Explain the monetary value of an email list like I'm 5...

[omar]

Everyone keeps saying build your list, etc. I've been having some trouble with understanding this importance. I can't seem to see how an email list is viable by any measure unless you have more than 100k subscribers.

For example, let's say you have an email list of 10,000 subscribers which probably less than 10% of marketers even have that.

Let's say the open rate is 30% which is higher than average.
= 3000 prospects.

Then the click through rate is 10% which is higher than average.
= 300 prospects.

Then the actual conversion rate is 4% which is higher than average.
= 12 sales.

Say you're selling a product for $47. That is 12*47 = $564

Trying to get 10,000 opt-ins doesn't seem like the best use of your time to make $564.

What's wrong with my math or perspective?

 

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[sle3pyguii]

1. You can't get to 100K without having 10K first.
2. If you have more than one product, you'll be making more than $47 per person.
3. You will be sending out an email more than once.

 

[wade1mil]

Five years ago, Google changed their algorithms and hurt a lot of websites that ranked well.
Last year, Facebook changed their algorithms and hurt a lot people that used it to get traffic.
If you built a list, the algorithm changes wouldn't have affected you as much.
You can send more than one email per "launch" or a product.
There are a lot of people online that have great strategies for increasing ORs, CTRs and CRs.
Measure the list based on the lifetime value of a customer rather than the revenue of a single product and a single email.
Ready, Fire, Aim talks about having a minimum list size that you can count on to cover your expenses for the month.
Once you grow your list this big, everything else you do is pure profit and you don't have to worry about money any more.
Conversion rates for people that know and trust you are higher than normal, sometimes incredibly high (20%+) when coupled with webinars and launch strategies.
The more targeted your list, the more valuable it is. 10,000 highly targeted buyers can be worth much more than 1,000,000 randoms.
Also, when you're capturing the emails, you can setup a retargeting pixel to market directly to people that visited your site and didn't opt-in.

• Increase your opt-in rate with a better offer
  
• Increase the quality and quantity of emails sent out to build a better relationship
• Increase the open rate with better email headlines
• Increase the click through rate with a better offer
  
• Increase the conversion rate with a better strategy

I recently listened to a podcast of a guy who helps people launch their own information courses. He said a 10,000 list is capable of a 7-figure launch.

 

[Andy Black]

Don't think in terms of "subscribers", or "opt-ins".

Think in terms of *people*.

It's easy to reduce everything to metrics and forget that *people* always have:

1. Problems they have but don't want.
2. Results they want but don't have.*

Even calling it a "list" strips out the fact that each "entry" is a *person*.

You already have "lists" of people you can help and who might pay you for that help. They don't have to be in an aweber or MailCheat(Chimp) list. They're in your phone contacts, and email contacts for starters.

I bet there's people on your phone contact and email "lists" who'd pay you to get rid of a problem they have but don't want, or pay you to get them a result they want but don't have.

When people say the money is in the list, they are really saying that your profit comes from people you *already* know, or people who have ALREADY bought from you.

Remember, customers are just people who have a custom of buying from you.

Watch this 2 minute video.


(*Thanks to Dov Gordon at www.dovgordon.net for summarising the two things people pay for in this way.)

 

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[Mike Kavanagh]

A business exists to create customers.

A business exists to serve customers with wants and needs. Creating customers sounds like forcing them to purchase

 

[Andy Black]

A business exists to serve customers with wants and needs. Creating customers sounds like forcing them to purchase

Ha. You got me before I removed that quote from my post. It's from Peter Drucker I believe.

I like it, but it needs explanation.

If we define a customer as someone who has a custom of buying from you, and if we treat their first purchase as a test, then we see that buyers will only convert into customers if we added value in their first purchase.

I've summed up my view of the world in that 2 minute video listed above.

You can trick people into buying from you once. But they won't turn into a customer if you do that, and they won't become a referrer for you.

R + R = Profit

... where R + R = Repeat Business and Referrals

 

[Andy Black]

@omar

The metrics you should concern yourself the most with are:

Customer (and visitor) Life-Time-Value (LTV)​

If you sell more times to someone over their life-time, then you've increased their LTV.

Selling to someone who's already bought from you is much easier than selling to someone who's never bought from you.

When they've bought, they have shown they are in your target "market".

Think of a market NOT as a collection of people with similar traits. That's just a demographic.

Think of a market as a demonstrated CASHFLOW*

One of your jobs as a marketer is to find a "market" of people willing to pay to have problems removed or results created.

When someone ends up on your "buyer" list, then they've demonstrated their cashflow.



Some other posts that might help you:

1. www.thefastlaneforum.com/community/threads/are-you-only-buying-traffic.52527
2. www.thefastlaneforum.com/community/threads/your-goal-is-to-increase-cpcs.52525
3. www.thefastlaneforum.com/community/threads/online-direct-response-metrics.52781

(*Thanks to @TropicalGuy for introducing me to this definition of a market in your podcasts at www.tropicalmba.com)

 

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[Gale4rc]

To get those 10k subs you'll have to drive over 100k hits (assuming 10% conv rate on your site which is high for an average site owner, normal for someone like me )

Which may take 6 months or a year depending on how hard you work at it. In which you'll also be getting sales from your website at the same time.

But what happens if you dont have a list? What happens to the people that didn't buy anything?

Those people just leave your website and don't come back. This is where a list comes into play. It helps you capture them and your more engaged audience.

Now whatever sales you're making via your website, you're also capturing 10% more potential customers. (popups, offers, giveaways, etc)

Once you get this new funnel going you want to convert this 10% of list signups into customers hopefully over short term rather than long term.

If you can get your list to convert at 10% - not talking open rate / CTR - this will change throughout the persons time on your list.

Now you're talking 1000 sales that you wouldn't of had before, which you can also sell to the same person more than once or have them more likely to share something and bring you more traffic if you build that relationship over time.

Assuming you convert 10% of your list only 1x:
1000 sales at $47 = $47,000 extra that you didn't have before and you can keep selling to them over time, or if you own a SaaS that is even $10/mo - that's $10,000/mo - Monthly is really where it's at.

When someone goes into your list it should act as a funnel like your site but also separate... You should be delivering as much value as possible and then going for the sale.

This is why often you will see these new email courses popup which will be a week or two weeks long then at the end they ask for the sale. The metric they are measuring mainly is conversion rate. Open/CTR will help optimize the conversion rate at the end but, ultimately the conversion is all that matters.

Also lets go back to the 100k visitors you needed to get this 10k subscribers.

How much did your website convert into paying customers? Most likely less than 10%

So by having this list and nurturing it, you literally just doubled your income.

I hope that makes sense. It's 2am and I was about to go to sleep when I saw this.

 

[Andy Black]

Worth reading @Silverhawk851's great thread here.


... and remembering it's not about the size of your list.

 

[theag]

Those people just leave your website and don't come back. This is where a list comes into play. It helps you capture them and your more engaged audience.

Not just an email list. Retargeting pixels. Place them. From all networks, not just Google and Facebook. Even if you dont need them right now, you're building up an audience. But do it inside Google Tag Manager and set proper priorities there to load them async or you will F*ck up your page load times .

Good post here: http://www.digitalmarketer.com/digital-marketing-predictions-2015

Regarding lists: I will launch an invite-only paid newsletter this year. Crazy idea but might work. Gonna be fun .

 

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[Kid Money]

I think instead of getting crazy and complex let's keep it simple. The value in lists are that instead of losing your customer forever into the Internet abyss, you can retap them again and again and again. Therefore converting some of them into sales. Not to mention they are targeted..

Obviously it's 1000x more complex and in depth. But the actual concept is simple. Collect targeted info and give them your best angle to make sales...

It's a better problem to have the info and decide from there than to not have it at all.... Peoples info/lists are powerful.

 

[smarty]

Everyone keeps saying build your list, etc. I've been having some trouble with understanding this importance. I can't seem to see how an email list is viable by any measure unless you have more than 100k subscribers.

The importance is not in the number of subscribers as much as it is in your relationship with them. If they know you and trust you because of the value you provide regularly, you have a valuable asset. You have a private channel of communication with people.
If you just have a list of emails, you never or rarely provide any value or you just try to sell them whatever junk you can, they won't open your emails.
You can make $10K from a list of 100 people and you can also make $0 from a list of 10K people.
Look at it in terms of what you can give first, not what you can get.
This is how you make fans, this is how you influence people to respond.

The value is in your relationship with your list, not in the list itself.

 

[wade1mil]

To get those 10k subs you'll have to drive over 100k hits (assuming 10% conv rate on your site which is high for an average site owner, normal for someone like me )

A 10% opt-in rate is low. Improve your offer and this can increase to 60%+, with 40% being a real possibility.

Which may take 6 months or a year depending on how hard you work at it.

Now it means you need 17,000-25,000 clicks, which can be bought as quickly as you have the money for them.
If you can convert your new opt-ins at a rate that covers the marketing expenses, then you build your list for free.

 

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[Milkanic]

This must be new on DM but it is a gold mine.

http://www.digitalmarketer.com/customer-value-optimization/

 

[Gale4rc]

A 10% opt-in rate is low. Improve your offer and this can increase to 60%+, with 40% being a real possibility.

Agreed, I was in the mindset of a blog getting subscribers from people who are just reading your content. But in dif scenarios you can definitely get it up to 60% - I would say safely 30% though.