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Take e-mail marketing seriously or die

As an entrepreneur with an engineering background, I found myself trying to understand all the buzz around e-mail marketing.

I was used to pay more attention to topics I felt to be more important like product-market fit, marketing strategy, etc.

And, when I had to study more the topics related to e-mail marketing (e.g: A/B testing), my idea was that I always had something more important to do.

Since I discover one thing which changed completely my mind.

Core e-mail marketing process

Let’s focus on the e-mail marketing process I’m analysing to show you how important is to master e-mail marketing.

Imagine you have crafted an incredible how-to guide, placed it in a wonderfully designed web page and promoted to your audience.

People who land to your web page should opt-in with their e-mail address to get the guide as a pdf download or to access the content in the web page.

As visitors leave the e-mail address and accept to receive marketing content from you, they are subscribed to a marketing list in your e-mail marketing platform.

From this time on, they enter a flow of marketing e-mails aiming at converting them into customers.

This process brings some cost to be carefully considered.

The cost of e-mail marketing

To compute the costs of e-mail marketing you may consider two types of costs.

The first is the cost of the technology you need to run your e-mail marketing campaigns.

The second is the cost of the people working on the campaigns and the cost to buy or produce the resources needed to craft the e-mails (e.g: pictures, vector graphics).

In this crack, I’m considering only the cost of the technology because it is enough to get straight to the goal.

The technology I took as the reference is Omnisend, an e-mail marketing platform specifically designed to help entrepreneurs easily nurture customer relationships for business growth.

Here are the costs of Omnisend.

# list subscribers Omnisend cost /month Subscriber cost /month
1.000 $ 15,0 $ 0,015
5.000 $ 50,0 $ 0,010
10.000 $ 75,0 $ 0,008
25.000 $ 150,0 $ 0,006
50.000 $ 245,0 $ 0,005

The customer ageing factor

The e-mail marketing platforms have, in general, a monthly cost as in the case of Omnisend shown in the table above.

This means that, once you close your list building campaigns, each subscriber will cost you a certain amount of money per month to be maintained in the e-mail marketing list.

When we consider the unit cost of maintaining such subscriber in the e-mail marketing list it’s not generally high.

Let’s take as an example the Omnisend cost for 1.000 subscribers. The monthly cost per subscriber is $0,015. Hence, the single subscriber would cost you $0,900 in 60 months.

Not that high, but to have a comprehensive view we should look at the customer acquisition cost.

The customer acquisition cost of e-mail marketing

The customer acquisition cost of our e-mail marketing case can be calculated only if we introduce two other factors: the cost per lead and the conversion rate.

The cost per lead (CPL) is the figure we have spent to have the single person opt-in.

The conversion rate (CR) is the percentage amount of people we convert to a purchase, given a timespan.

Assume we didn’t spend any money to acquire the leads, hence our CPL is $0. This is an assumption made to get straight to the point since the main factor determining the e-mail marketing performance is the conversion rate.

And assume that our conversion rate is 1%, regardless of the timespan. In a real case, we can imagine that we have higher conversions rate for longer timespans because we have more time to work on the list.

 

The customer acquisition cost tells us everything about how successful is the whole process, from the acquisition of leads to their potential exploitation through e-mail marketing campaigns.

Which are the takeaways from the analysis?

First, the greater the number of subscribers to the list and the lower the CAC, because the cost per subscriber per month is lower.

Second, the longer the time it takes to convert the subscribers and the greater is the CAC.

Fortunately, Omnisend offers a free plan with core email marketing features. This helps just-started entrepreneurs bootstrap their business.

The important role of the e-mail marketer

When I crafted this analysis I got clear why you should take e-mail marketing seriously and how an e-mail marketer can play a relevant role.

The e-mail marketer is the person who can determine the conversion rate and the time-to-conversion, reducing dramatically the CAC.

Let’s see what happens to a list of 10.000 subscribers at different conversion rates.

 

The impact the e-mail marketer has on the CAC is huge, both moving along the time axis and the lines at different conversion rates.

Since the business sustainability, in the long run, is mainly given by the LTV and CAC, it’s better if you master e-mail marketing to do it at best.