You may feel as if you’re in the dark sometimes when you have an online business that relies on email and content marketing to get the word out about your products and services. However, the truth is, you have even more power over your marketing and product creation than ever before. Why ? Because you can calculate what your subscribers are worth on average. This going to inform the marketing methods you deploy as well as how much you spend developing the products.
Calculate What Your Subscribers are Worth
Knowing your email subscriber value is a critical piece of knowledge that can help you make smart decisions.
To figure out how much your subscribers are worth you’ll need to gather the following information:
How Many Subscribers Do You Have?
Before you count your entire list, make sure you clean up your email list first. If you have people on that list who have not opened your emails for the last 120 days, don’t count them. Only count your active average opens as your list number. You may have 100K people on your list, but if only 10K regularly open the messages, then you should only count the 10K.
Know Your Revenue Numbers for the Last Period
This can be tricky if you’ve not been in business very long. The best figure to use is the last year or an average of the years you’ve been in business. These numbers are only estimating, but they will help you make better decisions about your expenses, nonetheless. So, if due to emails you sent out, you made $50,000 during the period in question write that down. Don’t count sales that happened using other methods, only due to an email you sent.
Then You Divide
Now that you have your numbers determined, you can figure out what your subscribers are worth.
The formula is:
Revenue During the Period Divided by The Number of Subscribers
For example, let’s say that you have a list of 20,000 subscribers (after cleaning the list), and you earned $50,000 during the period you’ve chosen. Now you just plug in the numbers to the right place. $50,000/20,000 subscribers equal $2.50 dollars value per subscriber. That means every single subscriber you earn is worth about $2.50 each period. So, if your revenues were from the last 120 days, you can potentially make that every 120 days, but if it was based on a year or an average of years, consider it potential annual earnings.
This information will help you make better choices when it comes to cash flow predictions, determining how much you can spend to get a new customer, how much you can afford to market, and more.
Knowing your subscriber value will inform your product creation budget as well. Plus, you can use that number to invest in raising that number. Maybe you need to sell more products, or charge a higher rate, or send out more offers. Either way, you’ll have a lot more information to help you improve your email marketing campaigns.
