Why is everybody everywhere telling you to start an email list? Nobody ever comes out and explains what all the buzz is about. It’s unclear why an email list is so valuable or what an individual subscriber is worth.
Let’s try to answer that!
How Much is an Email Address Worth?
To determine the value of an individual email address. Take your email’s click-through rate. Multiply it by your website’s conversion rate. Then multiply that by the average profit you make per sale. It looks like this.
Let’s plug in some realistic numbers and see what all the fuss is about.
Roughly 30% of people will open your emails, even less will click-through to your website. Despite low open rates, click-through rates of 3-4% are average. Meaning if you send out 100 emails, 3 or 4 people end up on your website.
Now that we’ve got people on our website how likely is it we can get them to buy something? “It depends,” so it will be impossible to find an industry average here. But, just to put a realistic number in there, I’ve found I’ve been able to easily convert 5% of warm traffic into sales in past campaigns.
The final thing that matters is how much money your customers are spending on your website. Let’s pretend you’ve created your own product with a $50 profit margin. If you make a sale, you make $50.
Ready for the big reveal? Let’s find out why everybody is telling you to start an email list? This is what an individual email is worth with these numbers.
Wait, 10 cents?!? WTF!!! That can’t be right!? Why are people so crazy about starting email lists if each address is only worth 10 cents?
10 Cents Per Email Sent is Actually Incredible
I was a little disingenuous in the last section. You’re not making 10 cents per email address. You’re making 10 cents per email address per email sent.
Much like a golden goose, if you abuse this you’re likely to end up with plummeting conversion rates and all of your emails in the Gmail spam folder. That said, you could send a weekly email and likely maintain your conversion rates. Potentially more often than that if your emails are particularly engaging.
Let’s assume you’re doing a weekly email for a year. Now we’re up to $5.20 per email address per year. Respectable, but are we done? Is this why everybody’s telling you to start a list?
Email Marketing Becomes Effective At Scale
The power of email marketing has to do with how many emails you can acquire from your free traffic.
According to Sumo.com, the average rate for email capture is 1.95%. But I’m going to use 2% because you’re above average (and it’s simpler math).
As far as traffic, pretend your site only gets 10,000 visitors per month. Here’s our new equation over the course of an entire year.
By the end of a year from your tiny site you’d be making $12,000 per year. On a bigger site that’s up to 100,000 users per month we start to get numbers where you’re earning than most of society does at their job. Solely from your email list .
Improving Your Funnel Can Drastically Increase The Numbers
I’ve been trying to use industry average numbers in this example. What if we kicked it up a notch and used above average numbers for our variables?
- What if you got your average order value up to $100 by adding new premium products to your store?
- What if you got your email click-through rate up to 6%?
- What if you got your email capture rate up to 4%?
- What if you got your website’s conversion rate up to 10%.
This is why everybody is telling you to start an email list. As a beginner these numbers would be hard to achieve, but you will build up to it over time. And several numbers in the equation (such as traffic & product cost) could easily be much higher than I laid out if you worked at it.
Focus on Email Capture Rates as a New Blogger
The beauty of an email list is that you don’t have to have all the pieces in place to start playing the game right now.
Right now just work on getting your email capture rate higher. You can build out a product, email sequence, sales funnel, increase traffic, etc. later on. And you can do some valuable stuff with your email list before you even have a product to sell them.
- Promote your new blog posts.
- Ask your audience for feedback.
- Offer consulting services.
- Use the list to create more targeted ads.
Emails Are More Valuable Than Google Adsense Clicks.
I’ve already written a blog post on why you shouldn’t use ads to monetize your website. But if you insist on using ads, I want to drive home why you should always prioritize your own email list over advertisements on your website.
Earlier we calculated an email address was worth $5.20 per year using industry average metrics. But maybe you think my numbers are too high. Let’s give a more pessimistic scenario. With a 2% CTR, and a 2% conversion rate an email address would still be worth $1.04/yr.
Which is still significantly more than what Google Adsense is paying you per click. You’ll be lucky if you see 20-50 cents per click with ads. Prioritize your email capture over ads on your site!
Can You Market To Your Email List Forever?
Email addresses aren’t really forever. A decent percentage of people will unsubscribe over time. Particularly if you’re spamming out a lot of low-quality emails.
Plus, external factors can dramatically cut down the number of people who receive your emails. For instance, when Google created the promotions tab, email open rates declined across the industry.
This is why I only like doing the math for the 1st year with email addresses. Your subscribers might stick around for longer but they also might not.
Do You Own Your Email List?
Most marketers claim that the reason emails are so valuable is that you own the list and nobody can ever take that away from you. Whereas if you build a business on Facebook traffic and that traffic goes away, you’re screwed.
Your email list might be the safest form of traffic out there. It’s a much more reliable source than Google, Facebook, YouTube, Pinterest, Amazon, Ads, etc. That said, your list is far from infallible.
For instance, the GDPR required re-consent for email addresses that were obtained in a non-GDPR compliant way. Most companies were able to keep their lists. But many companies had to send out re-consent emails or else lose their entire list (or risk lawsuits).
Meaning if you had an email list of 1,000,000 people. And an industry standard 4% clickthrough rate on your emails. Your 1,000,000 person email list was now only 40,000 people!!!
That’s terrifying. That said, it’s a rare event and if you require double opt-ins from the beginning you’re unlikely to find yourself in that scenario. The amount of money you can make from an email list is more than enough to get started building your list today!