who may or may not have given you the number in the first place. But with an email address, you don’t have to worry about cold calling and creating in your contact an interest for your product. If someone gave you his email address, then he must have some interest in what you do.
Your goal, then, is to convince your mailing list that you have something worth their attention, worth their time, worth their money. Your goal is to get your subscribers from an email to your website to a sale.
Are Your Emails Converting?
So how do you know if your emails are effective? To determine how much your emails are worth, you’ll have to do a little math. Just a little. We promise.
First, you’ll want to know how many leads you created. In other words, the number of people who visited your website from your enewsletter. You can do this using Google Analytics, or simply using the analytics on your website’s server (WordPress has a great analytics tool). Determine how many website visitors come from an email. Then, save this number.
Next, you want to know how many email recipients purchased your product or service. To do this, you could ask “how did you hear about us” on the payment page, an effective method used by many businesses.
Once you determine both of these values, set them up using this formula:
# of Sales
_______________ = Conversion Rate
# of Click-Throughs
So, for instance, if you created 100 leads, and of those 100 leads, 25 people purchased whatever you were advertising, then your conversion rate would be: 25/100 = 25%
So, for every 4 people that visited your website from an email, 1 made the purchase, one converted from lead to profit.
The Value of an Email
Now let’s get a bit more technical. If you want to know the monetary worth of an email, all you have to do is multiply your conversion rate by the profit made from purchase.
(Conversion Rate) x (Worth of the Product/Service) = Worth of an Email
So, if what you offer in your email sells for $200, then the worth of an email would be: (25%) x ($200) = $50. That is, every visit to your website from an email (whether the visitor buys or not) brings you $50.
Measure your Email
If you haven’t measured your email’s effectiveness, you definitely should. Not measuring your marketing before sending emails is like not measuring your foot before buying shoes: you could save yourself a lot of time (and money) by just taking the measurement.